Notes to Financial Statements

Question 1

Managements Discussion and Analysis (MD&A)

Answer 1

Required narrative for publicly held firm, discussion about ops, liquidity and capital resources. Not audited

Question 2

Future maturities on a company’s borrowing

Answer 2

must be disclosed for 5 years following BS date

Question 3

Purchasing power gain

Answer 3

paying less money to extinguish debt than inflation would require

Question 4

Purchasing power loss

Answer 4

having the same amount of money at the end of the year as the beginning of the year with inflation

Question 5

Significant Concentrations

Answer 5

when a lot of business is done in one source or with a source

Question 6

Significant Concentrations Criteria

Answer 6

1. Concentration exists at BS date
2. Entity is vulnerable because of the concentration to the risk of severe impact
3. It is reasonably possible (less than probable) that events causing a severe impact will occur in the near term.

Question 7

Subsequent Event

Answer 7

Events that occur after BS date but before statements are issued

Question 8

Recognition of subsequent event is required:

Answer 8

if condition existed at BS date

Question 9

Footnote Disclosure of subsequent event is required:

Answer 9

if condition did NOT exist at BS date

Question 10

Subsequent Event Examples:

Answer 10

issue new debt or securities, business combos, lawsuit or ruling

Question 11

US and IFRS differences in subsequent events

Answer 11

1. US cut off date= when FS are issued or available to be issued, IFRS= when FS are considered authorized for issuance
2. US adjust for share splits. IFRS does NOT
3. Refinancing, amendments and waivers are considered in determining the classification of debt as current or noncurrent. IFRS does NOT

Question 12

Discontinued Operation

Answer 12

1. is a component of the business and has clearly distinguishable cfs
2. Elimination of component is a strategic shift that will have major impact on operating results

Question 13

Strategic Shift

Answer 13

discontinuation of: a major geographic area, line of business, and equity method investment that is important