Mnemonics Flashcards
How to do calculate Pension Expense? Pg, 14-3
How do you calculate each component?
A-SPIDER +++++– (this is only the elements) => you need to know the order
A +/- Amortization of Existing Net Obligation or Net Asset at implementation
S + Service Cost
P +/- Prior Service Cost Amortization (cal: beg PSC/avg service life) => service this year/service in the future
I + Interest Cost (cal: beg PBO x discount rate)
D + Deferred Gain (unrecognized pension gain/ - loss)
(cal: return on Plan Asset - beg PA x expected rate of return)
E - Excess amortization of deferred gain/ + loss; pick bigger of PBO and FV plan asset; multiply by discount; subtract by unamortized; divide by service life
R - ACTUAL Return on PLAN assets (cal: end PA - beg PA - contributions + benefits paid) => EXPECTED return on plan assets (cal: beg PA x expected rate of return)
What are the 3 broad categories of funds? Pg. 30-11
Name the types of funds within each broad category
Pg. 30-13
1) Governmental Funds: similar to GASB chart Pg. 30-1;
utilizes MODIFIED ACCRUAL; expenditures
*PD-Consents-to-Smoking Grass Pg. 30-13
P Permanent: Set aside and cannot be spent => must be
invested in a permanent basis
D Debt Service: Services bonds (principle and interest)
C Capital Projects: Construction
S Special Revenue: Earmarked sources (ie maintains
bridge from tolls) => use of funds are restricted (only
to paint/maintain bridge)
G General: Junk drawer
*I-PIPE-Alot
2) Proprietary Funds similar to FASB chart Pg. 30-1; utilized
ACCRUAL; expenditures; like private business
a) Internal Sevice: for insiders of govt; no user fee
b) Enterprise: for outsiders / insiders of govt; user fee
(ie for public pools there are user fees)
3) Fiduciary Funds: like non-profit; ACCRUAL
a) Pension trust: for govt employees
b) Investment trust: pool govt money and invest
c) Private purpose trust: tabacco tax => use for cancer
research
d) Agency: IRS; collect money and give to someone else;
no fund balance
For government what is the main objectives for the financial reports?
Pg. 30-27
ACE F/S
A Actual VS Budgeted
C Compliance with finance-realated laws, rules, and regulations
E Efficiency and effectiveness
F/S Financial condition and results of operations
What is the statement of operations / activities for a hospital? State the function of each component?
Pg. 32-11
*Where is charity CARE recorded? Pg. NFP #74 WB
PP-NO-ONE
P Patient service revenue (all costs of taking care: hotel type, medical, lab)
P - Provision for contractual adjustments (no bad debt included; allowance included; medicare, employee discounts, not charity)
N = Net patient service revenues
O + Other Operating revenues gains and losses (earned, not patient service, RESTRICTED donations, net assets released from restriction, and interest/dividends) => revenues and gains that represent amounts received for reasons other than performance of health care related service; EARNED
O - Operating Expenses (cost of running hospital); includes bad debt
N + Non-operating revenues (UNEARNED); UNRESTRICTED donations
E = Excess of Rev/Exp
*Charity care is recorded in the notes and NOT in the statement of activities Pg. 32-11
What are the Primary Qualitative characteristics that makes the financial statements USEFUL? Pg. 2-1
Roger is PC (politically correct) but is Materialistic
1) Relevance - capable of making a difference in user’s decision
a) P Predictive value - helps predict or forcast results
b) C Confirmatory value - confirm or correct predictions
FENCE
2) F Faithful representation - info depicts what it represents
a) E Free from ERROR
b) N Neutrality
c) C Completeness
What are the Enhancing Qualitative characteristics that makes the financial statements USEFUL? Pg. 2-1
Roger is CUT like a V C Comparability U Understandability T Timeliness V Verifiability
**It enhances Relevance and Faithful representation (relates to BOTH)
What to remember for PP&E IFRS? Pg. 8-19 (2)
Describe the revaluation model
a) Cost model
b) Revaluation model: when you write up / down, and above cost goes to OCI [DENT-R]; when you write up / down, and below cost goest to I/S
What does a financial instrument include? Pg. 6-1
*What is its significance?
COD
C Cash
O Ownership interest in an entity (stock)
D Derivative contracts that create a right and obligation to transfer other financial instruments (stock options)
*If its not a financial instrument, then its not a derivative
Definition of Derivatives Pg. 6-1
*Derivatives do not include?
SUN: has to be a FINANCIAL INSTRUMENT
S Settlement in cash or equiv (net settlement)
U Underlying (variable) and Notional amount (number of units)
N No net investment
- Underlying is APPLIED to notional (what will be paid)
- Has to be changing, not for a fixed price => derives value from something else
*LAND, certificate of deposit (CDs)
What are the characteristics of a Capital Lease for a lessee? Pg. 11-3
TT-BPO-75-90
Risk of ownership passes to lessee by:Title,Bargain Purchase Option (BPO),Substance - Lease is more than 75% of asset’s useful life or PV of minimum lease payments are more than 90% of fair value
What is the trick for admitting a new partner for the bonus method and the goodwill method? Pg. 16-2
GAL: Goodwill adjust left, by using number on right
BAR: Bonus adjust right, by using number on left
How do you approach a deferred tax problem? Pg. 19-16
Think of the journal entry for deferred taxes
Income tax expense: debit
Current tax liability: credit
Deferred tax liability
Definitions for Liabilities: Pg. 12-2
a) Accrued Liabilities / Expenses
b) Prepaid Expenses
c) Deferred Revenues
d) Revenue Receivable
a) An expense that is incurred but not yet paid in cash
b) Expenses paid in cash, but not yet incurred
c) Revenue collected, but not yet earned
d) Revenue earned, but not yet collected
Definitions for 5 fund balance classifications Pg. 30-13
a) Non spendable fund balance
b) Restricted fund balance
c) Commited fund balance
d) Assigned fund balance
e) Unassigned fund balance
a) Fund that cannot be spent due to legal or contractual restrictions or are not in spendable form
b) Funds that are either externally restricted for a specific purpose or restricted by law => lein
c) Funds committed for a specific purpose by formal government action
d) Neither restricted nor committed, but are constrained by the governments INTENT to be used for a specific purpose
e) Represents the general fund’s balance that is not restricted, committed or assigned to a specific purpose
What is the absolute minimum number of funds for government accounting?
One, the general fund
For declaring a stock dividend, what must you remember about it? Pg. 15-12
If its small stock use FMV
If its a big stock use PAR
For intagibles, what is the proper treatment of the cost of equipment used in R&D activities that will have alternative future uses? 2013 AICPA #46
Capitalized and depreciated over its estimated useful life
For bonds how do you determine interest expense VS interest paid? 2013 AICPA TBS
Interest expense: when it is issued or how often interest is paid (annually, semi annually) => when using bond interest table; dont use when trying to find bond proceeds
Interest paid: what month was interest paid
Name the appropriate valuation technique to measure fair value Pg. 2-5
MIC
M Market Approach: uses prices and relevant information from market transactions for identical of comparable assets/liabilities
I Income approach: uses present value techniq earnings
C Cost approach: uses current replacement cost
What is included in other comprehensive income? Pg. 2-3
DENT
DENT-R for IFRS
D Derivative cash flow hedges
E Excess adj of Pension PBO and FV of plan assets at year end
N Net unrealized gains or losses on “AFS”
T Translation adj for foreign currency
R Revalutation gains; losses go to income statement
Bank Reconciliation Calculations Pg. 3-2
a) Balance on bank statement
b) Checkbook Balance
+ Deposits in transit
- Outstanding checks
+/- Errors made by bank
= Corrected balance
+ Amounts collected by bank
- Unrecorded bank charges
+/- Errors made in recoreding transactions
= Corrected balance
Does maintenance of goodwill count in the calculation of goodwill? Intagibles #7
No it doesnt count; Goodwill is only determined from the initial purchase
What is the difference between franchise revenue VS revenue in the current year? Intagibles #19 & 21
First you have to see if all services were performed (if it wasn’t, do not recognize any revenue)
Franchise revenue: only recognize the amount received in the current period
Revenue: recognize the WHOLE agreed upon amount
What is the difference between capitalize, and expense for PP&E and inventory? Pg. 8-32 & Pg. 7-1
Both for PP&E and inventory, the costs of acquisition and preparation for sale (INTENDED USE) => it is capitalized; debit asset, and credit cash; when you sell then expense it (COGS); considered a product cost
Expense for PP&E and inventory will be considered a period cost (SGA); debit expense, and credit cash
How to determine if there is an IMPAIRMENT LOSS for Held for SALE? Pg. 8-13
- Journal Entry as a result?
- What is significant about this term?
Check if CV > NRV then write down to NRV; if CV is less than NRV leave at CV
*Loss: debit
Other asset: debit (NRV)
Accumulated Depreciation: debit
Equipment: credit
- Restoration are allowed for impairment loss held for sale (can be written up or down), but not for held for use
- NOT to be depreciated
What is the Cost to Cost Method? (Percentage of Completion) Pg. 23-2 Purpose?
*What if there is a loss? Import!!!
*Purpose: To find profit; not used to find liability; better matching
Cost Incurred to Date / TOTAL construction costs (acutal + estimated to complete)
= Percentage of Completion
x Total Profit (profit always changes) => contract price - total cost
= Profit Recognized to Date (what you spent so far, and not just that year)
- Profit Previously Recognized (prior years)
= Profit to recognize This Year
*Expense immediately (dont use percentage)
a) When does a company that is a large accelerated filer must file its Form 10-Q with the US Securities and Exchange Commission?
b) All others for Form 10-Q
a) 40 days
b) 45 days
What are the 3 reportable segments to test for > or equal to 10%? (3) Pg. 21-4
What are the 3 tests for segment reporting?
1) Operations in different industries (meet any 3 tests => disclose all)
2) Foreign operations (meet test 1 or 3, disclose all)
3) Major customer or export sales (meet test 1 => disclose only that)
1) Revenue test
2) Profit/Loss
3) Segment asset test
Rates used for foreign currency? 2014 AICPA #18
a) Assets and Liabilities
b) I/S (remeasurement)
c) B/S (translation)
a) Current exchange rate
b) Wtd avg
c) Historical
How do you treat costs incurred in the business acquisition? ie) Consolidation Pg. 31-2
a) Direct, indirect, or general costs
b) Costs associated with the issuance and registration of debt or equity securities
a) ALL EXPENSED in the period incurrred => results in the reduction of net income
b) Decrease to APIC (debit)
a) When is there an increase in unrestricted net asset? NFP Written Notes
b) When is there no net effect on unrestricted net asset?
a) When the governing board can decide where the proceeds will go
b) When there is a transfer from temporary restricted net asset to unrestricted net asset
What is an executory cost, and what are examples of them? Pg. 11-3
*What is BPO?
TIM
It is not included in the calculation of PV of minimum lease payment => only include annual payment, BPO, and residual value
T Taxes
I Insurance
M Maintenance
*Bargin purchase order: after the lease ends, you can buy it at that price
How do you approach a sale-leaseback problem? Pg. 11-6
Check if PV of rental payments is > 90% FV; if so, defer all gain and offset against depreciation expense
If < 10% FV recognize all gain immediately, and do not defer
What is the significance of anti dilutive? EPS #15
If exercise price is larger than market price => anti dilutive => do not include it in stock amount in denominator
For govenment accounting, what is the difference between a) blended component VS b) discreet component?
a) When that part of the government pays for the debt of another part
b) Separately stated component
For government, when are GRANTS considered revenue? Pg. 30-1
a) Unrestricted
b) Restricted
a) If unrestricted => when approved
b) If restricted => when spent
For government, what are examples of:
a) Imposed
b) Derived
a) Property tax => you get no matter what
b) Sales tax => need to make a sale to collect sales tax
Where would a purchase of cash equivalents be reported in the statment of cash flows? Operating, Investing, or Financing? Pg. 25-17
It would NOT be reported since they are the same line item
Cash Equivalent: debit
Cash: credit
For cash flows using the indirect method, how do you add / subtract non cash items and adjustments to the balance sheet to net income?
Think opposite because working backwards
Good: “-“
Bad: “+”
How do you approach non-interested bearing note? Pg. 13-9
You have to impute an interest rate => find the PV of the NR first to find CV => this will give you discount
For government accounting, what is considered… Pg. 30-1
a) Revenue
b) Sources
*Important concept in what to include in estimated revenues journal entry
a) Property tax within 60 days of next year (can accrue); Grants unrestricted when approved, restricted when spent
b) Bonds; Interfund transfers
*Include all because it is only estimate
Does dividend payable affect current liability? Stockholder’s equity #26
No it doesnt
What will be tested for annually for impairment? Pg. 9-4
a) Intangibles with indefinite lives => no expense
b) Gooodwill => by each reporting unit
a) Spot rate VS b) Forward Rate Pg. 155 (Printout)
a) Actual exchange rate on a particular date
b) What the exchange rate is expected to be at some point in the future
For IFRS, what is the cost model VS the revaluation model? Ninja Notes
Cost model: Asset - Accumulated depreciation / impairment loss
Increases in value go to balance sheet, while losses go to income statement
How is held to maturity valued as? Pg. 5-5
Amortized cost => Use the effective interest table
What number do you use to depreciate a leased asset? Pg. 11-17
PV of minimum lease payment; DO NOT use the cost of the asset
For government funds infrastructure, compare the preferred approach VS the modified approach? Pg. 30-21
Preferred approach: recognize and depreciate => mention in supplementary info
Modified approach: must show it has an indefinite life => therefore do not depreciate
For a non-profit, what type of asset is a promise to contribute?
Temporary restricted net asset
What would increase a temporary restricted net asset?
Earnings from the asset, and an increase in fair value of the asset
Filing Dates for:
a) 10K: large accel filer, accel filer, small reporting co
b) 10Q: large, accelerated, small
a) 60 days for greater than or equal to $700M
75 days for >$75<$75M
b) 40 days for large
40 for accelerated
45 days for smallIn preparing a statement of cash flow, what must you think of when you have… TBS class questions
a) Interest expense
b) Depreciation expense
c) COGS
*What a very important concept to consider in using the direct method?
a) Bond discount
b) Accumulated depreciation
c) Inventory, and A/P
*Only consider OPERATING ACTIVITIES
What do you think of when you have to solve an unadjusted trial balance? 2012 TBS
Write out the journal entry => put both entries to debit and credit to balance
For government accounting, how do you account for an expenditure that is more than the encumbrance? TBS Class Example
Flip the only the item that is too low, and expenditure: debit & voucher payable: credit for the real cost
If inflation:
a) Monetary asset results in….
b) Monetary liability results in…
a) Purchasing power LOSS
b) Puchhasing power GAIN
To calculate common stock dividends, and you are given the amount for issued & outstanding, how do you get just outstanding shares and just issued shares? Pg. 15-28
To find outstanding you should use each journal entry => add issued stock and take out treasury stock
To find issued just get shares before looking at treasury stock transactions
For consolidations, which accounts are subsidiary only? Pg. 31-32
What do you do with the other accounts?
C/S, APIC, RE, dividends
Fix intercompany sales, inventory, equipment, gains, and losses (this will eliminate accounts) => add across
