Study Unit 4: Financial Statement Disclosure Flashcards
What disclosures on accounting policies are required in financial statements?
Accounting Principles usedBasis of ConsolidationInventory Pricing MethodsDepreciation MethodAmortization of Intangibles
What is the integral view in an Interim Financial Statement?
Interim period is a part of the annual period - GAAPGross profit method may be used to estimate COGS and inventoryTemporary declines in inventory aren’t recognized
How are discontinued operations & extraordinary items reported in Interim Financial Statements?
Aren’t proratedFully recognized in Interim Period as incurredIf it occurs in Q3 - it’s recognized in Q3
How are cumulative gains and losses reported in Interim Financials?
Reported as if they occurred in the first quarter
How is inventory valuation handled in Interim Financials?
If inventory experiences a decline in value during an interim period - the loss is recognized in the interim periodIf the loss is expected to be only temporary - no loss is recognized
What is one of the primary problems with interim reporting?
The matching principle gets messed up - Expenses incurred in one period may benefit future periods
For whom is Segment Reporting required?
Publicly traded companies
What factors cause a segment to be significant and therefore to be reported separately?
Revenue of segment is 10% or more of totalProfit is 10% or more of totalSegment assets are 10% or more of total75% Test - All segment revenues must equal 75% of total external revenues
What is the disclosure requirement regarding sales of 10% or more for one customer?
If 10% or more of enterprise revenue comes from one customer - the segment making the sales must be disclosed
How should a loss of a long-standing lawsuit be disclosed or recognized when the event happened after the balance sheet end date but before issuance of the statements?
Settlement of a lawsuit is indicative of conditions existing at year end and calls for recognition in the statements.
How should subsequent events be disclosed or recognized when the conditions existed AT the balance sheet date?
Subsequent events that provide additional evidence with the respect to conditions that existed at the balance sheet date, including the estimates inherent in preparing the financial statements, must be recognized in the financial statements of the year affected by the subsequent event.
