Practice Test Flash Cards
When should warranty costs be recognized?
When the device is sold
What is the impairment test, it has two steps: test for recoverability and then the actual impairment
Recoverability test: test to see if the carrying value is greater than the undiscounted future cash flows. If so, then the amount of impairment is the DIFFERENCE BETWEEN Carrying amount of the asset and its fair value
What is the difference for how unrealized gains and losses are reported for Trading Securitys and Available For Sale Securities
Trading Securities: Reported af Fair value, and Gains/losses are reported in earnings
WHILE AFS is also reported at Fair Value, the Gains and losses go to OCI
What is the equation to find the partial goodwill under IFRS?
Partial Goodwill = Purchase Price - FV of Net Assets acquired
Where are gains or losses recognized from changes in Fair Value of Derivatives/hedgin instruments recognized?
In Net Income
When are revenues recognized for a government
when they are measurable and available
What method must the proprietary funds use when making their statements of cash flows
DIRECT METHOD YOU ASSHAT
If you are changing from LIFO to another inveotry evaluation, you only worry about what amount, beginning of the year, end of the year, or difference between the too? and is it net of tax
you worry about only the beginning of the year amount, as that is the basis of your adjustment, and it is net of tax
Under regulation S-X, an entities interim financial statements would not include what aspect of the usual financial statements
there is no statement of cash flows
IFRS requires Component depreciation, can you tell me what that means
so you have an asset, and included in the cost is th cost of th equipment, the component, and inspection costs.
all three of those are broken out seperately and depreciated
In a consolidation, how much of the subsidiarys stock holders equity section is eliminated
all of it.
Under IFRS, if you have DTA’s and DTL’s do you net them or keep them seperately stated? and then are they reported as current or non current
you net them together and report them as noncurrent
How does a NONGOVERNMENTAL NON PROFIT report donor restricted contributions for long-term prurposes on the statement of cash flows
they report them as financing activities
For a government, you do a reconciliation of the fund financials to the actual government wide financials, where do you find this reconciliation
in the basic financial statements
When is going concern evaluated, like how often?
At each interim and annual financial reporting period.
Are losses from discontinued operations gross, or net of tax? What is included in discontinued operations in terms of valuation
they are net of tax and can include the impairment losses in them as well
If you are given a trial balance, how would you go about finding the ending retained earning amount
Revenue LESS: Expense =Pretax income Less tax = Net income \+Beginning RE =End Retained Earnings
What is form 8-K?
it lists major events that happened, just is written whenever the event occurs.
For a not for profit, what are the program services and support services
program services are those which relate to activities which support the main reason why the NFP is even operating
Support services are everything else, like fundraising and member development
How do you find the issue price of a bond?
You do the face amount times the PV factor of $1 using the market rate and considering how many payment periods and ADD the interest amount paid for one period using the stated rate and apply the PV of an annuity for the right amount of periods and at the market rate.
When you record an ARO, you have expenses arise for both X and Y what are X and Y
for both depreciation expense and accretion expense
If you have a lease and you fix something, say the lights, and then amortize it..over what period do you amortize it?
you amortize it over the period which you are expecting to reap the benefit…as in, if you only have the lease for two more years…you amortize it over two years.
When the fair value of a held to maturity & Available for sale security exceeds their respective amortized costs, how should both the HTM and AFS be valued at the end of the year
HTM is valued at amortized cost
AFS is valued at fair value
What financial statements must be presented for a not for profit
Statement of financial position
Statement of activities
Statement of cash flows
How do you handle vacation pay which vests or accumulates
you accrue it as a current liability
If you enter into a lease with fluctuating lease payments, what do you record as the monthly rent expense
the average monthly payment over the course of the lease
Where are revaluation gains reported?
OCI bitch
What are the entries to record compensation expense for an employee stock option which has not been exercised yet, and when it gets exercised
Before being excersised do a JE by splitting up the FMV of the options over how many years its not being exercised
DR: Compensation Expense
CR: APIC- Stock Options
WHEN EXERCISED: DR: Cash DR: APIC-Stock option CR: Common Stock (at par value) CR: APIC - Common Stock (Plug)
Can you tell me about the special revenue fund like what is it
account for revenues from specific taxes or other earmarked sources that are restricted or committed
Can you tell me about the permanent fund like what is it
legally restricted fund which allows income to be spent, but NOT PRINCIPAL
Can you tell me about the enterprise fund like what is it
set up to account for the acquisition and operation of governmental facilities and services that are intended to be primarily self supported by user charges.
Can you tell me about the capital project fund like what is it
accounts for resources used for the acquisition or construction of major capital assets
Can you tell me about the internal service fund like what is it
accounts for goods and services provided by designated departments on a fee basis to other depts. and agencies
Can you tell me about the custodial fund like what is it
it accounts for resources which are in temporary custody of the governmental unit
How do you find the book value per common share?
Total Value of Common stock / Common Shares outstanding
Total Value of common stock = Total SE section MINUS preferred stock at liquidation value MINUS Dividends in Arrears
How do you calculate dividends in arrears
Its the # of perferred shares issued and outstanding
mulitplied by the preferred %
multiplied by the amount of time
What is the formula for dollar value lifo? How does it work with accumulating
CY / Index = Base –> Layer x Index = Result
So in year 1 you would do this calculation to establish the base and then anything over the base will be added on as a layer. So if the base is 250,000 in Y1, and year two its 265,000…15000 will be mulitplied by the related Index and added to the 250,000 x index base layer`
Under IFRS what is the ‘one step’ method to finding goodwill impairment for a cash generating unit
Impairment of goodwill is = recoverable amount - carrying value
Where the recoverable amount is the greater of the Fair value minus cost to sell OR the PV of future cash flows
What is the entry for writing down a DTA
DR: ITE
CR: Deferred Tax Valuation Account
Under US GAAP Goodwill impairment exists when
the carrying amount of the reporting unit including goodwill exceeds it’s fair value of the reporting unit including goodwill
On the consolidated BS, Parent and Subs Assets and Liabilities are completly consolidated, but do the Subs Assets and liabilities show up anywhere else
yes they show up on the subs financial statements
What are functional and natural expenses as they relate to a NFP? Are these required to be reported?
Functional Expenses are basically Program and Support expenses grouped together, while natural expenses are things like salaries and utilities.
Yes, they have to be reported!
What is the equation/steps for finding the weighted average cogs/method of inventory valuation?
(Cost of beginning inventory + Cost of purchased inventory) / (# of units in beg. + # units purchased) = Per unit cost
take the per unit cost and multiply it by the amount of units sold and thats your answer
How are architect fees and improvements to a building/land handled?
they are capitalized
How are razing of an old building, insurance fees, legal fees handled for a building A new building on land
they are part of the basis of the gilding because they were incurred in order to build the shit in the first place
What is the equation for the double declining method form of depreciation
Cost of the thing x (2/n) x (months/12 in service if less than a year)
How do you handle legal fees when you win? what about when you lose?
legal fees are capitalized when you win and expensed when you lose
If you have an intangible asset, how do you handle amortization period if there are differing estimated life and legal life
take the greater between the estimated life and legal ife
When a stock split occurs, does the amount of equity change? What happens to the par value?
the amount of equity doesnt change, the par value does change tho related to the amount of the newly issued stock
What is the difference between the remeasurement method and the translation method? and where do gains and losses for those go to?
Remeasurement method converts a subs foreign currency to the functional currency and gains or losses go to INCOME STATEMENT
While the translation method converts the subs functional currency to the reporting currency and any gains or losses go to OCI :)
Relating to software development, are costs before economic feaibility expensed or capitalized? What about after technological feasibility?
Anything before feasibility is expensed, any testing or coding after feasibility is capitalized
For govt. reporting there is a comprehensive annual financial report, waht are thetwo main parts of it
it includes data relating to financial trends and pertinant financial data from the last 10 years
When dealing with a NFP, say you have someone wanting to donate/pledge over the course of a period of time). How do you record the amount of pledge received
You do the present value at the date the pledge is given
