APRIL 2025 CHAPTER 2 Flashcards
(33 cards)
On the settlement date how is foreign currency amount calculated?
Using the spot rate ar first then it’s revalued at the financial statement date results in gain or loss
Formula to calc the diluted earnings per share?
Diluted EPS = Adjusted Net Income / Common Stock + Converted Shares
When cause an antidilutive EPS?
option price is higher than the market price that cause the the EPS Antidilutiuve
How is Convertible Preferred Stock calc for Diluted EPS?
When the preferred Dividends are added to Net Income and the remaining are added to common stock
How is Convertible Bonds calc for diluted Stock?
after tax interest expense is added back to net income since they no longer need to pay the interest conversion
When calc the Diluted EARNINGS PER SHARE how is it calc piece by piece?
Step 1 - adjustments for the numerator
Calc the after tax amount which would be added to the NET INCOME the information would be coming from the Convertible bonds
Face amount x 6% tax rate (1.0 -.30) = after tax expense
additionally we need to add Cumulative convertible preferred stock
10,000 preferred stock x par x 10 = 20,000 (example)
Step 2 - Calc the adjustments of BEPS Denominator
Denominator is increased by the weighted avg numbers
When we get a problem with Weighted AVG cost of
Jan - Feb Number of shares 24,000
How would be start of calculating that?
Jan - Feb Number of Shares 24,000 x 2/12
March - June 29,400 x 4/12
How to calc Weighted AVG of Common Stock outstanding?
100,000 x 12 / 12 = 105,000
30,000 x 9 / 12 = 23,625
36,000 x 7 / 12 = 22,050
(35,000) x 4 / 12 = (11,667)
Errors Corrections for overstated revenue or unrecorded expenses how are they recorded?
adjusted retained earnings and restating prior period financials
How are changes in accounting estimates adjusted?
Depreciation expense useful life and bad debt expense are accounted prospectively affecting the current and future periods
How are changes in accounting principals adjusted?
they are adjusted retrospectively by restating
How to adjusted the depreciation expense for accounting estimate?
Step 1 - calc the depreciation expense
Step 2 - calc the accum depreciation
Step 3 - calc the carrying amount
When there is change in accounting principals that must be accounted for retrospectively how is
carrying amount of assets, liabilities, retained earnings must be adjusted beginning of the period
What are the days required for 10Q related filings?
40 days (LARGE ACCELERATED FILER) 700,000 OR MORE
40 DAYS
How to calc the Net income when you have income from continuing operation and discounted operations tax rate?
Income from continuing operations is start with discontinted operation with the tax rate which will give us the tax rate
For highest and best use concept for property or any intagible assets what do we look for?
transaction cost are also used to pick the highest and best use for the property
What are the keys words we need to look for the FV Measurement levels (Hierarchy)
Level 1 inputs are active, identical, stock exchange
Level 2 inputs observable, similar, adjustments, inactive market
Level 3 inputs unobservable, assumptions, internally developed, and no market data
When you see a problem with net processing and transaction price how do we get the most advantous?
We ADD the Net Processing and the transaction price to the most advantous price that gives us the most advantous price
What are some adjustments made for the general ledger cash balance?
- Avoided checks are ADDED back to the general ledger balance
- NSF FEES are subtracted
- NSF CHECK are subtract
Are outstanding adjusted for the cash balance or bank balance?
For the bank balance outstanding checks are adjusted since the check is written by the entity and the check hasn’t been cleared yet
Not adjusted for the cash balance
If cumulative preferred dividends not earned should be adjusted?
Added to the loss for the year
How and when is the equity method used?
When an investor has significant influence over the an investee and the ownership is 20% - 50% of voting shares
How to calc the Carrying Amount investment?
First we need to know the initial investment 300,000
Shares of Net Income
200,000 x 9/12 x 15%
= 22,500
Dividends
20,000 shares x 0.40 per shares
= 8000
Carrying amount for year 1
300,000 + 22,500 - 8000 = 314,500
When there is a error found on for the depreciation expense for year 1 during year 2 how is that adjusted?
No adjustments are made to depreciation expense however we need to adjust prior period statement and beginning of Retained Earnings
