My FAR Flashcards

1
Q

How is interest on debt during construction treated for financial reporting?

A

Capitalized. Debt in construction is considered avoidable and incurred before the asset reaches its intended condition and location.

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2
Q

How is interest in debt for purchase treated for financial reporting?

A

Expenses because the interest in the debt incurred when purchasing a plant asset is incurred after the asset has reached its intended condition and location.

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3
Q

What are the 2 approaches available for applying interest rates to average accumulated expenditures for the purpose of capitalizing interest?

A

Specific method and the weighted average method

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4
Q

How is the recoverable amount calculated under IFRS?

A

The greater of the Fair Value less cost or sell or the value in use (as known as the discounted cash flows)

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5
Q

Can restoration of the carrying value of a long lived asset be permitted under IFRS if the assets FV increases subsequent to recording an impairment loss for held or use and held for disposal?

A

Yes to both

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6
Q

U.S. GAAP and IRFS discounting differences…

A

U.S. GAAP doesn’t allow discounting and IFRS discounting is required in evolution stage

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7
Q

Is reversal of impatient allowed in U.S. GAAP and IFRS?

A

No reversal permitted in U.S. GAAP. IFRS allows impairment losses to be revered if circumstances change (except for Goodwill)

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8
Q

How to determine impairment loss?

A

Impairment loss exist when recoverable amount is less than the carrying amount of the asset

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9
Q

Is an annual review of PP&E method and life required for U.S. GAAP or IFRS?

A

No annual review under U.S. GAAP. Annual review under IFRS

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10
Q

How is depreciation for PP&E different under U.S. GAAP and IFRS?

A

U.S. GAAP doesn’t allow component depreciation and IFRS does

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11
Q

Can PP&E be reevaluated to fair value under U.S. GAAP or IFRS?

A
U.S. GAAP - no revaluation 
IFRS - revaluation (must be applied to the entire class of PP&E)
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12
Q

What is redeemable preferred stock?

A

Also known as callable PS may be rea quotes by the issuing corporation under prescribed conditions and is not considered an equity security for investment accounting purposes.

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13
Q

What’s the minimum level of voting ownership considered to give an investor significant influence over an invested?

A

20%

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14
Q

How many levels of influence could an investor have over an investee that are the identifies?

A

Accounting identifies 3 levels of influence: (1) no significant influence, (2) significant influence but not control and (3) control

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