My FAR Flashcards
How is interest on debt during construction treated for financial reporting?
Capitalized. Debt in construction is considered avoidable and incurred before the asset reaches its intended condition and location.
How is interest in debt for purchase treated for financial reporting?
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.
What are the 2 approaches available for applying interest rates to average accumulated expenditures for the purpose of capitalizing interest?
Specific method and the weighted average method
How is the recoverable amount calculated under IFRS?
The greater of the Fair Value less cost or sell or the value in use (as known as the discounted cash flows)
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?
Yes to both
U.S. GAAP and IRFS discounting differences…
U.S. GAAP doesn’t allow discounting and IFRS discounting is required in evolution stage
Is reversal of impatient allowed in U.S. GAAP and IFRS?
No reversal permitted in U.S. GAAP. IFRS allows impairment losses to be revered if circumstances change (except for Goodwill)
How to determine impairment loss?
Impairment loss exist when recoverable amount is less than the carrying amount of the asset
Is an annual review of PP&E method and life required for U.S. GAAP or IFRS?
No annual review under U.S. GAAP. Annual review under IFRS
How is depreciation for PP&E different under U.S. GAAP and IFRS?
U.S. GAAP doesn’t allow component depreciation and IFRS does
Can PP&E be reevaluated to fair value under U.S. GAAP or IFRS?
U.S. GAAP - no revaluation IFRS - revaluation (must be applied to the entire class of PP&E)
What is redeemable preferred stock?
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.
What’s the minimum level of voting ownership considered to give an investor significant influence over an invested?
20%
How many levels of influence could an investor have over an investee that are the identifies?
Accounting identifies 3 levels of influence: (1) no significant influence, (2) significant influence but not control and (3) control
