Flashcards in FAR - JH Deck (80):
Income - Accrual accounting
Cash to Accrual (Liab.-add BEG; subtract END/Asset - subtract BEG; add END)
Accrual to Cash (same as SOCF)
Expense - Accrual accounting
Cash to Accrual (same as SOCF)
Accrual to Cash (Liab.-add BEG; subtract END/Asset - subtract BEG; add END)
Decision Usefulness: 2 Primary Characteristics
1. Relevance - Predictive value, Confirmatory value, Materiality.
2. Faithful Representation - Completeness, Neutrality, Free from Error.
4 Enhancing Qualitative Characteristics
Comparability, Verifiability, Timeliness, Understandability
Definition of current asset's operating cycle
Operating cycle of one year or less - WHICHEVER IS LONGER!
Consolidated F/S accounting concept - which entity?
Going Concern assumption supports...
Supports historical cost; not @ liquidation value.
Fair value based on "what" price and transaction
Based on EXIT price and a hypothetical transaction
HTM is measured at what option?
Amortized cost & FV
Form 10-Q periods presented
1. B/S - quarter; PY FYE
2. I/S - quarterly and YTD and PY quarterly and YTD
3. CF - cumulative YTD for CY; PY FYE
Large accelerated filer ($700M or more)
10-K - 60 days ; 10-Q - 40 days
Accelerated filer ($75-700M)
10-K - 75 days ; 10-Q - 40 days
Non-accelerated filer (less than $75M)
10-K - 90 days ; 10-Q - 45 days
IASB Monitoring Board
Appoints trustees of IFRS Foundation
IFRS Foundation (22 members) appoints 3 who?
IFRS Foundation responsible for what?
1. IASB Members
2. IASB Interpretation Committee
3. IASB Advisory Council
Fund-raising for entire operations for the IASB.
IFRS Interpretation Committee is...
IFRS Advisory Council is...
1. Emerging Issues Task Force
2. Advises IASB on priorities, cost-benefit, etc.
2 Assumptions under IASB Framework (no enforcement)
1. Going Concern
2. Accrual Basis
IFRS for SMEs for inventory valuation approaches
1. FIFO or;
2. Weighted Average
IFRS requires what classifications for Stmt of Fin. Position?
Current & Non-current assets and liabilities
What are the 4 items in Stmt of Comprehensive Income?
1. Unrealized gain/loss on AFS securities
2. Unrecognized pension/post-retire benefit cost
3. Foreign currency transaction adjustments
4. Certain deferred gains/losses from derivatives (hedges)
What's included in personal F/S?
Stmt of Fin. Position & Stmt of Changes in Net Worth
What is the purpose of the Private Company Council?
To assist the FASB in identifying whether and when a private company accounting standard should be developed.
For IFRS SMEs, what accounting method can be used with significant influence?
Cost or Equity Method
All notes receivable are recorded how?
PV of future cash flows (> 1 yr); PV - any discounts will be amortized.
What are current & noncurrent notes receivable recorded at?
Current - Face value
Noncurrent - PV
Impaired note receivable are written down to?
PV of future cash flows expected to be collected using original interest rate; Loss or expense is recorded as difference b/t PV of CFs and original carry value.
1. Interest method is collected...
2. Cost recovery method is collected...
1. Each year
2. In total, but only when new carry value (PV of CFs) is received.
Inventory Costs includes what?
Freight-in, insurance, taxes paid, material handling/packaging costs, transport to consignees.
Inventory Costs does not include what?
Interest, advertising, freight-out, advance commissions.
What costs reduce inventory?
Purchase discounts & returns/allowances
Periodic Inventory (WA)
COGAS/# units available, multiply by either COGS or End Inventory, whichever you are calculating.
Periodic Inventory (Purchases) (FIFO)
HIGHEST Net Income
COGS - lowest (earliest) costs
End Inv - highest (latest) costs
Periodic Inventory (Purchases) (LIFO)
LOWEST Net Income
COGS - highest (latest) costs
End Inv - lowest (earliest) costs
Balance sheet; approximation of CURRENT costs
Income statement; approximation of NONCURRENT costs, but COGS CURRENT
LIFO is bad and good why?
Minimizes profits & chosen to minimize income tax
Dollar Value LIFO advantages are...
1. reduces effect of liquidation problem
2. allows to use FIFO internally
3. reduces clerical costs
Dollar Value LIFO (Conversion Index)
End Inv in CY dollars/End Inv in Base Yr dollars
COGAS cost/COGAS Retail
Retail Inventory Method (Calculate End Inv @ cost)
End Inv @ retail X C/R ratio
End Inv Overstated equals...
COGS Understated (OPPOSITE)
Beg Inv Overstated equals...
COGS & Purchases Overstated (SAME)
IFRS vs. GAAP Inventory
1. LC or NRV vs. LCM
2. Same cost formulas vs. may be different formulas
3. Reversal of write-down permitted vs prohibited
4. LIFO prohibited vs. permitted
5. Cost flow assumption mirrors physical flow vs. does not
Accumulated Average Expenditures
Capitalized interest (2 methods)
1. Weighted Average (total interest/total principal)xAAE
Subtract cap. interest from total interest = int. exp
2. Specific (capitalize interest on construction loans first,
then other, if necessary.
Subtract cap. interest from total interest = int. exp
Int. exp is difference b/t total int. cost and int. capitalized
AAE > debt
All interest is capitalized
Post-acquisition expenditures depreciate over...
the SHORTER of its useful life or remaining life of larger asset.
SL Method of Depreciation
Cost - salvage value / useful life
Sum of Years Digit Method
Double-Declining Method (SV not used)
Cost(2/N) ; i.e. Yr 2 = (Cost-depr yr1)(2/N), etc.
Natural Resources contains...
Cost of acquiring, exploring, etc. ; does NOT include cost of extracting of resource
Natural Resource (sum capitalized)
Acquisition, Exploration, and Development costs
Allocation of costs to inventory
(natural resource acct balance-RV)/total est. units
Depletion for a period calculation is...
(Depletion rate)x(# units removed in period)
Extraction costs and Production costs
Debited to inventory, NOT natural resource
1. Est. useful life/depr. method reviewed annually
2. Revaluation PERMITTED (ENTIRE class)
3. Interest earned CAN BE offset by interest costs
No Significant Influence (
1. Trading - FV current, Unreal G/L in earnings, Real G/L not recorded, dividends are income.
2. AFS - FV curr/noncurr, Unreal G/L in OCI, Real G/L recognized, dividends are income.
3. HTM - Amort. cost, Real G/L recognized.
4. Equity method - Real G/L recognized
5. Cost method - No Unreal G/L, Real G/L recognized.
Initial cost (Purchase - accrued interest)
+ Interest revenue (Initial cost x mkt rate x time)
- Cash paid (Face value x state rate x time)
Investment @ B/S
IFRS Investments (debt instruments)
Amortized Cost or FV; only debt instruments may be transferred b/t categories & RESTATED.
Joint Venture contributions are measured at what value?
Cost of stock rights formula
MV of one right/MV of one w/out right + MV of one right
IFRS Investment Property valued at...
Cost or FV (subsequent measurement); GAAP -cost only
Leasehold improvements amortization
SHORTER of useful life or lease life
Cash surrender value - Revenue recognized
Proceeds less the cash surrender value
Goodwill impairment is tested at what level?
Reporting unit level
Goodwill defined as...
Excess of FMV of net assets acquired
1. Revaluation of goodwill ALLOWED in active market
2. Reversal of impairment loss ALLOWED
3. Goodwill recognized at cash-generating unit level
For IFRS, what is the recoverable amount?
The greater of FV less costs to sell or value in use.
To calculate deferred revenue
Beg DR+cash received-earned rev=End Rev
Note payable (Discount)
Increases liability ; stated rate
Note payable (Premium)
Decreases liability ; stated rate > market rate
Determines cash payment of interest
Convertible bond methods (2 types)
1. BV Method - bond balances to stock accounts; no gain/loss recognized
2. MV Method - stock accounts are credited to MV of stock/bond, bond accounts are closed, and gain/loss is recorded for difference. (MV stock vs. bonds - diff is gain/loss.
Debt retirement (Gain/Loss)
When cash paid BV-DIC = Loss
Number of issued shares consists of...
# of O/S and Treasury
Called or Redeemed Stock
1. All OE accounts are removed and dividends in arrears are paid first.
2. DEBIT diff goes to RE
3. CREDIT diff goes to Contributed Capital
Increase in contributed capital T/S scenario...
Reissue price>cost ; Purchase price