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FAR > F2 M2,m3,m4 > Flashcards

F2 M2,m3,m4 Flashcards

1
Q

US has a standardized definition for Fair Value and outlined fair value disclosures for all areas that require or permit far value measurements except

A

share based compensation, fair value measurements used for lease classification

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2
Q

Fair value is a market based measure T or F

A

T Fair value is a market based measure and not an entity based measure

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3
Q

Fair value is measured in non principla market T or F

A

False fair value is measured in principal market, or the MOST advantageous marke in the ABSENCE of a principal market

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4
Q

An exit price is a fair value T or F

A

T Fair value is an EXIT price, the price to SELL an asset or transfer a liability. It is also not an entrance price (which is the price to acquire an asset or assume a liability)

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5
Q

Entrance price is to acquire as exit price is to

A

Sell

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6
Q

Fair value INCLUDES transaction costs T or F

A

F; Fair value does not include transaction costs, but MAY include transportation cost if the location is an attribute f the asset or liability

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7
Q

The fair value of a non financial asset assumes the HIGHEST and best use of the asset T or F

A

T; PP&E is used to calculate the highest and best use that is most advantageous and considers the market

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8
Q

And orderly transaction cannont be a forced transaction T or False

A

T an orderly transaction is one in which the asset or liability is exposed to the market for a period before the measurement date, long enough to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities.

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9
Q

The most advantageous market is no principal market

A

The best price for the asset is the price net transaction cost having the most advantageous result

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10
Q

Defined principal market

A

Principal market is the market with the greatest volume or level of activity for the asset or liability

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11
Q

T or F; if there is a principal market for an asset or liability the price in that market will be the FAIR VALUE MEASUREMENT

A

T the price in that market will be the fair value measurement even if there is a more advantageous price in a different market.

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12
Q

Stocks and BONDs highest and best value applies when measuring the fair value of financial assets T or F

A

False highest and best value DOES NOT apply when measuring the fair value of financial assets

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13
Q

Level 1 inputs key words are

A

active markets and identical assets or liabilities; quoted prices most reliable measures

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14
Q

Level 2 inputs key words are

A

quoted prices for markets not active ;identical and similar assets or liabilities in active markets

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15
Q

Level 2 inputs have the highest priority T or F

A

F Level 1 inputs have the highest priority and Level 3 inputs have the lowest

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16
Q

What LEVEL inputs are observable inputs

A

Level 1 and Level 2

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17
Q

What Level input is unobservable

A

Level 3; using future cash flows is an estimate which is why its not observable

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18
Q

What is the overall objective of fair value disclosures

A

provide users of financial statements with information about assets and liabilities measured at fair value including; what valuation techniques and what inputs the company is using; estimates and assumptions

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19
Q

Disclosures an entity must provide

A

Estimates (a.k.a unobservable inputs)-discount rate/FCF); sensitivity of Level 3 measurement used (FCF)/(1+r)=PV

20
Q

The fair value loss goes on the income statement T or F

A

True

21
Q

Stock is a financial asset T or F

A

T

22
Q

No principal market means you need to select the most advantageous fair value price T or F

A

T

23
Q

An entity is require to disclose what information about their segment

A

profit or loss, segment assets, but is NOT required to report segment cash flow

24
Q

What is an operating segment

A

It is a component of an entity; and the segments operating results should be regularly reviewed and have traceable cash flows

25
Q

What components are NOT operating segments

A

Corporate Headquarters and pension plans

26
Q

10% Size Test

A

Revenue: Segment revenue and intersegment sales must be 10% of more of COMBINED INTERNAL & EXTERNAL REVENUE; Reported profit or loss: the absolute amount of the segments reported profit or loss is 10% or more of the combined reported profit of all operating segments that did not report a loss and the combined reported loss of all operating segments that did report a loss; Assets: the segments identifiable ASSETS ARE 10% OR MORE of the combined assets of all operating segments

27
Q

T or F is one segment is > 90% no segment reporting is needed

A

T

28
Q

T or F if any one of the 10% Size test is met that you must report that segment

A

T

29
Q

T or F information about other business activities that are not reportable (not 10%) should be combined and disclosed in an all other segments

A

T

30
Q

If the total external consolidated revenue reported by operating segments is less than 75% of external consolidated revenue then

A

additional operating segments need to be identified as reportable segment even if they do not meet any of the 10% tests

31
Q

T or F the break out of your segments must total at least 75% of your income

A

T so even if you have 3 segments broken out and they are all 15% each in income contribution, that still doesn’t add up to 75% then you still need to break them out until you get to 75% of your segment sales relative to total sales

32
Q

Management is allowed to make a judgement to include a segment break out for a segment that no longer meets the 10% but use to meet in in prior years T or F

A

T

33
Q

NCI is also known as

A

Minority interest

34
Q

Required Segment disclosures

A

basis of accounting for any internal transactions; nature of differences between measurements reportable segments profits or loses, nature of differences between measurements reportable segments assets, nature of any changes from prior periods in the measurement methods used; asymmetrical allocations

35
Q

Measurement criteria for Segment disclosures also includes your abilities to reconcile segments to the consolidated totals for revenues, profit and losses, assets, significate item of information disclosed. T or F

A

T

36
Q

T or F Revenues from external customers for each product or service must be disclosed

A

T

37
Q

For the 75% test you look at the segment category for sales to unaffiliated customers T or F

A

T if you take the segments that meet the 10% test and those sales are > 75% then the consolidated sales then you meet the 75% requirement. If not you have to keep adding segments (even if they do not meet the 10%) until you meet the 75% of external consolidated revenue (revenue that does not include intersegment/intercompany sales)

38
Q

T or F external consolidated revenue includes intersegment sales

A

F External consolidated revenue is revenue outside of the company and would not include intersegment/intercompany sales

39
Q

Net income + other comprehensive income is equal to

A

comprehensive income

40
Q

Net income includes what items? This after operating revenues and expenses and interest and tax are accounted for?

A

Income from continuing operations and discontinued operations; note that NON OWNER TRANSACTIONS (goes to retained earnings/non ordinary items)

41
Q

Other comprehensive income items (OCI) are

A

is income and losses that are not ready to be reported; items are revenues expenses gains losses that are included in comprehensive income but excluded from net income under U.S. GAAP = Goes to Accumulated OCI which is reported in (Equity) item

42
Q

Other comprehensive income is classified by the following items

A

Unrealized gains and losses (available fore sale securities AFS) & cash flow hedges & debt securities hedges, foreign currency items - goes on income statement, interest specific credit risk, Pensions

43
Q

T or False Comprehensive income and its components shall be displayed in a financial statement that is presented with the same prominence as the other financial statements. NOT on a per share basis

A

T

44
Q

What are the two presentation options that comprehensive income can be presented in?

A

Single statement approach (displays items individually and in total below the net income amount); two statement approach (which is a separate statement of comprehensive income)

45
Q

T or F Other comprehensive income may be reported (1) net of tax or (2) before related tax effects with one amount show for the aggregate income tax expense

A

T

46
Q

T or F The changes in accumulated balances (income tax expense or benefit allocated to each component of other comprehensive income) by component may be shown on the face of the financial statements or in the notes of financial statements

A

T

47
Q

T or F when you take a gain or loss out of accumulated other comprehensive income it is NOT reclassified

A

F it is reclassified from AOCI as debit or credit in the statements

FAR (10 decks)

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