Star'd Flashcards
ENHANCING qualitative characteristics:
-Comparability
(company-company)
*consistency = period-period
-Verifiability
(faithfully rep’d)
-Understandability
(concise)
-Timeliness
SFAC 5:
recognition and measurement of FS
fundamental assumptions and principles:
- entity = separate corp/division
- GC = entity will continue to operate in future
- monetary unit = measure economic activity
- periodicity = economic activity can be divided into meaningful time periods
5 elements of PV measurement:
- Est FCF
- Expectations about timing variations of FCF
- TVM (risk-free rate of interest)
- Price for bearing uncertainty (Cr risk)
- Other factors (liquidity issues + mkt imperfection)
COPAS price allocation:
- if client can use machine without the other obligation, there will be 2 obligations
- if client buys 2 obligations from 2 different competitors, they are 2 separate obligations (even if they need each other to perform)
satisfied over time:
[examples]:
- annual services
- output method = newspapers produced/delivered
- input method = CPA firm hours put into job
satisfied at point in time:
[department store example]:
- control generally requires:
- right to pmt to pay for asset
- legal title to asset
- physical possession of asset
- customer accepted the asset
Rev Recognition; Principal vs Agent:
Principal = gross rev Agent = net rev
repurch agreements:
is a borrowing (gave collateral), not a sale
bill-and-hold arrangements:
GR: not a sale (buyers request)
consignment:
not a sale
warranties:
treated as separate performance obligations if:
- warranty is not req’d by law
- coverage period is lengthy and
-no specific tasks required regarding compliance assurance
sale with ROR:
when expected to receive, a refund liability and asset related to subsequent product recovery is recorded
% completion method (contracts):
cost incurred:
Dr CIP
Cr Cash
billings:
Dr A/R
Cr Progress Billings
Pmt’s received:
Dr Cash
Cr A/R
est’d GP:
Dr cost of LT contract
Dr CIP
Cr Revenue from LT contract
construction completed:
Dr Progress Billings
Cr CIP
calculation for current GP for % completion method: [MEMORIZE THIS]
Step 1 [total GP]:
Contract Price
- total est and actual cost
= GP
Step 2 [%completed]:
Cost to date/total est cost = %
Step 3 [GP earned to date]:
GP* % completed
Step 4 [current GP]:
GP earned to date
(-) GP earned PY
= current GP
1st IFRS FS’s must present:
3 BS, 2 all others (and related notes)
disclosure of risks and uncertainties (GAAP):
- nature of op’s (usually 1st note)
- description of entity’s major P/S and its principal market including locations
- use of estimates
- certain significant estimates
- current vuln due to certain concentrations:
- vuln due to conc’s arising when entity is exposed to ROL that could be mitigated thru diversification
- disclosure req’s:
- *conc exists at FS date
- *conc makes entity vuln to near-term impact
- *reas poss that events could cause severe impact in near term