FAR Flashcards
(21 cards)
How I/S reported discontinue operations?
- any gain or loss from measuring the component at FV- COGS
- any gain or loss on disposal in discontinue operations in the period it occurs
What is included in full sets of financial statement?
Comprehensive income in Either one continues statement or two separate but consecutive statements.
1 continuous statement has 2 sections: net income and OCT with other OCI
When the note must be classified as current?
issuance of the balance sheet that meets the following criteria
(1) The agreement does not expire within the longer of 1 year or the operating cycle, (2) it is noncancelable by the lender,
(3) no violation of the agreement exists at the balance sheet date, and
(4) the lender is financially capable of honoring the agreement. Thus, because the lender is not expected to be financially capable of honoring the agreement
What is a trade account payable?
A trade account payable is the amount owes by business to their vendors. It is a very common current liabilities for the business shows/posed under subcategory of account payable.
Where treasury stocks recorded?
Treasury stock recoded in owner’s equity side with other classification is reduction of total equity (DR)
How to calculate Weighted average number of common share outstanding?
Ja1 big balance 240,000 X 2/12= 40,000
Mar1 issued 60,000 shares= 30000 X 5/12= 125000
Aug 1 Repurchased 20000 shares=280000X3/12=70000
Nov1 issued 80000 shares=360000 X 2/12= 60,000
TOTAL= 40,000+125,000+70,000+60,000=295,000
What makes EPS increase?
Purchasing Treasury stock makes EPS increase because it reduces the number of outstanding shares. therefore, increase the ESP ratio.
Other Comprehensive income vs Continue operation income
A gain arising from TRANSLATION is reported in OCI.
However, a gain arising from REMEASUREMENT is reported in Income from continue operations using the temporal method.
Foreign currency translation adjustments for a foreign operation that is relatively self-contained and integrated within its environment do not affect cash flows of the reporting entity. Thus, they are excluded from earnings and reported in OCI.
When the transaction price should not be adjusted for the effect of the time value of money?
- The time between payment and delivery is less than 1 year.
Transfer goods and services is at the discretion of the CUSTOMER.(e.g., a bill-and-hold contract in which the seller provides storage services for goods it sold to the buyer). - A substantial amount of the consideration is contingent on a future event that is not within the control of the seller (such as salary-based royalty contract in which amount is paid when they sales by customer to third party)
What is zero profit margin?
When the outcome of the contract is not reasonably measurable, but cost incurred in satisfying the performance obligation are expected to be recover, Revenue MUST be recognized only to the extent of the costs incurred.
How to calculate revenue from contracts with customers?
- cost incurred +Estimate future cost= total cost incurred Y1
% completion= cost incurred/ total cost.
Definition- Total projected agreed to pay contracted price- total cost= Amount*%completion= This year revenue - already recognized revenue previous year if any.
What event needed to be disclosed with 4 days and which form?
Under 8-k form
1. The creation of an obligation under an off-balance sheet arrangement of a registrant.
2.The unregistered sale of equity securities.
3.A change in a registrant’s certifying accountant or significant enough.
Under SEC F/S and disclosure can be found in?
- Regulation S-X applies to the reporting of financial statements, including notes and schedules.
2.Regulation S-T governs the types of documents the SEC requires to be filed electronically.
3.Regulation S-K provides integrated disclosure standards, many of which are nonfinancial. It does not state requirements for financial statements. - Regulation S-B applies to smaller reporting companies (small business issuers and nonaccelerated filers).
Concept of consistency is sacrificed not followed what items got posted in income statement?
Change in accounting principle when the cumulative effect on the prior period is NOT known. Generally, change is accounting period need to post retrospectively but when prior period is unpredictable then the change applied prospectively.
What is level 2 fair value hierarchy?
Level 2 inputs include (1) quoted prices for similar items in active markets, (2) quoted prices in markets that are not active, and (3) observable inputs that are not quoted prices. Where
Level 3 inputs are unobservable inputs that are used given no observable inputs. They should be based on the best available information in the circumstances. Quoted prices for similar assets are observable inputs.
Investment in debt securities absent an election of fair value how would we account for bonds at?
Amortized cost- only WITHOUT an election of Fair Value option. HOWEVER, Trading and available-for-sale debt securities are accounted for at fair value. In addition to no election of FV, held to maturity which entity indented to hold till matures accounted at amortization cost.
10-K rule
After registration with the SEC, an issuer is required to file many different forms. Large accelerated filers [companies with a public float (the market value of shares held by the public) of $700 million or more] must file Form 10-K within 60 days of the last day of the fiscal year.
Current reports must be filed on Form 8-K describing specified material events. Examples are (1) changes in control of the registrant, (2) the acquisition or disposition of a significant amount of assets not in the ordinary course of business, (3) bankruptcy or receivership, (4) resignation of a director, and (5) a change in the registrant’s certifying accountant.
company’s liquidity and financial flexibility is analyzed under where?
Balance sheet
The accounting measurement that is NOT consistent with the going concern concept is-
Liquidation Value
While FV, Historic cost and present value of cash flows consistent with going concern.
FIFO year end INV?
Inventory accounted for using the FIFO method (or any cost method other than LIFO or retail) is measured at the lower of cost or net realizable value (NRV).
NRV is the estimated selling price in the ordinary course of business, minus reasonably predictable costs of completion, disposal, and transportation
