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CPA FAR > Roger Chapters 6-10 > Flashcards

Roger Chapters 6-10 Flashcards

Inventory, PP&E, Intangibles, Receivables, Bonds

1
Q

What is a bond issue cost?

A

Cost of issuing bond (engraving cost, promotion cost, etc)

Reduce the discount/premium

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2
Q

How are capitalized software costs amortized?

A
  1. Find the larger of straight line vs relative sales value approach
    (RSVA = CV x current period sales/ current period sales + estimated future sales)
  2. Compare CV after amortization to NRV. If CV > NRV, excess is amortization expense
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3
Q

What is factoring with recourse?

A

Client sells receivable but must make good on receivable if customer does not pay as promised

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4
Q

What is a recourse obligation?

A

Protection for transferee against uncollectible accounts

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5
Q

Double declining balance depreciation

A

(CV) x (2)(SL depreciation)

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6
Q

In a period of rising prices, what happens to EI, COGS, net income under FIFO?

A

Highest EI
Lowest COGS
Highest net income

Balance sheet is more accruate, income statement is NOT

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7
Q

What is net realizable value (NRV)?

A

Selling price - disposal costs

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8
Q

What is a callable bond?

A

Bond with the right to redeem before maturity?

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9
Q

What is pledging?

A

Client borrows cash, pledges receivable to lender as collateral

Must be adequately disclosed

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10
Q

What is factor’s holdback (due from factor)?

A

Amt which provides margin of protection against sales discounts, sales returns, allowances, and disputed accounts

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11
Q

How do you recognized exchanges lacking commercial substance? (Like)

A

Recognized ALL losses
Defer all gains unless boot received. If it is received recognize gain x (boot/total consideration)

Record at the LOWER of

  1. FMV given up + cash paid - cash received
  2. FMV asset received
  3. BV given up + cash paid - cash received
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12
Q

How are asset retirement obligaions recognized?

A
  1. Recognized at fair value or PV of estimated future restoration costs
  2. Amortize over the life of the asset using the effective interest method
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13
Q

Depletion equation

A

(Depletion base/Total volume beg of year) x Units extracted

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14
Q

What is a convertible bond?

A

Bond that is convertible to common stock

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15
Q

What is factoring without recourse?

A

Client sells receivable, buyer assumes risk of non-collectibility

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16
Q

How do you reconcile from recorded inventory to physical count inventory?

A

Recorded amount
+ goods held on consignment
+ goods f.o.b. shipping and set aside but included
- goods f.o.b. destination sold in transit
- goods purchased f.o.b. shipping in transit
—————————————————————-
Physical count

17
Q

What is the equation to get COGs form Beginning Inventory?

A 
Beg Inventory
\+ net purchases
---------------------------
Goods available for Sale
- Ending Inventory
-----------------------------
Cost of goods sold
18
Q

How do you find net cash paid by bank when discount? (Equation)

A 
Face value
\+ interest at maturity
----------------------------------
Maturity value
- Discount
------------------------------
Net paid by bank
19
Q

What is a callable bond?

A

Bond that has the right to redem prior to maturity date

20
Q

In a period of rising prices, what happens to ending inventory, net income, and COGS under LIFO?

A

Lowest EI
Highest COGS
Lowest net income

Income statement is more accurate balance sheet is NOT

21
Q

How is inventory measured?

A

Lower of cost or market

22
Q

What happens when boot received is >= 25% of total consideration?

A

The exchange becomes a commercial substance exchange

23
Q

What is a term bond?

A

Bond that pays principal at the end upon maturity

24
Q

What is a debenture bond?

A

Bond not secured by collateral (unsecured)

25
Q

How do you reconcile from physical count inventory to recorded inventory?

A

Physical amount
+ goods purchased f.o.b. shipping in transit
+ goods sold f.o.b destination in transit
- goods f.o.b. shipping set aside but in count
- goods held in consignment
——————————————————————-
Recorded amount

26
Q

How do you find ending inventory at base year dollars? (Dollar value LIFO)

A

Ending inventory/Inflation factor

27
Q

What is a serial bond?

A

Principal matures in installments. Payments include both interest and face amount

28
Q

How do you recognized exchanges with commerical substance? (Unlike)

A

Recognized ALL gains and losses

Record at fair market value. If not go down the list until you have a value you can use.

  1. FMV given up + cash paid - cash received
  2. FMV asset received
  3. BV give up + cash paid - cash received
29
Q

Sum of Years Digits Depreciation

A

(asset - salvage value)
x
(# years left in life/sum of years of life)

Sum of years of life = n(n+1)/2

30
Q

What is a convenant

A

Restriction a borrower` must agree to

31
Q

What is assigning?

A

Client borrows cash, agrees to use proceeds from receivalbe to repay lender

CPA FAR (7 decks)

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