Mock Exam 1 Flashcards
When to recognize Warranty Costs?
Should be recognized when items are sold
IFRS partial goodwill method calc?
Partial GW = purchase price - (acquired %) x FAIR VALUE of net assets acquired
How much warranty expense to recognize?
the entire warranty liability must be accrued in the year of the SALE to match the warranty cost to the related revenue.
Under IFRS how much profit is deferred if classified as a finance lease?
All profit is deferred
Sale lease back - major, how much gain to book?
none, should defer all.
minor lease, recognize all gain
Pension gain amortization
- unrecognized net gain 30k
- PBO beginning 250k
- FV plan assets beg. 200k
- return: 10%
larger of beginning PBO or FV of assets
times 10%
= 25k
gain 30k - 25k = 5k
divided by 10 years = (500) gain
BV = total value of C/S / common shares outstanding
total value of c/s subtracts out the value of preferreds and dividends in arrears
Revenues are recognized when “measurable and available”. Revenues are “accrued” when “earned”
Revenues must not only be earned but also collected within 60 days of year end for recognition in govt fund FSs
Unrealized gain from AFS securities are reported in AOCI how?
part of OCI, but need to report this “net of tax” in AOCI
Unrealized gain from AFS securities are reported in AOCI how?
part of OCI, but need to report this “net of tax” in AOCI
IFRS requires component depreciation
remember to subtract of the executory costs from equipment before depreciating, then depreciate separately the executory costs
Warranty expense should be recorded if part of a “separately identifiable performance obligation”
Dr. Cash 1200
Cr. Sales 950
Cr. Def. Revenue - warranty 250
Dr. Cost of sales 600
Cr. Inventory 600
Warranty expense should be recorded if part of a “separately identifiable performance obligation”
Dr. Cash 1200
Cr. Sales 950
Cr. Def.(if over time) Revenue - warranty 250
Dr. Cost of sales 600
Cr. Inventory 600
How to calc bond issue price?
PV of the face value times the PV factor for the market rate, not state rate
Then also need the PV of the interest payment, interest payment at stated rate times PV factor annuity at market rate
How to calc bond issue price?
PV of the face value times the PV factor for the market rate, not state rate
Then also need the PV of the interest payment, interest payment at stated rate times PV factor annuity at market rate
