My Becker Flashcards FAR1-3

Question 1

Depletion Base

Answer 1

Cost - residual value

Question 2

Depletion rate

Answer 2

Depletion base / estimated recoverable units

Question 3

Total depletion

Answer 3

Unit depletion rate X # of units extracted

Question 4

COGS

Answer 4

Beginning inventory
+ purchases
(= COGS AFS)
- ending inventory

= COGS

Question 5

Change in estimate

Answer 5

Prospective

Only adjust current year and Going forward. Not prior

Question 6

Change in accounting principle

Answer 6

Retrospective
Prior period adjustments.

EXCEPT

If the change is TO LIFO or a change in depreciation methods, it is considered a change in estimate(prospective)

Question 7

Correction of error

Answer 7

(Non-GAAP to GAAP)
Prior period adjustment
Adjust RE net of tax

Question 8

Change in entity

Answer 8

Retrospective
(Merger, acquisition, etc).
Adjust years as if 2 companies were always 1

Question 9

Cost model CV

Answer 9

Historical cost - AD - impairment

Question 10

Revaluation model CV

Answer 10

FV@revaluation date - subsequent AD - subsequent impairment

Question 11

Straight line depreciation

Answer 11

Cost - salvage value / estimated useful life
= depreciation

( x fraction of year = annual)

Question 12

Times interest earned

Answer 12

Earnings before interest and taxes / interest expense

Company’s ability to pay off or cover its interest expense with available earnings

If it goes up - it’s favorable

Question 13

Bank recon

Answer 13

Add deposits in transit

Subtract out outstanding checks

Question 14

Books recon

Answer 14

• service charges
  + bank collections
• NSF
  + interest income

Question 15

Cash

Answer 15

DEBIT for increase

CREDIT for decrease

Question 16

AFS debt securities (g/l)

Answer 16

Unrealized gains and losses are included in OCI

Question 17

Trading debt securities (g/l)

Answer 17

Unrealized gains and losses are part of income from continuing operations

Question 18

Accumulate OCI

Answer 18

Component of stockholders equity on the balance sheet

Question 19

Cash basis of accounting

Answer 19

Revenues are recognized when cash is received.

Expenses are recognized when cash is paid.

Question 20

Accrual basis is of accounting

Answer 20

Revenue is recognized when they are earned
Expenses are recognized when the expense occurs

(Generally this is standard of what companies use- complies with GAAP )

Question 21

What is the purpose of reporting comprehensive income ?

Answer 21

To summarize all changes in equity from nonowner sources.

Question 22

Cumulative currency translation adjustments

Answer 22

Are reported in OCI

Question 23

Percentage of completion

Answer 23

1) contract price (yr to ur)
- estimated costs
- gross profit (original)%
2) percentage of completion (yr)
3) gross profit earned to date
- less previously recognized profit
4) profit earned during the year

Question 24

Warranty costs should be recognized when

Answer 24

The machines are sold

Question 25

Reportable segments

Answer 25

Exceeds 10% combined assets of all operating segments

Reports to CEO

Question 26

Impairment loss

Answer 26

FV-CV

Question 27

Holding gains for AFS securities

Answer 27

Are part of OCI

Question 28

Trading debt securities are reported at

Answer 28

FV.
FV in yr1 -FV in yr2= unrealized gain/loss
Included in earnings

Question 29

Equity method of accounting should be used when

Answer 29

The investor is able to exercise significant influence over at the affairs of the investee
-assumed if investor owns 20% or more of investee stock

Question 30

Partial goodwill (IFRS)

Answer 30

Purchase price - FV net assets acquired

Question 31

IFRS deferred tax A;L on balance sheet reports as

Answer 31

Under IFRS, All deferred tax asset DTA and deferred tax liabilities DTL are noted in the net amount is reported as non-current on the balance sheet