Misc - Revision Flashcards
Goodwill in Consolidation = CV or PP - FV
Carrying value more denotes goodwill
CONSOLIDATION - Goodwill impairment impacts _____________
CV of investment in Parent’s books
and
Equity Earnings
Bonds Payable 4000000
Discount on bonds payable 40000
BIC 30000
Gain on Bond redemption(plug) 50k
Cash (retired value) 3880000
COnsolidation, equity method
Investment in Sub (NI) 150
Equity in Earnings(IS) 150
TO dep excess
Equity in earnings 20
Inv in sub 20
To record impairment
Equity in earnings 5
INv in SUb cr. 5
If co. is publicly traded, consider FV of stock to calculate NCI and Goodwill
100 shares @ 8 = 800
Otherwise calc by calc total value of the firm 90% bought for 900
total value = 900/90% = 1000
NCI = 1000*10% = $100
COST METHOD - Inter company dividends only need to be eliminated when Cost method is used coz dividends are Income in cost method and
EQUITY METHOD - No need to eliminate dividend if parent uses equity method as it’s a reduction in investment or CV of inv and dividend is not considered as income in equity method.
Div declared - need to be eliminated in both methods
Div declared but not paid
Equity - just 1 entry to eliminate div declared
DIv payable 15000
Div receivable 15000
COST METHOD - 2 Entries when div is declared
1. eliminating entry
Div Income 15000
RE 15000
- DIv payable 15000
Div receivable 15000
FUnctional classification - statement of activities
Natural - by function in the notes of FS
Eliminate profit from RE - COnsolidation
RE 5600
Inventory 5600
To eliminate Bonds
Bonds Payable 1000
Gain 100
Inv in Bonds 900
ELimination of int expense of 8% on 1000 face value bonds
Accrued int payable 80
Accrued int receivable 80
Assets
COst > Progress billings
EFT collections
on company book side: not on bank side
Cash paid to employees for GENERAL and ADMINISTRATIVE expenses
Operating Activities (this or salaries is an income statement item. Cash transactions reported on the income statement are operating items.)
A NEW SEPARATE CONTRACT IS FORMED WHEN _____
- Additional products in the contract modification are DISTINCT from the products in the original contract
- Consideration for the additional products reflects an appropriate standalone selling price.
Allowance for sales returns and allowances is a CONTRA ASSET to AR and
Contra assets have a natural credit balance
AFS impairment - need 3 numbers to calculate
1. FV
2. PV
3. Amortized cost or book value
If FV> Amortized value =unrealized gain (OCI)
Valuation account (BS)Dr. XX
Unrealized gain (OCI) XX
FV< Amort = Impaired
Impaired = FV - AMort
Calc ECL (PV-AMortized cost )
Calculate PV at market rate
(1)If impaired amount < Expected credit loss (ECL)
Credit loss Dr, (at ECL amount)
Allowance for credit loss (at ECL amount)
If impaired amount > ECL then record:
Credit loss (at ECL amount) Dr.
Allowance for credit loss (at ECL amount)
Unrealized loss on AFS (Impaired - ECL)
Valuation account (Impaired - ECL)
Revenue recognition - Product 1 is relected as a conditional contract asset in JE until the delivery of product 2 occurs. ____________
Once both products 1 and 2 have been delivered, Rhonda has an unconditional right to payment.
NFP - NOT CLASSIFIED AS NET ASSETS (LIABILITY OR REFUNDABLE ADVANCE)
Accounts such as conditional pledge receivable or conditional revenue are never used.
- A donor provides a deposit to a NFP that will ultimatetly fund the construction contigent upon securing operating funding for the program which it is to use.
2/A donor promises to contribute funds to defray construction costs of a new building contingent upon securing operating funding for the program which it is to house.
NFP - Purchase of equity of another organization - INVESTING
OPERATING - (1) CASH RECEIVED with MATCHING conditions attached should be deferred. Deferred items should be classified as cash flow from oeperations.
(2) Interest earned on endowment
Revenue = worked of skilled workers and work of unskilled general laborers as they “enhanced a physical asset”. (15k + 12)
The day care persuades the benefactor to give $200,000 to help the provider persuade the bus line that the benefactor is serious
Cash 200000
Refundable advance 200000
FV more than CV denotes
Bargain purchase option
CARINBIG (Eliminating Common stock-sub, APIC-sub and RE-sub against Investment in subsidiary)
100,000 shs at $10 each =1000000
MV @$17.60 each = 17,60,000
Common stock Dr. 600000
APIC Dr. 100000
RE Dr. 50000
Investment in SubsidiaryCr. 17,60,000 (FMV)
NCI Cr. Zero (100% acquisition)
PP&E(excess of FV over BV) Dr. 950000
Goodwill Dr. 60000
Common stock - sub Dr.
APIC-sub Dr.
RE-sub Dr.
Ivestment in Sub, (FMV mkt vaklue of stockor acquisition price) (Cr.)
NCI (non controlling interest) (Cr.)
Balance sheet adjustment to FV of Sub or Plant and Equipment (e.g. PPEexcess of FMV or BV) Dr.
Identifiable intangible assets to FV Dr.
Goodwill Dr.
Adjustments to Goodwill JE,
Goodwill is not amortized
Impairment expense 2,000
Goodwill 2,000
ELiminate intercompany transactions associated with the income statement
Dividend income from Sub Dr. 10k
Dividends Paid 10k
Right to recover goods
Sale 3k
return 15% =450
AR 2550
Right to recover goods 450
Sales revenue 2550
Refund liability 450