F1 - Income Statement/BS

Question 1

Selling Expenses(anything you use for selling)

Answer 1

• wages for sales
• commissions
• advertising
• freight out(shipping cost)

Question 2

General Admin. Expenses(office work)

Answer 2

• officer salaries
• legal fees
• accounting fees

Question 3

How is Freight - IN capitilized?

Answer 3

• in inventory as part of COGS so need to double book it!!

Question 4

Int Expense/Int Income are in operating or non operating?

Answer 4

NON Operating

Question 5

When net income is recorded where does it go in BS?

Answer 5

Goes to R/E

Question 6

Other Comprehensive Income (FUPIE)

Answer 6

• Foreign currency translation gain/losses
• unrelaized holding gains/losses on AFS
• pension adj
• instrument-specific credit risk
• Effective portion of cash flow HEDGES

Question 7

Total Comprehensive Net Income is:

Answer 7

Net income + OCI

Question 8

Dodd Co.’s debt securities at December 31 included available-for-sale securities with a cost basis of $24,000 and a fair value of $30,000. Dodd’s income tax rate was 20%. What amount of unrealized gain or loss should Dodd recognize in its income statement at December 31?

Answer 8

$0 is correct. Available-for-sale debt securities are carried on the balance sheet at fair value. Unrealized changes in fair value between periods are reported in other comprehensive income (“OCI”) for the period.

Question 9

Discontinued Operating is accrued after:

Answer 9

Taxes

“Income from cont. oper after tax”

Question 10

What is a strategic shift for a component to qualify as discontinued?

Answer 10

• major lines of business
• major investment in other organizations
• major geographical areas

Question 11

First step on held for sale?

Answer 11

Find impairment so FV-Book value

Question 12

Third/fourth step on held for sale?”loss on disc. oper. net of tax”

Answer 12

Impairment loss + operating loss = total loss before tax x (1 - tax rate) = loss on disc. oper. net of tax

Question 12

Year of sale on on the disc. operation we look for the gain/loss of disposal by:

Answer 12

Proceed from sale - Adj NBV after impairnment = gain / loss on disposal

Question 13

When regarding discontinued operations we only recognize when….

Answer 13

It was disposed so any accrued loss from previous year wouldnt affect the current year it got disposed only ANY LOSS IN THE SAME YEAR

Question 14

a material transaction that is “infrequent in occurrence” and/or “unusual in nature” should be presented separately as a component of “income from continuing operations” when the transaction results

Answer 14

GAIN or LOSS