Other Financial Statement Presentations

Question 1

Other comprehensive bases of accounting (OCBOA)

Answer 1

Non-GAAP presentations that have widespread understanding and support

Question 2

What does OCBOA include?

Answer 2

1. Cash basis
2. Tax basis
3. A definite set of criteria have substantial support
4. Regulatory basis

Question 3

What are the general OCBOA guidelines?

Answer 3

1. FS titles should differentiate the OCBOA FS from accrual basis
2. Required FS are equivalents to accrual basis BS and IS
3. FS should explain changes in equity accounts
4. Statement of CF not required
5. Disclosures similar to GAAP disclosures

Question 4

Cash basis

Answer 4

Revenues are recognized when cash is received and expenses recognized when cash is paid

Question 5

Cash basis presentation

Answer 5

1. Statement of cash and equity

2. Statement of cash receipt/disbursements

Question 6

Modified cash basis

Answer 6

Hybrid method that includes elements of both cash and accrual bases

Question 7

What are common modification in modified cash basis?

Answer 7

1. Capitalizing and depreciating fixed assets
2. Accrual of income taxes
3. Recording liabilities for LT and ST borrowings and related interest expense
4. Capitalizing inventory
5. Reporting investments at FV and recognizing unrealized gains/losses

Question 8

Under income tax basis of accounting, how are nontaxable revenues and expenses reported as?

Answer 8

1. Separate line items in the revenue/expense sections of statement of revenues and expenses
2. Additions and deductions to NI
3. Disclosure in a note

Question 9

Personal financial statements

Answer 9

FS of individuals or groups of related individuals (families) and are generally prepared to organize and plan financial affairs

Question 10

Personal FS presentation

Answer 10

1. Statement of financial conditions (Balance sheet)
2. Statement of changes in net worth
3. Disclosure

Question 11

How are assets reported in the Statement of Financial Conditions?

Answer 11

Reported at estimated current FV

• Life insurance loans payable are netted against cash surrender value of life insurance
• Business interest that constitutes a large part of total assets should be presented as single amount at estimated current value separately from other investments
• Vested pension plan benefits are reported at FV

Question 12

How are liabilities reported in the Statement of Financial Conditions?

Answer 12

Reported at estimated current amount

- Deferred tax liability reported for estimated taxes due

Question 13

Net worth at FV

Answer 13

Net worth = Assets - Liabilities

Question 14

How are the assets and liabilities presented in the statement of Financial Conditions?

Answer 14

In order of liquidity and maturity, with no current or noncurrent classifications

Question 15

How are income tax basis FS different from those prepared under GAAP?

Answer 15

Income tax basis FS recognize events when taxable income/deductible expenses are recognized on the entity’s tax return (recognizes certain revenues/expenses in different reporting periods)

Question 16

On personal statement of financial conditions, how are estimated income taxes calculated?

Answer 16

Equals the difference between fair values and tax bases of assets and liabilities

Question 17

How should a business interest that constitutes a large part of individual’s total assets be presented in a personal statement of financial condition?

Answer 17

As a single amount equal to the estimated current value of the business interest