Practice 1 Flashcards
When can a non monetary transaction be recorded as a Gain/Loss?
When the transaction has commercial substance.
If there is no election of the Fair Value Option, then…?
Only the Trading Security is reported at FV. And the unrealized gain is reported in earnings of the period.
Under the cost recovery method, when is profit recognized?
When the cumulative receipts (principal + Interest) exceed the cost of the asset.
How do you calculate Cash Flows from operating Activities?
Net Income - Increase in AR + Increase in AP
Statement of Financial Position is required for?
Non-Governmental, not for profit organizations.
What are the two types of Subsequent Events?
- those that relate to the current financial statements but come to light after year end
- those that come to light after year end and relate to the next year’s financial statements.
Which of following subsequent events require accrual?
the 1st situation, but the 2nd only requires disclosure if it’s material.
When is pension liability recognized and where?
On the BS if the projected benefit obligation exceed the fair value of plan assets.
If loss is probable and estimable then:
the amount is recorded as a loss on the income statement and a liability will be reported on the balance sheet.
What deferred accounts are amortized over the life of the bond?
Commissions, engraving and printing, legal, accounting fees, promotion costs. anything similar.
Remeasurement gains and losses not denominated in functional currency must be recognized in?
Income.
Which financial assets & liabilities can be eligible for FV election?
Modification of debt.
Business interests that constitute a large part of a person’s total assets should be shown
separately from other investments. The estimated current value of an investment in a separate entity, such as a closely held corporation, a partnership, or a sole proprietorship, should be shown in one amount as an investment if the entity is marketable as a going concern.
