Practice 3 Flashcards
When are [extraordinary] gains and losses recognized?
In the period that they occur
Changing from non-GAAP to GAAP is the correction of an error and should be reported in?
Retained Earnings Statement as an adjustment of the opening Balance
Is going from non-GAAP to GAAP an error?
YES
Dividends of Common Stock (under equity method) are
Not reported as revenue, they are recorded as a reduction of the investment account.
How do we report financial condition?
As if all the assets were sold and liabilities were settled as of the date of the statement.
If a bond sells less than part that means Market Rate is?
Higher than the stated rate
R&D Costs include?
Seeking Knowledge, Improving a product/Process, and translating that into an implementation plan.
How is pension expense calculated?
Service Cost + Interest on the PBO – Return on Assets + Prior Service Cost Amortization +/- Amortization Gain/Loss
If you want to maximize profits which inventory cost method would you use? (LIFO/FIFO/AVG).
FIFO (bc it assigns recent costs to COGS)
Under IFRS a subsidiary cannot be excluded from consolidation if:
It reports 1 class of stock on it’s BS
What are the 3 conditions of excluding a subsidiary from consolidation?
a. 1. It’s wholly/partially owned and the other owners don’t object to non-consolidation.
b. It doesn’t have any publicly traded debt/equity instruments
c. Its parent prepares consolidated financials that comply with IFRS
What purpose does reporting comprehensive income serve?
Report a measure of overall enterprise performance.
What are the 3 conditions to disclose the short term obligation as a long term liability?
a. The agreement doesn’t expire within one year
b. There’s no violation of any provision in the financing agreement at the bs date
c. Lender must be financially capable of honoring the agreement
An annuity due describes a cash flow pattern in which?
There’s an inflow/outflow at the INCEPTION of the trx
