Personal Financial Statements

Question 1

Estimated Income Taxes on Differences between the estimated current Values and Tax Bases

Answer 1

Estimate must be made of the amount of income taxes on the differences between the estimated current values of assets and estimated current amounts of liabilities and their tax bases

Question 2

Statement of Net Assets

Answer 2

• Plan investments are reported at fair value
  
  • Investment income
  • Contributions from employers, segregated between cash and noncash contribution
  • Contributions from participants, including those transmitted by a sponsor
  • Contributions from other identified sources
  • Benefits paid to participants
  • Contributions from other identified sources
  • Benefits paid to participants (decrease the statement)
  • Payments to insurance entities to purchase contracts that are excluded from plan assets (decrease the statement)
  • Administrative expenses (decrease the statement)

Question 3

Employee Benefit Plans and Trusts

Answer 3

• Prepare two financial statements per GAAP:
  ○ Statement of Net Assets available for benefits of the plan as of the end of plan year
  A statement of changes in net assets available for benefits of the plan for the year then ended

Question 4

Liquidation

Answer 4

• Recognize previously unrecognized items that the entity expects to sell
  
  • Assets should be measures at the estimated amounts of cash expected to be collected
  • Costs and income should be recognized when it becomes apparent that liquidation is imminent
  • Liquidation is considered imminent when a plan for liquidation has been approved by a board of directors or other parties with the authority and is only remotely probably that a plan will be blocked or entity will be able to survive liquidation

Question 5

Personal Financial Statements

Answer 5

• If business interests constitute a large part of a person’s total assets, they should be shown separately from other investments
  
  • Estimated current value of an investment in a separate entity should be shown in one amount as an investment
  • Assets and liabilities of the separate entity should not be combined with similar personal assets and liabilities
  • Statement of Financial Condition, and a statement in changes of net worth
  • Primary users of personal financial statements normally consider estimated current value information to be more relevant for their decisions than historical cost