Module 9D Flashcards
Net Sales =
Gross Sales - Sales Discounts - Sales Returns/Allowances
Cost of Goods Purchased =
Gross Purchases - Purchase Discounts - Purchase Returns/Allowances + Freight/Transportation In
Gross Margin (Profit) =
Net Sales - COGS
Operating Expenses Examples
Selling Expenses, General & Administrative Expenses, Organization cost, Impairment losses SEC Registrants
Selling Expenses Examples
Salary, Showroom Depreciation, Freight Out, Bad Debt Expense, Warranty Expense
General & Administration Expenses Examples
Headquarters Depreciation, Research and Development
Operating Income (Profit) =
Gross Margin (Profit) - Operating Expenses
Other Revenues/Expenses and Gains/Losses Examples
Unrealized Holdings, Interest Revenue
Income from Continued Operations, before tax =
Operating Income + Other Revenues & Gains - Other Expenses & Losses
Income Tax Expense =
Current and Deferred
Income from Continued Operations, NoT (net of tax) =
Income from Continued Operations, before tax - Income Tax Expense
Net Income =
Income from Continued Operations, NoT +/- Discontinued Operations, NoT +/- Extraordinary Gains & Losses, NoT
Comprehensive Income =
Net Income + Other Comprehensive Income
Other Comprehensive Income Examples (5)
- Reclassification Adjustments
- Unrealized Holding Gain/Loss on Available for Sale Securities, ASSUMING FAIR VALUE OPTION IS NOT USED
- Pension or other Postretirement Benefit (OPRB) Adjustments
- Unrealized Holding Gain/Loss on Derivatives held as Cash Flow Hedges, including foreign currency hedges as cash flow hedges
- Cumulative Foreign Currency Translation Adjustment (Current Rate Method)
Examples of items that are NEVER Extraordinary
Foreign Currency, Strike, Writedown of assets
Balance Sheet - Asset Sections
- Current Assets
- Long-term Investments
- Property, Plant & Equipment
- Intangible Assets net of amortization
- Other Assets: Installment notes, unamortized bond issue costs, equipment to be disposed of
Balance Sheet - Liabilities Sections
- Current Liabilities
- Noncurrent Liabilities
Balance Sheet - Stockholder’s Equity Sections
- Capital Stock
- Additional Paid-in Capital
- Retained Earnings
- Accumulated Other Comprehensive Income
Recognized Subsequent Event
Condition existed at balance sheet date and is recognized on financial statements i.e. warranty liability estimate
Nonrecognized Subsequent Event
Condition did NOT exist at balance sheet date but arose AFTER. It is NOT recognized on the financial statements however is it would make the FS misleading, then a footnote disclosure would be made
Fair Value Measurements Levels
Level 1: Market approach - prices and relevant info from market transactions
Level 2: Income Approach - converts future amounts to a single current, discounted amount
Level 3: Cost approach - current replacement cost to replace the asset with a comparable asset, adjusted for obsolescence
*****ONCE FV OPTION IS ELECTED, IT IS IRREVOCABLE
Developmental Stage Enterprise Accounting
ASU 2014-10: removes all incremental financial reporting requirements along with the definition
Historical Cost/Constant $: Monetary Assets/Liabilities: What are they and what do you do with them?
- Increases in prices due to inflation (fixed # dollars)
- Cash, AR, NR, AP, NP, BP, HTM investments in bonds (includes contra accounts)
- Net them and calculate a gain/loss
Mon. A or L * EOY CPI - BOY CPI / BOY CPI
Historical Cost/Constant $: Nonmonetary Items: What are they and what do you do with them?
- Everything else
- Convert them
Conversion Factor = Current Period CPI / Base Year CPI
Conversion Factor * Nonmonetary Item
Current Cost: Monetary Assets/Liabilities: What are they and what do you do with them?
- Increases in Prices due to demand/market appreciation
- Do nothing
Current Cost: Nonmonetary Items: What are they and what do you do with them?
- Restate to current costs and calculate a holding gain/loss
Holding Gains/Losses
PPE/Inventory - Use current cost (use recoverable amount if lower than current cost)
Depn Exp./COGS - Use Avg Current Cost = BOY + EOY / 2
Other Comprehensive Bases of Accounting (OCBOA) Financial Statements
- Cash-Basis: only asset is cash
- Modified Cash-Basis: Fixed assets, inventories and related liabilities
- Tax - Basis: Basis of tax laws and regulations
SEC Reporting Requirements
Assets of more than $10 million and 500+ shareholders
SEC Reporting Requirements - Regulation S-X
Describes the form and content of financial statements filed with the SEC
SEC Reporting Requirements - Regulation S-K
Describes the requirements for information and forms required by S-X
SEC Reporting Requirements - Regulation AB
Describes reporting requirements for asset-backed securities
SEC Reporting Requirements - Regulation Fair Disclosure(FD)
Mandates that publicly traded companies disclose material information to all investors simultaneously
