Sims Flashcards
Loss due to new international law for exports
Extraordinary Gain (both unusual and infrequent)
Impairment loss due to writing down a component to fair value before its sale
Discontinued Operations
Depreciate at 150% declining balance over 25 years.
Current year depreciation
= 150% / 25 years
= 1.5 / 25
= .06
Multiply by Carrying Value (Cost less Accum D)
Salvage Value?
Sum of Years Digits (SYD) over 4 years
Year 1 = 4/4+3+2+1 = 4/10
Year 2 = 3/10
Year 3 = 2/10
Year 4 = 1/10
Salvage Value?
Carrying value of received asset on a like-kind trade
Recognize gain/loss on fair value received compared to carrying value of asset given up.
Basis/carrying value of asset received is then its fair value.
If you will use the table cell to subtract the input value
enter the value with a minus sign
If book value is given
don’t mistake it for Accum D and subtract it to calculate book value
If given, just use it!
Small Stock Dividend
Less than 20-25% of stock outstanding
Accounted for based on fair value of shares issued
Increase # shares issued & outstanding
Credit C/S and APIC (for value of stock)
+ Debit Retained Earnings (same total amount)
= $0 change in total Stockholders Equity
Property Dividend
DOD -
Debit/Credit Accum D (to write up/down to fair value
Credit/Debit gain/loss to recognize gain/loss prior to distribution (like a liquidating distribution, it’s recognized at the actual value given up)
Debit Retained Earnings (now for Fair Value of Property)
Credit Dividends Payable
DOP - Remove asset and payable
Debit Div Payable
Debit Accum Depr
Credit Asset
Large Stock Dividend
Greater than 20-25% of stock outstanding
Accounted for based on PAR value of shares issued
Increase # shares issued & outstanding
Credit C/S (for PAR value of stock)
+ Debit Retained Earnings (same total amount)
= $0 change in total Stockholders Equity
Estimated income tax
Be sure to look for existing Income Tax Expense/Payable and only Dr/Cr for the change to arrive at the total estimated amount
Realization
Process of CONVERTING
NONCASH resources and rights
to CASH or claims to cash
Revenues
INFLOWS or other enhancements of assets or settlements of liabilities
From DELIVERING or producing GOODS,
OR rendering SERVICES or other activities
= (constitute)
the entity’s ongoing OPERATIONS
Earnings
Performance MEASURE
concerned primarily with
CASH-TO-CASH
cycles
Measurement Method of L/T Receivables
PV of FCF
Measurement Method of AFS Securities
Current Market Value
Measurement Method for S/T Payables
Historical Cost
Measurement Method of L/T Payables (Bonds)
PV of FCF
net payable less amort
Accrual
Recognition precedes cash receipt/expenditure:
Payables (liability)
Receivables (asset)
Deferral
Cash receipt/expenditure precedes recognition:
Unearned - cash received, not earned (liability)
Prepaids/Depr - expense “paid”, not incurred
(asset, contra asset)
Economic Resources Measurement/Accrual Basis for
GOV
Proprietary (Enterprise/Internal Service)
Fiduciary (Private Purpose, Pension, Investment,
Agency)
Capitalize and Amortize a Franchise
Intangible Asset/Finite Useful Life
Captalize (initial cost + present value of future installment payments)
Amortize (Capitalized amount s/l by term of useful life)
Adoption of a pension plan
neither an accounting change or an error