Random FAR

Question 1

Basic ESP

FAR 7

Answer 1

(Net Income - Preferred dividend)/ weighted average common shares outstanding

Question 2

Diluted EPS

FAR 7

Answer 2

(Net Income + interest on dilute securities)/weighted average common shares outstanding (including all debt securities converted)

Question 3

Cash flow per shares

Answer 3

Not included in Financial Statement

Question 4

FIFO

effect to inventory

Answer 4

Create highest ending inventory, lowest COGS, highest NI

Question 5

Research and Development Cost

Answer 5

1. Development or improvement of process & techniques

Question 6

Trading Securities

Answer 6

Unrealized gain/loss reported in I/S

report at fair value

Question 7

Available for sale

Answer 7

Unrealized gain/loss reported in OCI

report at fair value

Question 8

Held to maturity

Answer 8

Report at amortize cost

Question 9

Compensation expense is immediately recognized

Answer 9

When options are for prior service

Question 10

Factor Receivable with recourse

Answer 10

The right remain with the seller

Question 11

Factor receivable without recourse

Answer 11

The right transferred to the buyer

Question 12

Temporary Differences of Deferred tax results…

Answer 12

Result in deferred tax liability in the current year

deferred tax liability = (temporary difference x future tax rate)

Question 13

Income Tax Expense

Answer 13

Taxable Income x current enacted tax rate

Question 14

Impairment Loss

Answer 14

1. Revaluation permitted by IFRS

2. Revaluation prohibited by GAAP

Question 15

LIFO

Answer 15

1. permitted by GAAP

2. prohibited by IFRS

Question 16

Treasury Stock

Cost Method

Answer 16

Buy Back (report at cost)
DR Treasury Stock (at cost)
CR Cash

Calculate Gain/loss at reissue cost
Gain is credited APIC - Treasury Stock
DR Cash
CR T/S
CR APIC - T/S

Loss - first apply to APIC - T/S to offset gain, then RE

DR Cash
DR APIC - T/S (eliminate previous gain)
DR RE (excess loss not covered by APIC- T/S)
CR T/S

Question 17

Treasury Stock

Par Method

Answer 17

Gain/Loss Caculate at buy back
DR T/S (at Par)
DR APIC - C/S (ORIGINAL amount excess of par (e.g. 10 par sold for $15 excess $5)
DR APIC - T/S Loss
DR RE Loss (If APIC - T/S doesn't exist)
CR Cash 

Reissue
DR Cash
CR T/S (par)
CR APIC - C/S

Question 18

Interim Reporting Emphasis which enhanced qualitative characteristics

Answer 18

Timeliness

Question 19

Interim Reporting

Answer 19

is seen as an integral part of annual period

Question 20

Interim Reporting

‘The effective tax rate’

Answer 20

Effective tax rate to be applicable to the whole year as estimated at the end of the reporting quarter

Question 21

Reporting Loss in Interim Period

Answer 21

Loss that is estimable and probable is recorded in that pperiod

Question 22

Interim Reporting

Treatment of Temporary and Permanent decreases in market value

Answer 22

Temporary decrease that is expected to reverse is not recorded
Permanent decrease is recorded in the period it occurs

Question 23

Income Tax Expense Formula

Interim Reporting

Answer 23

(Year to date income before taxes x current effective tax rate) - previous quarter income tax expense

Question 24

IFRS F/S

Answer 24

1. Statement of Financial Position
2. Statement of Cash flow
3. Statement of Comprehensive Income,
4. Statement of equity
5. Note

Question 25

Under IFRS, a provision is..

Answer 25

An event that is probable and measurable

Question 26

For translation, statement of cash flow uses what rate?

Answer 26

Historical and weighted average rate

Question 27

Characteristics of Convertible Debt

Answer 27

1. No value is assigned to the conversion feature

Question 28

Foreign Exchange

‘Direct Quotation’

Answer 28

Express in U.S Dollar