My Becker Flashcards FAR1-3
Depletion Base
Cost - residual value
Depletion rate
Depletion base / estimated recoverable units
Total depletion
Unit depletion rate X # of units extracted
COGS
Beginning inventory
+ purchases
(= COGS AFS)
- ending inventory
= COGS
Change in estimate
Prospective
Only adjust current year and Going forward. Not prior
Change in accounting principle
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)
Correction of error
(Non-GAAP to GAAP)
Prior period adjustment
Adjust RE net of tax
Change in entity
Retrospective
(Merger, acquisition, etc).
Adjust years as if 2 companies were always 1
Cost model CV
Historical cost - AD - impairment
Revaluation model CV
FV@revaluation date - subsequent AD - subsequent impairment
Straight line depreciation
Cost - salvage value / estimated useful life
= depreciation
( x fraction of year = annual)
Times interest earned
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
Bank recon
Add deposits in transit
Subtract out outstanding checks
Books recon
- service charges
+ bank collections - NSF
+ interest income
Cash
DEBIT for increase
CREDIT for decrease
AFS debt securities (g/l)
Unrealized gains and losses are included in OCI
Trading debt securities (g/l)
Unrealized gains and losses are part of income from continuing operations
Accumulate OCI
Component of stockholders equity on the balance sheet
Cash basis of accounting
Revenues are recognized when cash is received.
Expenses are recognized when cash is paid.
Accrual basis is of accounting
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 )
What is the purpose of reporting comprehensive income ?
To summarize all changes in equity from nonowner sources.
Cumulative currency translation adjustments
Are reported in OCI
Percentage of completion
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
Warranty costs should be recognized when
The machines are sold
Reportable segments
Exceeds 10% combined assets of all operating segments
Reports to CEO
Impairment loss
FV-CV
Holding gains for AFS securities
Are part of OCI
Trading debt securities are reported at
FV.
FV in yr1 -FV in yr2= unrealized gain/loss
Included in earnings
Equity method of accounting should be used when
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
Partial goodwill (IFRS)
Purchase price - FV net assets acquired
IFRS deferred tax A;L on balance sheet reports as
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
