Assignment 2 & 3 Formulas & Notes Flashcards
(33 cards)
Contract Revenue Recognition (Service/product paid once work complete & services that are paid overtime)
Amount customer paid
Times: Percent of the aggregate price for completed service.
Equals: Revenue for services completed
Percent of Aggregate Price
Stand-alone price of service/product
Divide: Aggregate price
Equals: Percent of aggregate price
Percent Complete Method
Cumulative cost incurred
Divide: Total estimated cost
Equals: Percent complete
Percent Complete Method Revenue Recognition
Contract price
Multiply: Percent completed
Equals: Revenue
Variable Consideration
See Q4 on Assignment 2
Recognizing Revenue w/ Estimated Return
Cash received
Multiply: (1- Estimated return %)
Equals: Revenue
Calculating Return Allowance Liability
Cash received
Multiply: Estimated return %
Equals: Liability for return allowance
Cost of Sales w/ Estimated Return
Carrying value of inventory given to customer
Multiply: (1 - Estimated return %)
Equals: Cost of sales
Calculating Inventory Return Allowance
Carrying value of inventory given to customer
Multiply: Estimated return %
Equals: Inventory return allowance
Revenue Recognition w/ Gift Cards
Amount redeemed
Divided by: Redemption rate
Equals: Revenue
Calculating Ending Balance for Allowance Account
Beginning balance of allowance
Plus: Bad debt expense
Minus: Write-offs
Equals: Ending balance of allowance
Converting LIFO Inventory to FIFO Inventory
LIFO inventory
Plus: LIFO reserve
Equals: FIFO inventory
Converting LIFO Cost of Sales to FIFO Cost of Sales
LIFO cost of sales
Plus: LIFO beginning reserve
Minus: LIFO end reserve
Equals: FIFO cost of sales
Leases
See week 10 slides 23-45.
Inventory, FIFO, LIFO
See week 9
Calculating Goodwill
Total purchase consideration
Minus: Fair value of net indentifiable assets
Equals: Goodwill
Calculating the Increase in Assets as a result of consolidation
Fair value of net identifiable assets
Plus: Goodwill
Minus: Cash consideration
Equals: Increase in assets
Calculating Goodwill w/ Non-controlling Interest
Total consideration (including the fair value of non-controlling interest)
Minus: 100% Fair Value of the aquiree’s net identifialbe assets
Equals: Goodwill
(see week 11 slide 23)
Net Identifiable Assets (NIA)
Identifiable assets
Minus: Identifiable liabilities
Equals: Net identifiable assets
(see week 11 slides 31-32)
Calculating Goodwill with previously held equity interests
1) Total consideration (including the fair value of non-controlling interest)
Minus: 100% Fair Value of the aquiree’s net identifialbe assets
Equals: Goodwill
2) Total consideration & value to be allocated to net assets
Plus: Non-controlling interest
Minus: Net identifiable assets
Equals: Goodwill
(see week 11 slides 26-30)
Calculating Consideration with previously held equity interests
Fair value of items transferred by acquirer
Plus: Fair value of contingent consideration
Plus: Fair value of non-controlling interests
Plus: Fair value of previously held equity interests
Equals: Total consideration
(see week 11 slide 30)
Calculating Ending ESO Obligation
Beginning ESO obligation
Minus: Fair Value of ESOs exercised
Plus: Fair value of ESOs granted
Plus: Revaluation loss
Equals: Ending ESO obligation
Options Exercised
Options exercised equal the intrinsic value when time value equals 0. Time value equals 0 when the options expire.
Intrinsic value
Stock price
Minus: Exercise price
Equals: Intrinsic value
Intrinsic value cannot be negative, so if the stock price is less than the exercise price the intrinsic value is 0.