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CFA Level 1: FR & A > Balance Sheet > Flashcards

Balance Sheet Flashcards

0
Q

Asset recognition

A
  • probably future flow of economic benefit

- measurable with reliability

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1
Q

Components of the balance sheet

A

Current assets
Long-lived assets

Current liabilities
Long term liabilities

Owners equity

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2
Q

Liability recognition

A
  • probably sacrifice of future economic benefit
  • amts received but not reported as revenue (deferred/unearned)
  • amts reported as expenses that haven’t been paid
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3
Q

Assets

A 
Cash
Inventories
Trade and other receivables
Prepaid expenses
Financial assets
Deferred tax assets
PP&E
Investment property
Intangible assets
Equity AC investments
Natural resources
Assets held for sale
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4
Q

Liabilities

A 
Bank borrowings
Notes payable
Provisions
Unearned revenues
Accts payable
Financial liabilities
Accrued liabilities
Deferred tax liabilities
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5
Q

Current Assets

A

*converted into cash or used up within one year

Cash and cash equivalents
short-term investments
accounts receivable
notes receivable
inventory
prepaid expenses
deferred tax assets
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6
Q

Long-Lived Assets

A

*held for continuing use within the business, not resale

Investments
Property, Plant & Equipment
Other (Inv property, assets held for sale, natural resources)

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7
Q

Short-Term Investments

A

Held-to-Maturity
Trading
Available for Sale

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8
Q

Held to Maturity ST Investment

A

reported at cost

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9
Q

Trading ST Investment

A

reported at fair market value

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10
Q

Available for Sale security

A

reported at fair market value

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11
Q

Accounts Receivable

A

reported at net realizable value

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12
Q

Notes receivable

A

a promissory note with a maturity date and interest rate, reported at net realizable value

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13
Q

Inventory

A

reported at lower of cost and net realizable value
use FIFO, LIFO, ave cost, or specific ID
overstated closing inventory –> overstated income

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14
Q

Prepaid Expenses

A

Reported at cost

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15
Q

Property, Plant &Equipment

A

land = at cost
plant, bldgs, equp = historic cost less accum depreciation
Intangible assets = historic cost less accum amort

16
Q

Long-Lived Investments

A

intention to hold > 1 year
valued at cost or market value
equity accumulated investments

17
Q

Stockholder’s Equity

A 
Contributed Capital
Treasury Stock
Retained Earnings
comprehensive income items
Minority (non-controlling) interests
18
Q

Contributed Capital

A

= common stock at par + additional paid-in capital

19
Q

Retained Earnings

A

= accumulated net income - dividends

20
Q

Current Liabilities - Criteria

A
  1. Expected to settle in operating cycle
  2. Held for trading
  3. settlement due within 12 months
  4. no right to defer past 12 months
21
Q

Current Liabilities

A 
accounts payable & other payables
accruals
notes payable
provisions
deferred/unearned revenue
dividends payable
current portion of long-term debt/capital leases
deferred tax liabilities
22
Q

Long-Term Liabilities

A 
paid after more than one year
notes and bonds (PV of future CFs)
capital leases
provisions
deferred tax liabilities
23
Q

Net Realizable Value

A

= estimated selling price - estimated cost of completion - selling costs

24
Q

US GAAP Inventory Reporting

A

lower of costs or market value (replacement cost)

25
Q

Items to be Expensed as Incurred

A 
start-up and training costs
administrative overhead
advertising and promotion costs
relocation and reorganization costs
termination costs
26
Q

Goodwill

A

excess of purchase price over the fair value of the identifiable net assets acquired in a business acquisition

  • not amortized
  • must be tested for impairment annually
27
Q

Assets valued at Historical Cost

A

unlisted equity investments

loans and receivables

28
Q

Assets valued at Amortized Cost

A

held-to-maturity securities

29
Q

Assets valued at Fair Value

A

Trading Securities
Available-for-sale securities
derivatives

30
Q

historical cost

A

= purchase price + cost to get asset ready for use

31
Q

amortized cost

A 
= original issue price 
- principal payments 
\+ amortized discount 
- amortized premium 
- impairment losses
32
Q

Fair Value

A

= current market value

33
Q

Held-to-Maturity Security

A
  • reported on balance sheet at amortized cost

- interest income is reported on income statement

34
Q

trading security

A
  • reported at fair value on balance sheet

- unrealized loss/gain and interest income reported on income statement

35
Q

available-for-sale security

A
  • reported on balanced sheet at fair value
  • interest income reported on income statement
  • unrealized loss/gain reported as change in stockholders’ equity

CFA Level 1: FR & A (7 decks)

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