Mics Flashcards
Forward rate
forward rate is used only in forward contract. When two parties agree to exchange an asset (ex foreign currency) at a future date on a fixed price .
Spot rate
The rate of the currency the day off the transaction
Intra-period income tax allocation
Are separately allocated in the income statement in a provision for income tax expense. Effective tax rate is used for net on the gross for the continued operation , separately listed as
- discontinued operation
-continued operation
- other comprehensive income
Income statement - general and administrative expenses includes
Officers salaries expenses
Accounting and legal expenses
Insurance expenses
Rent for office space (not part of sale)
To Find COGS formula
Sales X(100%-gross profit margin %)
Gives you COGS
Find # of purchases in COGS -formula
COGS - net decrease in inventory
COGS + net increase in inventory
Gross profit % formula - in COGS
1-Gross profit/sales
2- if gross profit % is known and solving for gros profit $- gross profit % * net sales to get gross profit
Statement of changes in Equity
CPA RAT , “CPA NO rat”
Contributed Capital
Preferred & common stock
Additional Paid in Capital
Retained Earnings
Accumulated OCI
Treasure stock( contract equity) minus it
Other comprehensive income (OCI) - think of C.U.P
OCI is a part of comprehensive income
C- think of currency( foreign currency translations) & Cash flow hedges
U- think of unrealized gains or losses investments in security-available-for sale (fair value to OCI)
P- think of pension cost adjustments
Discontinue operations (in income statements) Impairment loss calc
Fair value minus the cost to sale (cost of disposal) is the NRV ( net realized value)
If NRV is less than BV- that’s a loss
If NRV is more than BV(book value) that’s a gain and recorded as the impairment loss or gain
BV- 10M
FV-8M
NRV < BV by 2M - an impairment loss x(1-Tax rate) = a (1,400,000)
Discontinued operations included net of tax - calculation
The operating income - net of tax . $ x (1-tax rate)
Impairment loss -net of tax , NRV<BV $ x(1-tax rate)
Subtract both - that equals the $ of discontinued operations
Foreign exchange transactions gain /loss calc
The the initial spot rate minus the spot rate to record for end of year income statement/date of sale and then multiply it by the #of units purchased . Purchased 10,000 units
Ex- initial purchase spot rate .55
Spot rate .70 on Dec 31. For recording this transaction, .55-.70 x 10,000=(1,500)
Date of sale use last spot rate used and do the same calculation
Accumulated depreciation is a what type account and reported in where?
Is a contra account reported in balance sheet
Non controlling interests appear in the balance sheet?
In stockholders equity
Accumulated other comprehensive income is reported in which financial statement ?
In the statement of financial position. (Aka the balance sheet)
Calculating transactions gains or losses recognized in a foreign currency is included in which statement
Component of income from continued operations in the income statement
Which statement an investor will rely on for liquidity and financial flexibility ?
Balance sheet
Realized and unrealized gains and losses for trading securities are reported in ?
In income from continuing operations
Realized, but NOT “Unrealized” gains and losses on investments in available for sale securities are reported in ?
Income from continuing operations
Accumulated other comprehensive income is where?
Owners equity account
CPA RAT (cpa no rat) is for?
CUP is for ?
1- statement of changes in equity
2- other comprehensive income
What is Note Payable?
Is a type of debt or loan, a company owes a lender, like a bank.
It’s like a written promise to pay a certain amount of money back at a specific date, and it includes interest.
Foreign transaction
Vs
Foreign translation
Foreign transaction - reported in Net Income after the gain or loss is recognized for a transaction that occurred in foreign curreny
Foreign translation- when consolidating a F/S between a parent company and subsidiary company foreign currency is translated to the company currency, gain/loss is included in OCI
Translation gain/losses are what and reported where?
They are the gain or loss that occurs after translating the F/S from its functional currency to its reporting currency.
It’s reported in other comprehensive income
Consolidated balance sheet
Equity Method
Initial CV in Sub= cost
+ % share of sub NI=⬆️ CV
- % share of any excess of dep= ⬇️ CV
- % share of div=⬇️CV
🟰 Ending C.V of Sub that needs to be eliminated in the consolidated B/S
Goodwill
Is the amount that is not identifiable in the investment of subsidiary
Purchase price ➖FMV of equity
Ex- purchase the Inv for $200k
The BVE -150k
The FV on equip- 100k
The BV on equip- 80k
The FV>BV = 20K. The FMV of the equity is 150k+20K= $170K
Calculation- 200k-170k= 30k in goodwill
Concentration of credit risk
A note in the financial statement indicating there is risk to pay others and receive payment since customers and business are in the same industry due to an event or circumstance affecting them
Concentration of market risk
A note in the financial statement indicating the entity has multiple assets that are valued on the basis of a similar market criteria - like interest rate. A change in the rate affects the value of such investments
Is Net income is taxed before recording it into Retained Earnings?
Yes! Multiply it by its tax rate, and if it matches the prepaid expenses on the debit side, no extra liability is recorded on the credit side. NI is reduced by that amount and it gives you the new NI total to include in retained earnings
On consolidation date, the consolidated stock holders equity will equal ?
Exactly the parents stockholders equity,
Common stock and retained earnings
Cash flow in financing
Common stock
Preferred stock
Dividends paid to stock holders
Issuance of bonds
