MCQ missed questions

Question 1

NFP HC org FS’s:

Answer 1

BS, CFs, and statement of activities

Question 2

in business combinations, valuation of GW is calculation of:

Answer 2

residual paid above FV of net ID’d assets

Question 3

in a financing lease, lease liability is recorded with the PV of minimum lease payments;

Answer 3

taxes should be expensed when paid

Question 4

translation method (current rate method):
[to functional]

Answer 4

• Step 1: convert to IS
• all IS = WA rate
• transfer NI to RE
• Step 2: convert to BS
• A+L = YE rate
• CS+APIC = HC
• RE = roll forward

**translated RE = BB translated RE + translated NI - translated div declared

Question 5

remeasurement method: (temporal method)

Answer 5

• used when:
  1. self-contained sub with 3Y inflation rate of 100%+
  2. foreign entity that does not maintain its accounts in a foreign functional currency
• Step 1: Convert to BS
• monetary items (fixed) = YE rate
• non-monetary items = HC (APIC+CS, investments)
• Step 2: Convert to IS
• non-BS related items = WA rate
• BS related items = HC
• (DE+PPE, COGS+inv, AE+bonds and intangibles) use HC

Question 6

to calculate BDE/VA from PV of renegotiated N/R:

Answer 6

• Step 1: find PV renegotiated N/R
• (loan amtPV remaining years) + (int pmt at reduced ratePVA remaining years) = PV new note
• Step 2: calculate BDE/VA
• PV new note (-) BV note = BDE/VA

**JE:
Dr N/R (BV)
Dr BDE (calc)
Cr N/R (face)
Cr Accrued I/R (calc)
Cr VA (calc)

Question 7

reclassification adjustments (including effect on NI and OCI) must be presented in:

Answer 7

presented in statement in which the components of NI and OCI are presented (NOT in footnotes)

Question 8

for CFO indirect method, we START with NI:

Answer 8

to calculate NI when given CFO, we work our way backwards (subtract DE and impairment, etc)

Question 9

GR for consignor goods:

Answer 9

Consignor includes consigned goods in hands of the consignee (potential buyer) at consignor’s cost + shipping costs to consignee

*shipping costs incurred by a consignor on transfer of goods to a consignee should be considered as inventory cost to the consignor

Question 10

indirect vs direct method of reporting currency:

Answer 10

[direct method]:
for reporting company (US);
1 foreign currency = “x” USD

[indirect method]:
for reporting currency (US);
1 USD = “x” foreign currency

Question 11

uninsured damages and known CV of damage:

Answer 11

capitalize the cost of refurbishing and record a loss in current period equal to the CV of the damaged portion

Question 12

GR for appropriation of RE:

Answer 12

there is no requirement to appropriate RE for any purpose; RE may be set aside for future purposes by classifying a portion as “appropriated”

Question 13

JE for the last year when actual demo and removal costs are incurred:

Answer 13

Dr ARO liability
Dr Demo Exp
Cr Cash/AP

Question 14

eliminating JE for I/C COGS and profit:

Answer 14

Dr I/C Rev
Cr I/C COGS
Cr COGS-company

Question 15

under the bonus method for partnerships, we use the old P/L ratio to allocate excess of new partner’s contribution over amt credited to the new partner’s capital account;

Answer 15

capital ratios are inappropriate to reflect operating effectiveness of old partners