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Becker - Final Review > Shit I keep forgetting > Flashcards

Shit I keep forgetting Flashcards

1
Q

From Accrual to Cash

A

^Cash = ^L + ^E - ^OA

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2
Q

From Cash to Accrual

A

^E = ^A - ^L

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3
Q

IF Converted method for Diluted earnings per share - Usually convertible bonds

A
  1. Multiply bonds the bond by its rate then by (1 minus tax rate)
  2. Multiply number of bonds by amount they are converted into
  3. Add number one to the numerator and 2 to the denominator
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4
Q

Treasury stock method

A
  1. Multiply common stock by market value then divide by average market price.
  2. Add convertible shares then subtract 1* from the number of shares of common stock in the denominator
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5
Q

If there is a time issue with diluted earnings per share

A
  1. Calculate EPS first
  2. Multiply out the DEPS and multiply by month ratio then
  3. Then add to EPS
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6
Q

Remeasurement

A

The foreign subsidiary’s functional currency is the reporting currency of the parent and the subsidiary is dependent on the parent

Balance Sheet: monetary items use current rate and nonmentary use historical

Income Statement: non-balance sheet items use weighted average and balance sheet items like COGS and depreciation use historical rate

Remeasurement gains and losses are reported on the income statement

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7
Q

Translation

A

Subsidiary’s currency is its functional currency and it is independent of its parent

Income statement: weighted average

Balance sheet: assets and liabilities uses current rate, common stock uses historical, and retained earnings is a rollforward

Translation gain or loss is reported in comprehensive income

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8
Q

Monetary and nonmonetary items

A

Monetary: Assets and liabilities denominated in dollars like payables and receivables

Nonmonetary: Shit that fluctuates in value like PP&E, inventory, and stocks

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9
Q

Nonmonetary exchange rules

A
  • If there is gain, but cash is paid then no gain is recognized and new asset is sum of the asset given up plus cash paid
  • If cash is received and there is a loss the record the loss
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10
Q

25% rule

A
  • 1st determine potential gain by comparing BV of asset being given up to its FV(either given or FV of asset received plus cash)
  • Divide cash received by consideration received(cash plus FV of asset received) and see if its greater of less than 25%
  • Either recognize whole gain or portion less than 25%
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11
Q

Average Accumulated Expenditures - Weighted Average

A firm begins construction on January 1 by making a $40,000 construction payment to a contractor. On July 1, another $40,000 payment is made.

A

AAE = $40,000 + $40,000(6/12) = $60,000.

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12
Q

Average Accumulated Expenditures - Simple Average

Assume small discrete payments made throughout the year for $180,000 were paid

A

AAE = Average of beginning & ending costs (0 + 180,000)/2 = 90,000

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13
Q

Interest to be capitalized with weighted average

A
  1. ) Find Average Accumulated Expenditures(AAE)
  2. )Add up all the debt outstanding
  3. )Multiply each debt instrument by interest rate and add up
  4. )Divide sum of interest by sum of debt outstanding & then multiply by AAE
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14
Q

Interest to be capitalized with specific method

A
  1. ) Find Average Accumulated Expenditures(AAE)
  2. )Add up all the debt outstanding not related to construction
  3. )Multiply each debt instrument not related to construction by interest rate and add up
  4. )Divide sum of interest by sum of debt outstanding
  5. )Multiply construction portion by interest rate
  6. )Subtract construction portion from AAE then multiply that number by nonconstruction rate
  7. )Add construction and nonconstruction totals
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15
Q

Asset Impairment

A

If CV of asset is greater than undiscounted future cash flows then you have an impairment; and the impairment is the difference between the CV and the FV

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16
Q

Dollar Value Conversion Index

A

Ending inventory in current year dollars divided by Ending inventory in base year dollars

17
Q

Dollar Value Inventory Steps

A
  1. ) Multiply ending inventory by (1 divided by index)
  2. ) Find the difference between that number at beginning inventory
  3. ) Multiply the difference by the price index
  4. ) Add that to beginning inventory
18
Q

Inventory Margins

A

Sales - Cost = Margin
100 - 80 = 20

Margin on Sales: 20/100 = 20%
Margin on Cost: 20/80 = 25%

19
Q

Accounting for percentage of completion

A
  1. Contract price minus estimated total cost equals gross profit
  2. % of completion is total cost to date divided by total estimated cost of contract
  3. Multiply step 1 by step 2 for gross profit earned
  4. Current year gross profit is profit to date minus previous year profit to date
20
Q

Debt Retirement Journal Entry

A

Dr. Bonds Payable - Face of Bonds Retired
Dr. Premium - Unamortized Portion
Dr. Loss - Plug
Cr. Bond Issue Costs - Unamortized Portion
Cr. Discount - Unamortized Portion
Cr Cash - Market Price
Cr. Gain - Plug

21
Q

How to calculate discounting notes

A
  1. Multiple face value by rate while remembering the date for interest then add that to the face value
  2. Multiply rate by remaining life of the note divided by year
  3. Subtract 2 from 3
22
Q

Inventory Consolidation Table

A

———————Should be—–P—–S—–Eliminations
Sales(dr)
COGS(cr)
Inventory(cr)

23
Q

Depreciable Asset Consolidation Table

A 
-----------------Should be-----What is-----Difference
Equipment
Accum Dep
Depreciation
Gain or R/E
24
Q

Grant Options Journal Entries

A

Expense JE
Dr. Compensation Expense
Cr. APIC - Stock Options

JE to exercise options
Dr. Cash - Stocks * Original APIC
Dr. APIC - Stock options: reversal for expense
Cr. Common Stock - PAR
Cr. APIC
25
Q

Eliminating Entry when P owns 100% of S

A

Dr. Common Stock (of subsidiary)
Dr. Additional Paid-in Cap (of subsidiary)
Dr. Retained Earnings (of subsidiary)
Dr. Identifiable Assets (of subsidiary to FV, as needed)
Dr. Goodwill (if Investment cost > FV of subsidiary’s NA)

Cr. Identifiable Liabilities (of subsidiary to FV, as needed)
Cr. Investment in subsidiary (from parent’s books)

26
Q

Eliminating Entry when P doesn’t down 100% of S

A

Dr. Common Stock (of subsidiary)
Dr. Add’l Paid-in Cap (of subsidiary)
Dr. Retained Earnings (of subsidiary)
Dr. Identifiable Assets (of subsidiary to FV, as needed)
Dr. Goodwill (if Investment value > FV of subsidiary’s NA)

Cr. Identifiable Liabilities (of subsidiary to FV, as needed)
Cr. Investment in subsidiary (from parent’s books)
Cr. Noncontrolling Interest

27
Q

Consolidation after Acquisition

A
  • Balance Sheet: P + S + FV Increment - Intercompany Balances
  • Income Statement: P + S since acquisition - Depreciation of FV Increment
  • Equity: P only
28
Q

Journal Entry to book ARO

A

Dr. Asset Retirement Cost (ARC)
Cr. Asset Retirement Obligation (ARO)

Present value of future cost*Risk free rate

29
Q

How to calculate accretion expense

A

Multiply PV of future cost by the accretion rate

30
Q

Accretion journal entries at end of year

A
  1. Depreciation
    Dr. Depreciation
    Cr. A/D - PV of future cost divided by number of years
  2. ARO journal entry
    Dr. Accretion Expense
    Cr. ARO - calculate accretion expense
31
Q

Intercompany bond rules

A

If parent purchases bond at a premium then R/E decreases but if parent buys at a discount the R/E increases

32
Q

Note about impairment and goodwill

A

Goodwill impairment can never me more than the original impairment

33
Q

Calculating Bonds in between interest dates

A
  1. Multiply face amount by discount or premium
  2. Multiply face by the coupon rate then multiply by number months in between issue date and bond date ratio
  3. Add 1 and 2
34
Q

How to do straight line bonds

A

Divide number of months in question by total months and multiply by the premium or discount

35
Q

Balance Per Bank

A

+ Deposits in Transit
+ Cash on Hand
- Outstanding Checks
+/- Errors

36
Q

Balance Per Books

A 
\+ Interest Earned
\+ Note Collected
- Service Charges
- NSF Checks
\+/- Errors
37
Q

Operating lease note lessee

A

Its calculated using straight line for lessee?

38
Q

Units of production

A

Unit production rate multiplied by units produced

Becker - Final Review (19 decks)

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