Timing Issues Flashcards
What are the four criterias that must be met for each element of the contract before any revenue can be recognized?
Persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collection is reasonably assured
What are the revenue recognition rules for sale of goods under IFRS?
Measured reliably, economic benefits, risk and rewards, and not retain managerial involvement
What method is used to recognize rendering of services under IFRS?
Percentage of completion method
What are the conditions for revenue recognition for rendering services under IFRS?
Measured reliably, economic benefits, and stage of completion
What are the conditions for revenue recognition for revenue from interest, royalties, and dividends under IFRS?
Measured reliably and economic benefits
What are the conditions in revenue recognition for construction contracts under IFRS?
Measured reliably, economic benefits, and stage of contractt measured reliably
What is reported when cash is received before earned?
Deferred credit
What principle states that expenses should be recognized?
Matching principle
What occurs when the entity obtains cash or the right to receive cash or has converted a noncash resource into cash?
Realization
What is the actual recording of transactions and events in the financial statements?
Recognition
What type of accounting is required by GAAP and is the process of employing the revenue recognition rule and the matching principle to the recognition of revenues and expenses?
Accrual accounting
What are the 3 different types of expired costs?
Insurance expense, costs of goods sold are directly allocated to the periods in which the sales take place, and period costs
What financial statement does unexpired costs appear on?
Balance sheet
What section is deferred credits located in on the balance sheet?
Liability
When is royalty revenue recognized?
When earned
What is net method calculation for royalty income?
Royalty collections + reduction in unearned royalties - reduction in royalties receivable = royalty revenue
What is revenue received in advance recorded as?
Liability
When should continuing franchise fees be reported?
When earned
What conditions have been met for “substantial performance”?
Franchisor has no obligation to refund any payment, initial services have been performed, and all other conditions have been met
What are a few examples of intangible assets?
Patents, copyrights, franchises, trademarks, and goodwill
Is research costs related to an intangible asset expensed under IFRS?
Yes
What life is the patent amortized by?
Shorter of estimated life or remaining legal life
What amortization method is used for intangible assets?
Straight-line method
Is Good will amortized? If not, what approach is used?
No, impairment approach is used
What models can intangible assets be reported under with IFRS?
Cost and revaluation
What method is used when intangible assets are reported at cost adjusted for amortization and impairment?
Cost model
What model is used for intangible assets are initially recognized at cost and then revaluated to fair value at a subsequent revaluation date?
Revaluation model
Where is revaluation losses reported?
Income statement unless revaluation gains were previously reported in Other Comprehensive Income
Where is revaluation gains reported?
Other Comprehensive Income unless revaluation loss was previously reported on income statement
Where is impairment reported in the revaluation method?
First to revaluation surplus to zero then income statement
Are start-up costs expenses?
Yes
Are organizational expenses capitalized?
No
What method is calculated as goodwill is the excess of an acquired enity’s fair value over the fair value of the entity’s net assets?
Acquisition method
Annual amortization of capitalized sofware costs is the greater of?
Percentage of revenue and straight line
What basis of amortization should be used when capitalizing costs for computer software developed internally for internal use only?
Straight-line method
What are 2 steps when testing a fixed asset or an intangible asset with a finite life for impairment?
Determining the impairment(use undiscounted future net cash flows) and amount of impairment(use fair value(discounted cash flow))