Flashcards in Exam 3 Financial Accounting Review Deck (56):
Use their own currencies
What are 2 characteristics of the Available for Sale Method?
Initially recorded at cost
Reported at market value on balance sheet
Long Term Investments are recorded where?
On the balance sheet
What is another name for Long Term Bond Investments?
Held To Maturity Investments
Number of shares sold to shareholders
Amount borrowed and usually in $1000 units
Insurance and limits or qualifies by exceptions
All bonds mature at the same date
Stockholder elect who?
Board of Directors
Cumulative (in terms of preferred dividends)
Any unpaid dividends are carried forward until paid
How are Long Term Bond Investments reported?
Reported at amortized cost
What is 1 characteristics of a contra equity account in terms of Treasury Stock?
Reduces shareholders equity and assets
If the contingent liability is probable what happens when recording it?
Record if amount can be estimated
Maximum number of shares a company can issue
What 3 things increase debits (ADE)
What 2 things is the Preferred Dividends rate expressed as?
Percent of par value
Dollar amount per share
What are the 2 parts of stockholders equity?
Paid In Capital
What are 6 examples of known amounts?
Salaries tax payable
Short Term Notes Payable
What are 2 characteristics of Treasury Stock?
Company buys stock back
Number of shares currently in shareholders possession
Carrying Amount =
Face Value - Discount Balance
Maturity Date (Bond Terms)
Date bond is due
Mature in installments
If the contingent liability is reasonably probable what happens when recording it?
Include in Notes
Why would a parent company and a subsidiary consolidate as if they were one company? (Consolidated Subsidiaries)
Want to eliminate reciprocal accounts
What are the 2 classes of stock?
What accounting method do you use when the investor owns up to 20%?
Available For Sale
Financial statements of a parent and its subsidiary are combined and consolidated as if they were one company
What accounting method do you use when the investor owns 20%-50%?
In terms of Consolidated Subsidiaries the investor is called what?
Claim on assets if bond not paid
In terms of Consolidated Subsidiaries the investee is called what?
Date of Declaration
When the board of directors announce the dividend
What are 2 characteristics of Small Stock Dividends?
Less than 25% of outstanding shares
Recorded at market value
Claim on assets
What are 2 examples of unknown amounts?
Estimated Warranty Payable
If the contingent liability is unlikely what happens when recording it?
Do not report
What 3 things increase with credit (LCR)
What are 2 characteristics of the Equity Method?
Investor has significant influence over investee
Investment is recorded at cost
What are 2 characteristics of Large Stock Dividends?
Greater than 25% of outstanding shares
Recorded at par value
What are the 4 types of bonds?
Obligations due within one year
What accounting method do you use when the investor owns more than 50%?
Difference between issued and outstanding
When something is reported at amortized cost what happens to the bond? ( In Terms of Long Term Bond Investments)
Bonds carrying amount is amortized to face value at maturity value
In terms of Consolidated Subsidiaries the investor owns how much of the stock?
Owns more than 50%
What is the difference between short term investments and long term investments?
Short Term Investments
Must be liquid
Held for 1 year or less
Long Term Investments
Expected to be held longer than 1 year
In terms of Consolidated Subsidiaries the investor controls the -----.
Board of directors elect who?
What are 2 differences between Premium and Discount?
-issue price above face value
-stated rate of interest greater than market
-Issue price below face value
- stated rate of interest less than market
What 4 rights do the stockholders have?
What is 1 example of a Long Term Liability?
Interest (Bond Terms)
Company must pay bondholders interest in regular intervals over the term of the bond
The right to maintain ownership
No claim on assets