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Flashcards in Deck 4 Deck (18):
1

Impairment loss (IFRS vs. GAAP)

GAAP: carrying value > undercounted cash flows; IFRS: carrying value > recoverable amount

2

Impairment loss under GAAP =

goodwill implied FV - goodwill book value

3

Recoverable amount under IFRS is the greater of:

1) FV less costs to sell and 2) asset's value in use

4

What happens when an intangible asset has an indefinite life?

No amortization expense

5

Approach to convert from cash-basis to accrual-basis:

1. Add increases in current assets; 2) Subtract decreases in current assets; 3) Add decreases in current liabilities; 4) Subtract increases in current liabilities

6

Deferred revenue

Revenue that has been received in cash but not yet earned; ex: unearned interest income, unearned rental income, and unearned royalty income

7

4 criteria that must be met before revenue can be recognized (GAAP)

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

8

Realization

Occurs when the entity obtains cash or the right to receive cash

9

Selling expenses include:

Advertising, freight out, rent for office space, sales salaries and commissions

10

Journal entry for accrued asset/revenue

Dr. A/R; credit accrued revenue

11

Journal entry for accrued liability/expense

Dr. Accrued expense; Cr: Accrued liability

12

Journal entry for deferred revenue/unearned revenue

Dr. Cash; Cr. deferred/unearned revenue

13

When is royalty revenue recognized?

Recognized when earned

14

Journal entry for collection of earned royalties:

Dr. Cash; Cr. unearned royalty

15

Journal entry for recognizing an earned royalty:

Dr. Unearned royalty; Cr. Earned royalty

16

For a franchise, when is unearned revenue recognized as revenue?

Once substantial performance has occurred

17

Revaluation model under IFRS:

intangible assets initially recognized at cost and then revaluated to FV at a subsequent revaluation date

18

Revaluation model carrying value =

FV - subsequent amortization - subsequent impairment