Deck 26 Flashcards Preview

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Flashcards in Deck 26 Deck (21):
1

Contingencies losses will only be accrued when the loss is:

Estimable and "probable"; if "possible" then disclose

2

4 types of derivatives (OFFS)

Options, futures, forwards, swaps

3

Disclosure of market risk vs. credit risk:

Credit risk: required; Market risk: required only for IFRS

4

Three necessary characteristics for a derivative:

1) one or more underlyings and notional amounts; 2) no initial net investment; 3) requires or permits a net settlement

5

Underlying vs. notional amount

Underlying: specified price or rate; Notional: Specified unit of measure used to calculate gain/loss

6

Put vs. call option

Call option: gives the holder the right to buy; Put: gives the holder the right to sell

7

Fair value vs cash flow hedge:

Fair value: Firm commitment, income statement; cash Flow: forecasted transaction, OCI

8

Difference between ineffective and effective portion of cash flow hedge:

Ineffective: income statement; Effective: OCI

9

Do you recognize the conversion feature for convertible bonds? (GAAP vs. IFRS)

Gaap: No; IFRS: Yes

10

When is the liquidation basis of accounting used?

When liquidation is imminent; applied prospectively

11

Holding gain on inventory =

Replacement cost - original purchase price

12

Definition of a bargain purchase

FV of net assets acquired is more than the consideration exchanged for the net assets

13

What method should be used to account for an investment that is non-voting?

Cost method

14

LIFO method

Last amount of inventory purchased is the first to be sold

15

FIFO method

First amount of inventory purchased is the first to be sold

16

Conversion of bonds into common stock - Journal entry

Dr. Bonds payable; Cr. Unamortized discount, common stock, and APIC

17

Restricted funds for principal and interest payments should be accounted for in what fund?

Debt service fund

18

What is the initial net investment for a forward contract?

Zero

19

Financial statement requirements for GAAP and IFRS?

IFRS: 3 B/S and 2 for all other statements; GAAP: 2 B/S and 3 for all other statements

20

Potentially dilutive securities include:

Convertible securities, warrants, contracts settled in cash or stock, and contingent shares

21

Donated capital assets to a governmental unit are recorded at:

Estimated fair value when received