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FAR > Chapter 1: Part 2 > Flashcards

Chapter 1: Part 2 Flashcards

1
Q

What are the two main components of comprehensive income?

A
  • Net Income

- Other Comprehensive Income

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2
Q

What are the main components of other comprehensive income and how are they reported?

A

“PUFER”

  • Pension adjustments
  • Unrealized gains and losses (available for sale securities)
  • Foreign currency items
  • Effective portion of cash flow hedges
  • Revaluation surplus or “gains” (IFRS only)

These items bypass the income statement and go straight to equity.

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3
Q

How is other comprehensive income moved to the balance sheet?

A

Via the accumulated other comprehensive income account, which is similar to retained earnings.

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4
Q

How is comprehensive income presented in the financial statements under U.S. GAAP?

A

NOT on a per share basis, in either a single or two statement approach.

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5
Q

What is the single statement approach to presenting comprehensive income?

A

On the Statement of Comprehensive Income, it display other comprehensive income items individually AND in total below the net income amount, and totals them for comprehensive income.

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6
Q

What is the two-statement approach to presenting comprehensive income?

A

On the Statement of Comprehensive Income, it displays comprehensive income as a separate statement that immediately follows the income statement.

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7
Q

How is income tax on other comprehensive income reported and disclosed?

A

Components can be reported either net of tax OR before the tax effect with one amount shown for the income tax expense/benefit for the total of the components. The income tax expense/benefit is disclosed on either the face of the related statement OR in the notes to the financial statements.

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8
Q

What are the required disclosures for other comprehensive income?

A
  • The tax effects of each component included
  • The changes in the accumulated balances of each component
  • Total accumulated other comprehensive income in the balance sheet as an item of equity
  • Reclassification adjustments AND current period OCI
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9
Q

As part of the Summary of Significant Accounting Policies, what are IFRS requirements that U.S. GAAP does not have?

A
  • Requires an explicit and unreserved statement of compliance with IFRS.
  • Disclosures of judgments and estimates that management has made.
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10
Q

Who are not considered related parties under IFRS?

A

Principal owners

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11
Q

What is the treatment of material related party transactions under U.S. GAAP?

A

They must be disclosed, EXCLUDING compensation arrangements, expense allowances, and anything else in the ordinary course of business.

Notes and AR must be shown separately from general notes or AR.

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12
Q

What is the treatment of material related party transactions under IFRS?

A

They must be disclosed, INCLUDING compensation arrangements.

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13
Q

What is the treatment of bad debt expense/allowances/write offs under IFRS?

A

They must be disclosed.

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14
Q

What is the treatment of bad debt expense/allowances/write offs under U.S. GAAP?

A

No disclosure is required.

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15
Q

Which estimated tax rate is permitted for the purposes of interim reporting under IFRS?

A

The effective tax rate using enacted OR substantially enacted changes in tax rates.

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16
Q

Which estimated tax rate is permitted for the purposes of interim reporting under U.S.GAAP?

A

Only the use of the enacted tax rates.

17
Q

As part of segment reporting, what must an entity disclose under U.S. GAAP?

A
  • Profit / Loss
  • Assets
  • NOT required to report segment cash flow or liabilities.
18
Q

As part of segment reporting, what must an entity disclose under IFRS?

A
  • Profit / Loss
  • Assets
  • Liabilities, IF given on a regular basis to the chief operating decision maker.
19
Q

The definition of an operating segment is:

A

A component of an enterprise that:

  • engages in business activities that can earn revenues and incur expenses
  • has its operating results reviewed regularly by the chief operating decision maker
  • has discrete financial information available (traceable cashflows)
20
Q

What is a reportable unit?

A

An aggregate group of operating segments that show similar long term financial performance and meet certain materiality tests.

21
Q

What are the materiality tests that determine whether a group of operating segments may be grouped into a reportable segment?

A
  • 10 Percent Size Test (Any one of three)

- 75 Percent “Reporting Sufficiency” Test

22
Q

10 Percent Size Test

A
  1. 10 percent or more of combined revenue, internal and external, of all operating segments
  2. Absolute amount of it reported profit or loss is greater than the combined reported profit of all operating segments that did not report a loss, OR the combined reported loss of all operating segments that did report a loss.
23
Q

75 Percent “Reporting Sufficiency” Test

A

If the operating segments external (consolidated) revenue is less than 75 percent of external (consolidated) revenue then more operating segments need to be identified, up to 10.

24
Q

Form 10-K

A
  • Annual filing by US registered companies (issuers)

- Contains: financial disclosures, MD&A, audited financial statements

25
Q

Form 10K Filing Deadlines

A

After fiscal year end

  • 60 days for large accelerated filers (700M)
  • 75 days for accelerated filers (75M)
  • 90 days for all other registrants
26
Q

Form 10-Q

A
  • Quarterly filing by US registered companies (issuers)

- Contains: MD&A, UNaudited financial statements, and certain disclosures

27
Q

Form 10Q Filing Deadlines

A

After fiscal year end

  • 40 days for large accelerated/accelerated filers (all over 75M)
  • 45 days for all other registrants
28
Q

Form 11-K

A

Annual report of a company’s employee benefit plans.

29
Q

Forms 20-F and 40-F

A

Similar to a 10-K for foreign private issuers.

30
Q

Form 6-K

A

Similar to 10-Q, semi-annual filing for foreign private issuers.

31
Q

Form 8-K

A

Filed to report major corporate events.

32
Q

Forms 3, 4, and 5

A

Forms required to be filed by directors, officers, or beneficial owners of more than 10 percent of a class of equity securities.

33
Q

Regulation S-X

A

SEC’s requirements for the form and content of interim and annual financial statements.

34
Q

Regulation S-X lists the requirements for interim financial statements as?

A
  • Reviewed by an independent public accountant.
  • Include IS, BS, Statements of Cash Flows
  • Disclosures of material contingencies and subsequent events
35
Q

Regulation S-X lists the requirements for annual financial statements as?

A
  • Must be audited
  • Periods presented, BS 2yrs and IS / CF 3yrs
  • All relevant disclosures must be present
36
Q

IFRS lists the requirements for periods presented under annual filings as?

A

Two each of the following:

  • Balance sheets
  • Statements of comprehensive income (and net income if the two-statement approach)
  • Statements of changes in equity, and
  • Statements of cash flows
  • Related notes

FAR (3 decks)

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