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Question 1

A company reports land on its BS at historical cost even though the FV of the land is significantly higher at the BS date

Answer 1

Measurement principles

Question 2

Bad debt expenses

Answer 2

G_A expenses, Becker

Question 3

Sign contract - capital or expenses

Answer 3

Capital \$\$ incurred only success
Ex: capitalized 
Book copyright-> capitalized 
lawyer review contract $
Sales commission $ - success got commission 

Design - expenses

Question 4

Construction liability Question

Answer 4

Cost incurred 
\+ Profit recognizes 
- Billings collect
—————————
Asset or Liabilities is recognized

Question 5

LT construction

Answer 5

Contract $
Estimated total Cost 
Cost incurred to date
Estimated Cost to complete 
billing to date
Cash collection to date

Question 6

G_A

Other Revenues & Gain

Answer 6

G_A: bad debt expenses,
Depreciation expenses

Others: Interest
Loss on write down inventory

Question 7

Discontinued OP

Answer 7

Disposal Line of Business- NO

Sale is Segment - YES

Question 8

EI - overstate -> auto adj next year

Answer 8

Year 1

  BI
\+Pur
———-
COGAS
- EI          UP
————-
COGS     DWN —> NI Up —> RE Up

Year 2

  BI
\+Pur
———-
COGAS
- EI          DWN
————-
COGS     UP

Question 9

I/S or OCI

Comprehensive Income in SH equity

Answer 9

Loss on available for sale -> OCI
Foreign currency Translation-> OCI
Unrealized Loss on available for sale Security -> OCI

Trading securities-> I/S
Realized g/l on available for sale -> I/S
Unrealized G/l on trading -> I/S
Gain on foreign currency Re-measurement -> I/S
Loss on foreign currency Transaction
Loss on available for sale Security

Question 10

Retrospective

prospective

Answer 10

If show FS -> Retro all;

if no show FS -> RE

Question 11

Rules for Adjusting JE

Answer 11

By 12/31
Never involve Cash account
Will hit one I/S and one B/S

Question 12

Change in accounting Estimated

Answer 12

Inventory obsolete written off
Tax accrued adjustment

• change from cash to accrue accounting-> Restate prior period
• acquired company - change in entity -> Retrospective
• Can Not change between completed contract to % contract

Question 13

• ineffective hedge transaction-> I/S
• net income closed to RE;
  OCI closed to accumulated OCI -> In shareholders equity
• consignment Freight Cost -> % Sales portions
• $ spend uniformly during the year = 1/2 $

Answer 13

*

Question 14

Significant accounting Policy or Note only

Answer 14

POLICY 
Basis of consolidation
Depreciation Method
Basis of PPE measurement: a level 1, 2 or 3
*NO numbers in it

NOTES ONLY
Concentrate of Credit Risk
Change in stockholders equity
Info about significant asset/liab account
Info about change shareholders equity
Description of company pension plans
Notes need details

Gonging Concerns - footnotes disclosure explains

IFRS ONLY

1. Statements of Compliance with IFRS
2. Disclosure of judgement made in preparation of FS, - Asset categorized as “hold to maturity” or “available for sale”.

Question 15

Concentration

Answer 15

*Concentrate, if only to specific region - no need notes

Two big customers -> disclose Amount Revenue from each of the two customers.

Question 16

FV measurement framework (M I C)

The price to SELL, not buy - exit price

Answer 16

Level 1: Identical - active market - money market fund

L2: Similar - Active market
Or Similar / Identical Not Active Market
Available 4 sale security, derivatives financial instruments

L3: Estimated Future Cash Flows - goodwill

Not including Transaction, but Transportation Yes

Accounting estimated

Question 17

Segment report 10% of

Answer 17

1. Combined revenue - not consolidated - it’s total revenue, not net income
2. OP profit - not Loss (ADD LOSS BACK to calculate threshold, 75%)
3. Identifiable asset - no liability

Both: No segment cash flow
GAAP: no segment Liability - IFER, Yes

Question 18

10K
10Q
11K: employee benefits plan
20F: non US 10K
40F: Canadian 10K

6K: non US 10Q
8K: major Event
Forms 3, 4, 5 = 10% owners

Regulations S-X - interim FS

Answer 18

10K - Annual -

• 60d Large Accelerate, $700 millions;
• 75d Accelerated, $75 million;
• 90d others (3 months)
• Income tax expenses disclosed required

10Q - quarterly -

• !40d,
• 40d,
• 45d

Question 19

% of completion - 4 steps

Answer 19

1. Gross profit of completed contract
2. % of completion
3. Profit to date
4. Profit earned for current year

Question 20

Reg S-X SEC require

Answer 20

2 BS

3 IS, cash flow, change owner equity

Question 21

Software depreciation

Answer 21

Greater of SL or sales %

Question 22

1. Revenue Recognized at time of production - agreement at the prevailing price
2. Revenue/Loss Recognition: yearly minimum purchase agreement loss

Answer 22

1. Agriculture products or precious metals

Question 23

1. Lower Cost or Market - GAAP

2. Lower cost or NRV - IFER

Answer 23

1. NRV
   Replacement
   NVR - (selling $ margin)

2.

Question 24

Depreciation

Double decline: no need minus Salvage value, BUT can’t depreciate below Salvage
- 2/Year

Add salvage if ask Book Value

Answer 24

Sum of the digit: minus salvage

- [Y(Y+1)] / 2

Question 25

Non monetary transactions JE - plug

Answer 25

1. Commercial: gain = FV - BV 2. No Commercials: * No $ Received -> no gain -> use BV * $ Paid < 25% -> no gain * $ Received -> recognizes proportion * $ Paid or Received > 25% -> recognizes All * Loss recognized either no $ or has $ * IFER: exchange similar FV asset. Gain/Loss = cash give up * commercial exchange -> transactions value = FV surrendered.

Question 26

Unearned “cash received price” | is better estimated than

Answer 26

Unearned merchandise retail price

Question 27

Prime rate, discount rate, market rate

Answer 27

The prime rate (also called "prime lending rate," or even "prime") is the rate at which banks loan preferred customers funds for mortgages, loans and credit cards, and is the best rate customers can obtain. Currently, the prime rate sits at 5.50%. The “discount rate” or “primary credit rate” is the interest rate the Federal Reserve sets and offers to member banks and thrifts that need to borrow money in order to prevent their reserves from dipping below the legally required minimum. The market rate, also known as the going rate, is the usual price charged for a good or service in a free market, rather than one fixed by a state authority. ... In the world of finance, market rate refers to the rate of interest that is paid on a debt security that trades in the open market.