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Flashcards in Deck 8 Deck (18):
1

Distributions that exceeds investor's share of the investee's retained earnings are (cost method):

Return of capital/reduce basis

2

Investment in investee (cost method)

Only adjusted to FV

3

GAAP rules for equity method accounting:

BASE: beginning balance, add share of earnings, subtract share of dividends paid and amortization = ending balance

4

Goodwill for equity securities =

Excess purchase price over FV of net assets

5

Mark to market:

Mark up to FV

6

Joint venture investments are usually accounted for using what method?

Equity method

7

Change from cost method to equity method:

Adjust retrospectively (apply equity method for prior periods but use the prior period's old percentage)

8

When does a company consolidate financial statements?

Have control (over 50%)

9

Two examples when a company has control but wouldn't be able to consolidate?

When the sub is is reorganization or is bankrupt

10

Gains/losses from fixed assets are always recognized at:

NBV in the period incurred

11

Difference between calculating NCI under GAAP and IFRS

GAAP: FV of sub x NCI% ------- IFRS: FV of sub net assets x NCI%

12

Difference between calculating goodwill under GAAP and IFRS

GAAP: FV of sub - FV of net assets ------IFRS: Acquisition cost - FV of subs net assets

13

Items that will be adjusted during consolidation (CAR IN BIG)

C/S, APIC, RE...Investment in sub, NCI...B/S of sub adjust to FV, Identifiable intangible assets record at FV, Goodwill

14

Difference between legal fees under the equity method and consolidation (capitalize or expense)

Equity method: capitalize; Consolidation: expense

15

In process R&D should be carried as:

An asset, separately from goodwill

16

Acquisition price > FV of net assets acquired =

Goodwill

17

Can goodwill be amortized?

Only for private companies (max 10 years)

18

Revaluation losses under IFRS are recorded in: (OCI or NI)?

OCI