Flashcards in Deck 16 Deck (20):
Total estimated coupons redeemed =
Total number of coupons issued x estimated redemption rate
Total estimated liability for warranties =
Total sales x total estimated expense
Estimated warranty liability on balance sheet at year end =
Total estimated liabilities - actual expenditures
Loss contingencies are accrued for when?
Losses are "probable" and estimable (disclose if reasonably possible); debit expense and credit liability
To be a derivative, the financial instrument must have:
1. One more underlyings and 2. one or more notional amounts (no initial net investment needed)
Financial instrument definition
Right to receive cash and ownership interest
Disclosure of market risk for GAAP vs. IFRS; is it required?
GAAP - no; IFRS - Yes
Specified price, rate, or other variables (Ex: price per share)
Specified unit of measure (Ex: number of shares of stock)
Call vs. put option
Call: option to buy; Put: option to sell
Journal entry to record gain on forward contract hedge
Debit Fair value hedge and credit Gain on fair value hedge
Journal entry to record gain on cash flow hedge
Debit Cash flow hedge and credit OCI
Investments in bond receivable
Total accretion expense =
total estimated cost - ARO
Interest rate swap is what kind of hedging item?
Cash flow hedge
Difference in recording large and small stock dividends?
Large: debit RE at par value; Small: debit RE at FMV
How do you treat software developed internally?
Before preliminary project stage: expensed; after preliminary stage: capitalized and depreciated over economic life
When do you expense interest related to construction costs?
All interest incurred for machinery held for sale
What decreases when you declare and pay a liquidating dividend?
Decrease PIC but not RE