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FAR > More FAR Flashcards > Flashcards

More FAR Flashcards

1
Q

What are the three components of Relevance?

A

Predictive value- future trends; Confirming Value- past predictions; Materiality- effects users decisionsg

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2
Q

What are the three components of Faithful Representation?

A

Completeness- nothing omitted that affects decisions; Neutrality- free from bias; Freedom from Error- no matieral omission or errors

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3
Q

What is the formula for Net Realizable Value?

A

Sale Price - Disposable fees - Selling Fees = Net Realizable Value

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4
Q

What is the formula for Royalty Income?

A

Gross Sales - Estimated Returns = Net Sales x Royalty % = Royalty Income

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5
Q

What is formula for Deferred Gross Profits?

A

AR x GP % = Deferred GP

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6
Q

Given GP amount, what is formula for AR?

A

AR = (GP Deferred/ GP %)

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7
Q

In a franchise agreement, what are the two parties involved and what are their roles?

A

Franchisee = You, pay costs to Franchiser and defer income until corresponding revenue recognized; Franchiser= Big company, pay franchise fee to start business and defer revenue until performance takes place

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8
Q

What criteria must be met for “Extraordinary Items”? How is item recorded if criteria not met?

A

Both unusual and infrequent; if not both criteria met, record as Continued operations

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9
Q

What is a product cost?

A

Expense matched with revenue associated. Ex: sales commission paid on car sold

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10
Q

What is a period cost?

A

Expense amortized and recognze with passage of time. Ex: General & Administrative expense - rent, supplies, office staff

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11
Q

What is a business start-up cost?

A

One-time cost for opening a new business

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12
Q

What is the market approach to valuing assets?

A

Market transactions and prices value the assets

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13
Q

What is used to value assets using the income approach?

A

PV, discounts and earnings value the assets

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14
Q

What is used to value assets using the Cost approach?

A

Value based on replacement cost

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15
Q

Who is the Franchisee in a Franchise transaction?

A

YOU, pay costs to franchisor and defer revenue until corresponding revenue recognized

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16
Q

Who is the Franchisor in a franchise transaction?

A

BIG Company- pay franchise fee to start business, defer revenue until performance takes place

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17
Q

What is the definition of Retrospective adjustments?

A

Prior periods adjusted and goes to OCI

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18
Q

What is the definition of Prospective adjustments?

A

Going-forward adjustment, Changes referred to in FS Notes

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19
Q

Which accounting changes result in Retrospective adjustments?

A

Change in Principle of accounting (LIFO vs FIFO invty valuation) and Change in Equity (Equity method to Consolidated FS)

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20
Q

Which accounting changes result in Prospective adjustments?

A

Change in Accounting Estimate (Straighty line to Double declining depreciation)

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21
Q

What is the purpose of Regulation S-K?

A

Under Securities Act of 1933; Company presents IPO, must obey Regulation S-K

22
Q

Which sections are included under Regulation S-K?

A

General business and securities info, Financial, Mgt & Security holder info, Registration statement and prospectus provision, Industry guides w/ exhibits and asset back security, Roll-up transactions and mergers, Oil & Gas disclosures (if apply)

23
Q

What is the formula for Depreciation basae?

A

Historical cost to new custommers - Salvage value = Deprec. Base to new owners

24
Q

Who issues IFRS?

A

International Accounting Standards Board (IASB)

25
Q

Which assumptions are made under IFRS?

A

Entity is going conern, Entity uses Accrual basis of accounting

26
Q

What is the objective of the IFRS Framework?

A

Provides users with information

27
Q

What is the purpose of the IASB Framework?

A

Helps to develop standards, it is NOT a standard itself nor does it supersede any standard’s authority

28
Q

What is the criteria for recognition under IFRS?

A

Value must have a) Probable future economic benefit, b) Can be measured reliably

29
Q

Which method is used when value or outcome cannot be measured reliably?

A

Cost Recovery Method

30
Q

What is the Date of Transition?

A

First reporting period that an entity produces full comparative FSs using IFRS

31
Q

What is the most efficient method for converting PP&E assets to IFRS?

A

Fair Value election

32
Q

What are Contingencies?

A

Uncertain future events; GAAP- Probable, Reasonably possible, or Remote

33
Q

What are Provisions?

A

If “probable” and “Measurable” according to IFRS; Payment is uncertain in Timing or amount

34
Q

How can bonds be recorded on the Statement of Financial Position under IFRS?

A

Fair Value through Profit or Loss, Amortized Cost

35
Q

How are bonds recorded using the Fair Value through Profit or Loss method?

A

Liability revalued at the end of each period, Gain/ Loss recognized in period

36
Q

How are bonds recorded using the Amortized Cost method?

A

Using effective interest method

37
Q

How are deferred taxes recorded under IFRS?

A

Using the “Liability Method”; all deferred tax liabilities must be reported, only “probable” deferred tax assets can be reported

38
Q

When can Deferred Tax assets and liabilites be netted?

A

ONLY if they are related to the same country/ taxing authority

39
Q

Which tax rate is used under IFRS?

A

Enacted tax rate OR Substantially enacted tax rate

40
Q

Which tax rate is used under GAAP?

A

Enacted tax rate ONLY

41
Q

How are Fixed Assets valued under IFRS?

A

Cost model- asset carried at Cost - Accum Deprec & Impairment Loss, Revaluation Model- asset adjusted to FV - Accum Deprec

42
Q

Under Revaluation Model, how are adjustments in value treated?

A

Increase in value from adjustment reported in current period as OCI, Decrease in value from adjustment treated as expense

43
Q

What criteria must be met for Revaluation Model of valuing Fixed Assets?

A

Asset must be able to be reliably measured, Model must be applied to whole class of assets not just ONE, no guidance on how often assets should be revalued under IFRS

44
Q

How is Investment Property revalued?

A

Fair Value model- property is revalued to FV, Profit or Loss is recorded in current period on IS; Cost Model- carried at (Cost- Accum Deprec), FV must still be disclosed in the notes to the FS

45
Q

How are Intangible Assets recorded under IFRS?

A

Cost model- asset carried at (Cost - Accum Deprec), Revaluation Model- asset adjusted to (FV - Accum Deprec)

46
Q

How is internally generated Goodwill recognized?

A

It is NOT recognized

47
Q

How is an intangible with a finite life amortized?

A

Amortized over its Useful life

48
Q

How is an intangible with a indefinite life amortized?

A

Not amortized, Tested for Impairment at reporting date

49
Q

When is a lease accounted for as a Finance Lease?

A

If substantial risks of ownership have passed to the Lessee

50
Q

What is the Project-unit-credit method related to Defined Benefit pension plans?

A

Calculates the PV of the defined benefit obligation

51
Q

How are significant non-cash transactions recorded on the Statement of Cash Flows?

A

Must be included in the notes to the FS

52
Q

How are Interest Expenses or Finance Costs classifed on Statement of Cash Flows?

A

Can be classified as either Operating or Financing, once classificiation is chosen all future costs must be classified there

FAR (2 decks)

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