Standard Setting, Income Statement, and Reporting Requirements Flashcards
What is the single most authoritative nongovermental source of US GAAP?
FASB Accounting Standards Codification
What is the purpose of the International Accounting Standards Board (IASB)? What have the IASB and FASB been working towards?
To develop a single set of high-quality, global accounting standards. Convergence.
What is the FASB’ conceptual framework called?
Statements of Financial Accounting Concepts (SFAC)
What is the purpose of general financial reporting?
To provide financial information to the primary users. (investors, lenders, and other creditors)
What are the fundamental qualitative characteristics of useful financial information?
Relevance and Faithful Representation.
“Relevant that they stay faithful”
What are the characteristics of Relevance? Fundamental or Enhancing?
Predictive value, confirming value, and materiality
“Passing Confirms Money”
Fundamental
What are the characteristics of Faithful representation?
Fundamental or Enhancing?
Completeness, neutrality, freedom from error.
“Completely neutral is free from error”
Fundamental
What are the enhancing qualitative characteristics of useful financial information?
Comparibility/consistency, verifiability, timeliness, understandability
“Compare & Verify in time to understand”
What is considered a full set of financial statements?
Statement of Financial Position (Balance Sheet), Statement of Earnings (Income Statement), Statement of Comprehensive Income, Statement of Cash Flows, and Statement of Changes in Owners’ Equity
When should Revenue be recognized?
When it is earned and when it is realized or realizable.
IASB only two fundamental assumptions?
Accrual basis and Going Concern
What is Comprehensive Income?
CI includes all differences between beginning equity and ending equity other than transactions with owners (ie NI plus other comprehensive income)
Five element of Present Value Measurement
Est. of Cash Flow
Expectations about timing variations of future cash flows
Time value of money (risk-free rate of interest)-gma rate
Price for bearing uncertainty- not gma
Other Factors
Presentation of major components of Income
Income (loss) from Cont. Ops (gross then net)
Income (loss) from Disc. Ops (net)
Extraordinary items (net)
Cumulative effect of change in Acct’ Principles (net- R/E stmnt)
IDEA
True or False: Under IFRS, Extraordinary items exist under income.
False. IFRS does not recognize Extraordinary Loss.
List the types of accounting changes and how they are accounted for.
- Change in Acct Estimate (prospective) *A change in Acct Princ that is inseperable from a change in Acct Est. is handled prospectively
- Change in Acct Principle (retrospective-net of tax against Beg. RE)
- Change in Acct Entity (retrospective)
- Error Correction (Prior period adjustment)
- Change in Depreciation Method (prospective)
What comprises comprehensive income?
PUFER Pension Adjustments Unrealized gains and losses (avail for sale securities) Foreign Currency items Effective portion cash flow hedges Revaluation surplus (IFRS only)
In order for a segment to be reportable, it must meet what criteria?
10% “Size” test. Revenue is 10% or more of combined revenue of all operating segments. Or If absoulte amount (profit or loss) is 10% or more of all profitable reporting segments.
What is the developmental stage?
Principal ops have not yet commenced or have generated an insignificant amount of revenue (or loss).
First-time adopters of IFRS must present:
at least 3 balance sheet dates, and two of each other statement.
Filing deadlines: 10K, 10Q
10K = 60 days after YE for large accelerated, 75 for accel, 90 for all others 10Q= 40 days for large accel, 45 for all others
