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CPA- FAR > Misc > Flashcards

Misc Flashcards

1
Q

Journal entry for increase in available for sale securities Fair value (using valuation account)

A

Debit to Valuation Account; credit to Unrealized gain

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2
Q

Bond is re-classified as trading security from held-to-maturity
reported on BS:

A

fair value, current asset

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3
Q

Bond re-classified as a trading security from held-to-maturity
impact on Financial Statements from G/L:

A

Income statement, as CY earnings

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4
Q

stock purchased during the year, with unrealized gains by YE

Reported on Balance sheet

A

fair value, current asset

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5
Q

stock purchased during year, with Unrealized gains by YE

Impact on F/S from G/L:

A

income statement, as CY earnings

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6
Q

reclassified stock as Held to Maturity

report on BS:

A

ineligible- an equity security cannot be re-classified as held-to-maturity, only applies to debt

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7
Q

debenture re-classified as held to maturity from AFS

reported on BS:

A

fair value, non-current asset

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8
Q

debenture re-classified as held to maturity from AFS

impact on F/S from G/L:

A

amortized G/L moved from OCI to IS

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9
Q

stock reclassified as trading security from AFS

reported on BS:

A

fair value current asset

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10
Q

stock reclassified to trading security from AFS

impact on F/S:

A

income statement, as CY earnings

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11
Q

debenture reclassified as AFS from held-to-maturity

reported on BS:

A

fair value, non-current asset

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12
Q

debenture reclassified as AFS from held-to-maturity:

impact on F/S from G/L:

A

unrealized G/L goes to OCI

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13
Q

bond purchased at par, near fiscal YE

reported on BS:

A

amortized cost, non-current asset

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14
Q

stock purchased at beginning of year

reported on BS:

A

fair value, non-current asset

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15
Q

stock purchased at beginning of year

impact on financial statements from G/L:

A

unrealized G/L goes to OCI

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16
Q

COGS for consignment sales

A

BI+Purch+Freight-in+Transportation to cosignees - EI (held by owner) - EI (held by cosignees

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17
Q

material overstatement in ending inventory means current assets is: and gross profit is:

A

CA: Overstated
GP: Overstated

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18
Q

Unreailzed holding loss from AFS securities would:

A

cause earnings to differ from comprehensive income

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19
Q

dollar value LIFO

A
  1. Current year / index = base
  2. base x index = result
    Do for year one, then for year two, calculate the difference in base layer from year 2 to year 1? add to result
20
Q

under IFRS, a change in accounting principle made in current period, the cumulative effect adjustment for change is shown as an adjustment to beg RE as of:

A

beginning of the prior period

21
Q

if a transaction lacks commercial substance, and boot is involved

A

gain recognized proportionally if less than 25% of total consideration recieved. (proportion is calculated by FV boot/FV consideration)

22
Q

Disclosure requirements of identified concentrations:

A

the concentration exists at the financial statement date

  1. the concentrationmakes the entity vulnerable to the risk of near term severe impact
  2. Reasonably possible that event that could cause severe impact will occur in the near term
23
Q

FICA taxes- only include

A

employer portion in payroll

24
Q

warranty costs should be recognized/expensed when:

A

the product is sold

25
Q

under accrual accounting, how is warranty expense calculated

A

sales for the year x % estimated

26
Q

disclosed? concentration of credit risk for financial instrutments

A

yes

27
Q

disclosed? market risk for financial instruments

A

no

28
Q

disclosed? fair value for financial instruments

A

yes

29
Q

disclosed? carrying value for financial instruments

A

yes

30
Q

gains and losses from changes in the fair value of a derivative designated as fair value hedge should be:

A

recognized in current net income in the period in which the fair value of the derivative changes

31
Q

how should effective and ineffective portions of change in value of derivative which qualifies as a cash flow hedge be reported in F/S

A

effective portion: other comprehensive income

ineffective portion: current income

32
Q

gain in value of fair value hedge

A

reported on income statement (effective portion)

33
Q

gain in value of cash flow hedge

A

not reported on income statement

34
Q

first IFS financial statements must include

A
  1. three balance sheets
  2. two statements of comprehensive income
  3. two income statements (if usisg two-statement approach to presenting comprehensive income)
  4. two cash flow statements
  5. two statements of changes in equity
  6. explicit statement regarding compliance with IFRS
35
Q

impairment loss under IFRS

A

difference between the carrying value and recoverable amount.
recoverable amount = greater of FV-costs to sell or PV future cash flows

36
Q

recording impairment loss after gain under IFRS

A

Under IFRS, if a revalued asset becomes impaired, the impairment is recorded by first reducing any revaluation surplus to zero, with further impairment losses reported on the income statement.

37
Q

in a sale leaseback transaction under IFRS a gain resulting from the sale should be deferred at the time of the sale-leaseback and amortized when:

A

lease is classified as a finance lease or lease is classified as an operating lease and the sales price is above fair value

38
Q

goodwill impairment test under IFRS

A

carrying value of CGU is compared to CGU’s recoverable amount.
Recoverable amount = greater of the FV less costs to sell or PV future cash flows

39
Q

what effect does a 70% owned sub declaring and paying a dividend have on RE and NCI balances in parent’s cons. BS

A

No effect on RE

Decrease in NCI

40
Q

IFRS partial goodwill

A

goodwill= acquisition cost- FV net assets acquired

41
Q

a company issued a bond with a stated rate of interest less than effective interest rate on the date of issuance. The bond was issued on one of the interest payment dates. What should the company report on the first interest payment date?

A

an interest expense that is greater than the cash payment made to bondholders

42
Q

when the effective interest method of amortization is used for bonds issued at a premium, the amount of interest payable for an interest period is calculated by multiplying the

A

face value of the bonds at the beginning of the period by the contractual interest rate

43
Q

gain on bond retirement

A

bonds at fv + unamortized bond premium = CV of bonds to be retired

Less: Cash paid = gain on bond retirement

44
Q

warranty expense

A

current deferred tax asset

45
Q

depreciation

A

noncurrent deferred tax liability

CPA- FAR (19 decks)

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