M1 Pillars Flashcards
How do you account for realized gains on AFS
Realized will hit NI
What effect does stock rights and warrants have on NI
No impact to Ni
Where does income tax expense come when prepping net income statement
continuing operations - it will have to reduce NI
Where are accounting or prior period adjustments shown?
Retained earnings not net of tax
What happens when stock rights are issued?
Nothing happens… no entry
How do stock dividends effect RE
Reduce RE regardless of no cash being paid by PAR or by FMV. If below 20% by FMV if above by PAR
Where are dividends in arrears reported as?
Reported as disclosures - dont forget to multiply by two if it is cumulative
How are property DIV recorded?
recorded as book (-) FMV * Shares
Treasury stock
Cost method - record at what it costed you to grab it back
Foreign transactions denominated in a foreign curry and YOU HAVE ASSET and their currency goes up?
Book a gain
Foreign transactions denominated in a foreign curry and YOU HAVE Liability and their currency goes down?
Book a gain
Are stock splits and diluted earnings per share retro active?
If happens after year end but before F/S than yes it has to be accounting for year 1
What are entrys for PAR method treasury
Issuance DR Cash CR Common stock and if applicable CR APIC
Buy back: DR Treasury at Par DR APIC that went off the books at PAR, PLUG RE if needed
CR cash for purchase amount
Resell: DR Cash, CR Treasury at PAR to remove off books, APIC C/S for plug.
What are the entrys for COST
Issuance DR Cash and CR Common and APIC
Buy Back: Debit Treasury at cost CR Cash
Re sell: DR Cash DE RE if there is a loss and no APIC CR Treasury at original cost.
When stock is exchanged for property what is it booked at?
FMV, common stock increases at PAR times shares given for that property,
APIC = Market value (-) Par
On bal sheet items how do you adjust for entries? How do you show contra accounts
Entries will hit two sides of the bal sheet, If you adjust an expense it hits RE. Contra accounts have to be shown for as a negative to net with the asset
What is inventory defined as?
CA
If there is a correction with no comparative FS what do we do
Decrease RE for the full amount in that year.
How is gain on purchase of discontinued business?
Sales Price (-) broker fee (-) CV when it was discontinued
