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Flashcards in Deck 3 Deck (20):
1

Deferred gross profit (contra asset) =

gross profit rate x installment receivables

2

Installment receivables =

Sales - cash collections

3

How do you account for gains/losses in an exchange that has commercial substance?

Recognize gains/losses immediately

4

Gain (has commercial substance) =

FV asset given up - BV of asset given up

5

What does "commercial substance" mean?

Exchange results in a change in cash flows

6

Basis of acquired asset (has commercial substance) =

FV of asset given up + cash paid

7

What causes an exchange to lack commercial substance:

1) no change in cash flows or 2) FV can not be determined

8

Recognized gain (lacks commercial substance) =

Realized gain x (boot received/FV received)

9

What method of measuring prices is used for GAAP?

Historical cost/nominal dollar

10

Examples of nonmonetary assets

Inventory, PPE, intangibles

11

Examples of monetary assets

Cash, AR, AP

12

When is the historical rate used for foreign currency?

Used for equity

13

Reporting currency is

The US$

14

Foreign Currency Translation

Functional currency to the Reporting currency (US$)

15

Foreign Currency Remeasurement

Foreign currency to entity's functional currency

16

Remeasurement method

Temporal method; monetary (fixed items) - use current rate; nonmonetary - historical cost

17

When is the weighted average rate used for foreign currency?

For all income statement items under both methods

18

Translation method

Current rate method; use current rate for assets and liabilities; use historical rate for C/S and APIC

19

Personal financial statements are recorded at

Estimated Fair Value

20

What are the only kinds of items that can be classified as Held to Maturity?

Debt securities