Roger Chapters 6-10 Flashcards
Inventory, PP&E, Intangibles, Receivables, Bonds
What is a bond issue cost?
Cost of issuing bond (engraving cost, promotion cost, etc)
Reduce the discount/premium
How are capitalized software costs amortized?
- Find the larger of straight line vs relative sales value approach
(RSVA = CV x current period sales/ current period sales + estimated future sales) - Compare CV after amortization to NRV. If CV > NRV, excess is amortization expense
What is factoring with recourse?
Client sells receivable but must make good on receivable if customer does not pay as promised
What is a recourse obligation?
Protection for transferee against uncollectible accounts
Double declining balance depreciation
(CV) x (2)(SL depreciation)
In a period of rising prices, what happens to EI, COGS, net income under FIFO?
Highest EI
Lowest COGS
Highest net income
Balance sheet is more accruate, income statement is NOT
What is net realizable value (NRV)?
Selling price - disposal costs
What is a callable bond?
Bond with the right to redeem before maturity?
What is pledging?
Client borrows cash, pledges receivable to lender as collateral
Must be adequately disclosed
What is factor’s holdback (due from factor)?
Amt which provides margin of protection against sales discounts, sales returns, allowances, and disputed accounts
How do you recognized exchanges lacking commercial substance? (Like)
Recognized ALL losses
Defer all gains unless boot received. If it is received recognize gain x (boot/total consideration)
Record at the LOWER of
- FMV given up + cash paid - cash received
- FMV asset received
- BV given up + cash paid - cash received
How are asset retirement obligaions recognized?
- Recognized at fair value or PV of estimated future restoration costs
- Amortize over the life of the asset using the effective interest method
Depletion equation
(Depletion base/Total volume beg of year) x Units extracted
What is a convertible bond?
Bond that is convertible to common stock
What is factoring without recourse?
Client sells receivable, buyer assumes risk of non-collectibility
How do you reconcile from recorded inventory to physical count inventory?
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
What is the equation to get COGs form Beginning Inventory?
Beg Inventory \+ net purchases --------------------------- Goods available for Sale - Ending Inventory ----------------------------- Cost of goods sold
How do you find net cash paid by bank when discount? (Equation)
Face value \+ interest at maturity ---------------------------------- Maturity value - Discount ------------------------------ Net paid by bank
What is a callable bond?
Bond that has the right to redem prior to maturity date
In a period of rising prices, what happens to ending inventory, net income, and COGS under LIFO?
Lowest EI
Highest COGS
Lowest net income
Income statement is more accurate balance sheet is NOT
How is inventory measured?
Lower of cost or market
What happens when boot received is >= 25% of total consideration?
The exchange becomes a commercial substance exchange
What is a term bond?
Bond that pays principal at the end upon maturity
What is a debenture bond?
Bond not secured by collateral (unsecured)
How do you reconcile from physical count inventory to recorded inventory?
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
How do you find ending inventory at base year dollars? (Dollar value LIFO)
Ending inventory/Inflation factor
What is a serial bond?
Principal matures in installments. Payments include both interest and face amount
How do you recognized exchanges with commerical substance? (Unlike)
Recognized ALL gains and losses
Record at fair market value. If not go down the list until you have a value you can use.
- FMV given up + cash paid - cash received
- FMV asset received
- BV give up + cash paid - cash received
Sum of Years Digits Depreciation
(asset - salvage value)
x
(# years left in life/sum of years of life)
Sum of years of life = n(n+1)/2
What is a convenant
Restriction a borrower` must agree to
What is assigning?
Client borrows cash, agrees to use proceeds from receivalbe to repay lender
