special transactions Flashcards
what criteria for capital lease application?
1 - Transfer of ownership
2 - Bargain purchase option
3 - Lease term is 75% or more of asset life.
4 - Present value of lease payments equals or exceeds 90% of fair value of asset.
what is a “business combination?”
a transaction or event where the acquirer obtains control of 1 or more businesses.
how should a transaction be recorded when there is a transfer of assets that do not qualify as a “sale”?
it is a secured borrowing w/ a pledge of collateral
how do we determine if an operating segment is a reporting segment?
1 - revenue 10+% of all operating segments
2 - profit/loss is 10+%
3 - assets 10+%
what are the stages of software application development and how should they be expensed?
Preliminary project stage (expensed)
Application development stage (capitalized)
Postimplementation-operation stage (expensed)
leasehold improvements are capitalized and amortized over what duration?
lesser of useful life or remaining lease term.
when should a loss contingency be accrued?
when it is likely to occur and can be reasonably estimated.
when should “percentage of completion” method be used?
1 - when the progress towards completion can be measured
2 - when both parties expect to fulfill their obligations
what is a “subsequent event?”
an event happening after balance sheet date, but prior to auditor’s report.
how to expense lease payments when the lease payments are non-level aka not uniform?
average it out and expense on a straight-line basis
how to account for accounting estimate changes in current period?
only change for current period and onward – do not retrospectively edit.
what is the estimated current value of life insurance plan?
cash value (surrender value) - loans against it
