Deck 2 Flashcards Preview

FAR 2 > Deck 2 > Flashcards

Flashcards in Deck 2 Deck (20):
1

Patents should be capitalized and amortized over the:

Lessor of legal life or economic life

2

Maintaining and developing goodwill is

Expensed

3

When service contracts are sold, the proceeds are as:

Deferred revenue

4

Impairment test under GAAP

2 step test; cv> undiscounted cash flows; if yes, impairment loss = CV>FV

5

Impairment test under IFRS

1 step test: CV>recoverable amount

6

Recoverable amount for IFRS is

Greater of FV less costs to sell or PV of future cash flows

7

4 requirements for revenue recognition under GAAP

1. Signed contract, 2. delivery has occurred or services have been rendered; 3. price is fixed and determinable; 4. collection is reasonably assured

8

Expired vs. unexpired cots:

Expired: go on income statement; Unexpired costs: balance sheet

9

Initial franchise fee is considered revenue when?

When "substantially performed"

10

Unearned franchise revenue consists of 2 things

1. initial franchise fee; 2 prepaid continuing franchise fee

11

Revaluation loss that reverses a previously recognized revaluation gain is recognized in

OCI

12

Revaluation gain that reverse a previously recognized loss is recognized in

Income statement

13

Impairment test for finite vs. infinite life intangibles

Finite: 2 step test like GAAP; Infinite: 1 step test like IFRS

14

Formula to calculate the percentage of completion =

Costs incurred to date/(estimated costs to complete + costs incurred to date)

15

What method is only allowed for IFRS for construction contracts?

Percentage of completion

16

Current asset/current liability under percentage of completion

CA: costs + estimated earnings are greater than billings; CL: costs + earnings are less than billings

17

How are losses treated in construction contracts?

Recognized immediately

18

Gross profit for percentage of completion =

Contract price - estimated total costs (cost incurred + costs to complete)

19

% of completion =

Cost incurred to date/estimated total costs

20

Earned/realized gross profit =

Gross profit rate x cash collections