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Flashcards in F1 Concepts & F2 Cash Deck (31):
1

Define Historical Cost

Amount Paid (PPE)

2

Define Replacement Cost

Replace Today (Inventory)

3

Define FMV

(ASC 820) Amount for an orderly, routine transaction on measurement date

4

Define NRV

Amount expected to be converted into A/R

5

Define PV

Discounted CF due to time value of money (N/R, Bonds Payable, Leases)

6

Which price option does Fair Value focus on?

Exit Price

7

How is the FV of an asset measured?

Highest & Best Use

8

Define Exit Price

$$ paid to transfer a liability or $$ received to sell an asset

9

Name 3 FV Valuation Techniques

1. Market Approach,
2. Income Approach,
3. Cost Approach

10

Define the Market Approach

FV valuation technique: Market transactions of Identical or Comparable assets/liabilities

11

Define Income Approach

FV valuation technique: analyzes future amounts in form of revenues, cost savings, earnings

12

Define Cost Approach

FV valuation technique: cost to replace the benefit derived from an asset

13

Explain the 3 levels used for FV valuation (MIC)

Lvl 1=Actual Trx, Active Mkt, Identical assets/liabilites;
Lvl 2=Actual Trx, Inactive Mkt OR Similar assets/liabilities;
Lvl 3=Mgmt's judgment, No observable data

14

Name 5 steps for FV calculation

1. Determine asset/liability; 2.Highest & Best Use; 3. Valuation Premise (in-use or in-exchange); 4. MIC Technique; 5. Lvl 1-2-3

15

Define Concentration of Credit Risk

a special risk of multiple or large defaults, all affected by a common issue. (Ins. companies insuring hurricane prone property)

16

Where is concentration of credit risk disclosed

Notes of F/S

17

3 characteristics of an asset

1. Provides probable future benefit; 2. Entity controls it; 3. Results from a past trx or event

18

Name Primary Qualitative Characteristics

RELEVANCE: Predictive Value, Confirmatory Value, Material@ entity level
FAITHFUL REPRESENTATION: Error free, Neutral, Complete

19

Name Enhancing Qualitative Characteristics

Comparability, Understandability, Timeliness, Verifiability
**Cost/Benefit Constraint

20

Explain Equity

1. Contributions/Investments by Owners;
2. Distributions to Owners;
3. Comprehensive Income--DENT

21

Explain Comprehensive Income

all changes in equity that are not owner resources (DENT)

22

Explain OCI's DENT

D=Derivative CF Hedges; E=Excess adj of Pension PBO & FV of plan assets; N=Net UNrealized gain/loss on AFS securities; T=Translation adj of foreign currency

23

Define Realization

Conversion of a good/service into cash or A/R

24

What is issued to announce a change to FASB Codification?

a proposed accounting standards update

25

Rank Pronouncements by authority (high to low)

1. FASB SFAS-Statements of Financial Accounting Standard;
2=FASB Interpretations;
3=AICPA APB Opinions;
4=AICPA Research Bulletins

26

2 Key attributes of Cash Equivalent

1. Highly Liquid & can easily be converted to cash
2. Has an original maturity date of 90 days or less (or acquired when remaining time to mature is less than 3 mos)

27

Examples of cash equivalents

Treasury Bills, Commercial Paper, Money Mkt Fund, Petty Cash, Unmailed Checks, Savings Accounts, Negotiable Paper like money order, CDs that mature in 3mos.

28

How are postdated checks classified?

A/R

29

How are NSF checks classified?

A/R

30

How is Restricted Cash classified?

If restricted for a current asset/liab report as current & separate from cash. If non-current asset/liab report as Other Assets

31

How are Postage Stamps classified?

Prepaid Expenses-Supplies