Deck 16 Flashcards Preview

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Flashcards in Deck 16 Deck (20):
1

Total estimated coupons redeemed =

Total number of coupons issued x estimated redemption rate

2

Total estimated liability for warranties =

Total sales x total estimated expense

3

Estimated warranty liability on balance sheet at year end =

Total estimated liabilities - actual expenditures

4

Loss contingencies are accrued for when?

Losses are "probable" and estimable (disclose if reasonably possible); debit expense and credit liability

5

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)

6

Financial instrument definition

Right to receive cash and ownership interest

7

Disclosure of market risk for GAAP vs. IFRS; is it required?

GAAP - no; IFRS - Yes

8

Underlying amount

Specified price, rate, or other variables (Ex: price per share)

9

Notional amount

Specified unit of measure (Ex: number of shares of stock)

10

Call vs. put option

Call: option to buy; Put: option to sell

11

Journal entry to record gain on forward contract hedge

Debit Fair value hedge and credit Gain on fair value hedge

12

Journal entry to record gain on cash flow hedge

Debit Cash flow hedge and credit OCI

13

Debt instruments

Investments in bond receivable

14

Total accretion expense =

total estimated cost - ARO

15

Interest rate swap is what kind of hedging item?

Cash flow hedge

16

Difference in recording large and small stock dividends?

Large: debit RE at par value; Small: debit RE at FMV

17

How do you treat software developed internally?

Before preliminary project stage: expensed; after preliminary stage: capitalized and depreciated over economic life

18

When do you expense interest related to construction costs?

All interest incurred for machinery held for sale

19

What decreases when you declare and pay a liquidating dividend?

Decrease PIC but not RE

20

Shipping costs for goods sent to consignee are included as

Inventory cost for the consignor