MyFAR Flashcards
How should acquisition cost be accounted for?
Expense all. Registration cost and issuance of c/stk & bonds reduces APIC
What method is NOT allowed by IFRS?
LIFO
What stock splits affects? And treasury stock?
Splits affects shares issued and t. stock affects shares outstanding
Issuance of a note in connection to a purchase contract should record?
Note receivable and prepaid asset for the contract
Major fund reporting applies to internal fund? T or F
False. Does not applies
What CAsset is not included in operating of cash flow?
Change in cash
When are unconditional contributions recorded as revenue?
When received @ FV
When is liquidation imminent?
When approved by Board of D, and is probable that plan would be blocked and Co. wont survive w/o it.
Derivatives are recorded @ ___ and revalue @ ___ on what date?
Recorded @ cost when acquired and @ FV on B/S date
Amount financed w/ principal payments of the financing is part of what cash flow activity?
Financing. Only the down payment to acquire the asset is part of investing.
Comprehensive income should be presented in the FS’s as other financial statements?
True
What forms part of the required supplementary information?
MD&A
Reports acquisition through the use of equity.
Pooling of interest
In which fund is normally recorded the city’s tax revenues?
General fund
Continuing franchise fees (ex. annual fees) from each yr revenues are part of intangible asset cost?
No. Continuing franchise fees are expensed
Uses valuation techniques to determine a discounted present value
Income approach
Primary characteristics of governmental structure are:
(1) The representative form of government and the separation of powers
(2) The federal system of government and the prevalence of intergovernmental revenues
(3) The relationship of taxpayers to services received
Applying LCM by separate items results in:
Lower inventory amount
Under GAAP restoration of impaired PP&E is permitted only if,
Held for disposal NOT for own use
If original lease is classified as capital lease then sublease also capital if it meets:
OW but if it meets NS then classify as operating lease. When original is operating, sub-lease must be also operating.
What amount refers to record and report on bonds?
Record is the face amount and report is the CV of the bond
Cash and its equivalents have no effect on cash flow statements. List some examples.
Examples considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold
GASB has now codified all of its standards in
the Codification of Governmental Accounting and Financial Reporting Standards
Identify four comprehensive bases of accounting other than generally accepted accounting principles
- Cash basis
- Tax (income) basis
- Regulatory basis
- Contractual basis
Major funds considers 10% of all gvt funds and enterprise separately and 5% of both combined funds
True
How should taxes levied be considered in gvt funds?
All taxes, even those levied for a specific purpose, are general revenues
Budgetary comparisons may be included in
Basic FS or RSI
How would a municipality that uses modified accrual and encumbrance accounting record the transaction of property taxes collected in advance?
A deferred revenue account (a liability like Unearned revenue) is credited (with corresponding debit to cash)
Gvt-wide reconciliation, gvt activities (B/S) subtracts_____ and in gvt changes in revenue substracts ___
Noncurrent liabilities and other financing sources (selling capital)
An organization is most likely to be considered a government if
It has the power to enact and enforce a tax levy
When referring to dif. in taxes, are permanent dif. needed to be disclosed?
No. They may be disclosed but not needed to.
The statement of changes in fiduciary net position is not required for
agency funds
The machinery when acquired is recorded at the
cash equivalent price of the machinery
In the government-wide financial statements, what is the correct revenue classification of fines and forfeitures?
Charges for services
When method changes from control to no control use what %?
Corresponding % to corresponding period. Use new method with corresponding %.
Noninterest Bearing Note
A noninterest-bearing note includes the interest in the face amount of the note as a single amount to be paid back at maturity. It is a discounted (present value) note
Classifications of gvt funds?
NU CAR. For business type RUN
An increase in the cash surrender value of a life insurance policy owned by a company would be recorded by:
decreasing annual insurance expense
Not-Profit recognition of contribution for:
1) cash contribution
2) unconditional promise
3) conditional promise
1) Revenue when received
2) Revenue when pledge
3) Revenue when earned
sole proprietorship
is a business form of one person conducting business as an individual. It is not a legal, taxable entity separate from the owner. The owner is personally liable for the debts of the proprietorship.
Current liabilities also include long-term obligations that are or will be callable by the creditor because
the debtor has violated a covenant in the debt agreement
When AFS securities are sold, record realized G/L by and
reverse unrealized G/L included in OCI
Royalties received should be reported as revenue
when earned. It will depend on the % of sales per year so cant estimated future sales
Property dividends considers gain or loss on declaration
to determine the effect in R/E’s
If appropiations is greater than expenditures at the end of the year
a balance in general fund will remain as unassigned balance
Under modified approach, infrastructure are reported as expenditures except for outlays that result in additional improvements
for outlays that result in additional improvements which are capitalized
Stk dividend reduces (debit) R/E by
FMV if lower than 25% and Par value if higher than 25%
For a museum both education and research can be considered
its primary mission considered program expenses
LCM results higher if by items or total inventory
results higher inventory if applied to total inventory instead of by item
perpetual will produce higher inventory than
periodic under the LIFO. FIFO is the same for periodic or perpetual
All distributions of dividends reduces R/E’s except
liquidating dividends which decreases APIC
Joint ventures are accounted
under the equity method
An exception to the rule to recognize loss on a lease-back is
if the sales price is artificially too low and the asset is actually worth more than its selling price and more than its carrying value, the loss is then deferred instead of recognized immediately.
Examples of permanent differences
(municipal bonds)/dividend received/life insurance/fines & penalties/ 50 M&E
Temporary differences
DTL: depreciation, investments, accrual sale, prepaid exp, goodwill
DTA: warranty, rent royal, bad debt exp., contingent liability
capitalized cost of a machine would include
all costs of acquiring, transporting, installing, and testing of the machine for its intended use, up to the time the machine was placed in use
Dividends in arrears are not an accrued liability until actually declared. Thus, the reporting of dividends in arrears is achieved through
disclosure either on the face of the balance sheet or in the notes.
Any goodwill accounted for under the equity method is
Not amortized nor ignored. The entire investment is subject to impairment test
Example of financial instrument issue as a liability at date of issuance
stock that contains and unconditional redemption feature
Expenditures of governmental resources should be classified as which type of element
object element
Note payments that does not exceed 1 yr should be reported at
face amount. only long term notes should be reported at present value amount
prior service cost includes pension expense in the year of the plan amendment and
future years of service
accretion expense for the year related to the asset retirement obligation
Changes in the value of a liability for an asset retirement obligation measured by applying an interest method of allocation using a credit-adjusted, risk-free interest rate.
SEC Regulation S-X provides guidance regarding
contains information regarding the financial statements that must be submitted to the SEC
Difference b/w GAAP and IFRS BS?
PPE may be present first
Public institutions that report as special-purpose governments either engaged only in governmental activities or engaged in both governmental and business-type should report infrastructure
using the provisions include the reporting of capital assets
acceptable framework for the presentation of financial statements
Reporting on cash basis but capitalizing fixed assets and recording depreciation. Ignoring accrued income and expenses. Measuring inflation and reporting it on the financial statements
expenditure rules will not apply to
the principal or to the interest on debt as specified by the GASB
The effective tax rate would be the
total tax due divided by the total taxable income earned
If determining the actual historical cost of general infrastructure assets is not practical because of inadequate records
special-purpose governments should report the estimated historical cost for major general infrastructure assets. are capitalized and depreciated unless can keep its value same as if it was just acquired and are assessment of condition review every 3 yrs
The intent of balanced budget laws is to achieve
interperiod equity. transfers among funds should always be equal, however, equality of transfers in and out has no bearing on the extent to which interperiod equity is achieved
Sinking funds are increased by
revenues earned and by additional investment. not decreased by any investment purchase
Membership development activities are separate from fundraising activities when members receive significant benefits. Fundraising activities includes
maintaining donor lists, conducting special fundraising events, preparing and distributing fundraising manuals
Because the focus of fund financial reporting is on major funds, nonmajor funds should be
aggregated and do not need to be shown individually
In governmental accounting, object of expenditure refers to
“the type of items purchased or services obtained”.Governments pay salaries and wages in order to acquire “personal services.”
interfund activity, (3 dif ways)
b/w GRASSP+I are eliminated, b/w GRASSP+I and E are treated as other financing sources and revenues, b/w primary gvt and fiduciaries are treated as w/ external source
IFRS partial goodwill =
Goodwill * Controlling interest
Total stockholders’ equity accounts on the consolidated balance sheet equals
total stockholders’ equity of the parent plus the noncontrolling interest. NCI is presented in the equity section of the B/S. When 100% show parent only
Purchase of CStk and bonds payable is part of what section of the CFlow?
Investing activity
assets and liabilities arising from reverse repurchase and fixed coupon reverse repurchase agreements should
not be netted on the balance sheet
Voluntary health and welfare entities are required to prepare a statement of functional expenses using
natural classification of expenses (salaries, supplies, utilities, etc.) in addition to the statement of activities which shows functional categories
The noncurrent portion of capital leases financed by the general government reported as general long-term liability should be reported in
the governmental activities column in the government-wide statement of net position
Fixed assets donated to a governmental unit should be recorded
at estimated fair value when received
The portion reported in the government-wide financial statements as governmental activities is a general long-term liability. The governmental funds, using the modified accrual method, report only
the portion of the liability expected to be claimed by employees in the current year and first 60 days of the new fiscal year
a not-for-profit entity such as Maple Church may pool its investments, including those from contributions with different kinds of restrictions
Investment income and realized and recognized, unrealized gains and losses are later assigned based on the underlying facts and circumstances, board policy, donor requirements, and relevant legislation
The items listed (promotion costs, engraving and printing, and underwriters’ commissions) would all qualify as
bond issuance costs
