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Flashcards in Deck 5 Deck (20):
1

Unearned revenue under franchisor accounting includes:

Initial franchise fee and prepaid continuing franchise fee

2

How are organizational expenses (start-up costs) treated?

Expense immediately

3

Technological feasibility for computer software costs:

Expense costs until technological feasibility has been achieved; capitalize costs after technological feasibility has been achieved up to the point of sale

4

Two-step impairment test (When/how is it used)

Intangible assets with finite lives; step 1: use discounted future net cash flows to determine the impairment; step 2: use FV for the amount of impairment

5

One-step impairment test (when/how is it used)

Intangible assets with indefinite lives (Amount of impairment - use FV)

6

Where is goodwill impairment loss recorded?

Dr. loss due to impairment; Cr. goodwill (record in income from containing operations)

7

Goodwill for private companies -

Amortize the goodwill over 10 years or less

8

Calculate impairment loss under IFRS:

Use the greater of: Fv - costs to sell; or Value in use

9

Exit and disposal activities include:

Benefits related to involuntary employee termination

10

Permanent inventory losses are recognized in:

The interim period incurrred

11

Losses from discontinued operations must be shown:

Net of tax

12

Percentage of completion calculation =

Total costs to date/total estimated cost of contract

13

What method of long-term construction contracts is allowed for GAAP and IFRS?

Percentage-of-completion method

14

Current liability for long-term construction contracts =

Progress billings exceed costs and estimated earnings

15

Deferred gross profit =

Gross profit rate x accounts receivable

16

Installment method:

Gross profit is deferred until cash payments are received

17

Installment receivable =

Sales - collections - accounts written off

18

Cost recovery method:

Revenue is recognized after cash equaling the cost of the item is received

19

Gross profit percentage =

deferred gross profit/accounts receivable

20

Earned gross profit =

Cash collections x Gross profit percentage