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1

Income - Accrual accounting

Cash to Accrual (Liab.-add BEG; subtract END/Asset - subtract BEG; add END)
Accrual to Cash (same as SOCF)

2

Expense - Accrual accounting

Cash to Accrual (same as SOCF)
Accrual to Cash (Liab.-add BEG; subtract END/Asset - subtract BEG; add END)

3

Decision Usefulness: 2 Primary Characteristics

1. Relevance - Predictive value, Confirmatory value, Materiality.
2. Faithful Representation - Completeness, Neutrality, Free from Error.

4

4 Enhancing Qualitative Characteristics

Comparability, Verifiability, Timeliness, Understandability

5

Definition of current asset's operating cycle

Operating cycle of one year or less - WHICHEVER IS LONGER!

6

Consolidated F/S accounting concept - which entity?

Economic entity

7

Going Concern assumption supports...

Supports historical cost; not @ liquidation value.

8

Fair value based on "what" price and transaction

Based on EXIT price and a hypothetical transaction

9

HTM is measured at what option?

Amortized cost & FV

10

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

11

Large accelerated filer ($700M or more)

10-K - 60 days ; 10-Q - 40 days

12

Accelerated filer ($75-700M)

10-K - 75 days ; 10-Q - 40 days

13

Non-accelerated filer (less than $75M)

10-K - 90 days ; 10-Q - 45 days

14

IASB Monitoring Board

Appoints trustees of IFRS Foundation

15

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.

16

IFRS Interpretation Committee is...
IFRS Advisory Council is...

1. Emerging Issues Task Force
2. Advises IASB on priorities, cost-benefit, etc.

17

2 Assumptions under IASB Framework (no enforcement)

1. Going Concern
2. Accrual Basis

18

IFRS for SMEs for inventory valuation approaches

1. FIFO or;
2. Weighted Average

19

IFRS requires what classifications for Stmt of Fin. Position?

Current & Non-current assets and liabilities

20

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)

21

What's included in personal F/S?

Stmt of Fin. Position & Stmt of Changes in Net Worth

22

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.

23

For IFRS SMEs, what accounting method can be used with significant influence?

Cost or Equity Method

24

All notes receivable are recorded how?

PV of future cash flows (> 1 yr); PV - any discounts will be amortized.

25

What are current & noncurrent notes receivable recorded at?

Current - Face value
Noncurrent - PV

26

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.

27

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.

28

Inventory Costs includes what?

Freight-in, insurance, taxes paid, material handling/packaging costs, transport to consignees.

29

Inventory Costs does not include what?

Interest, advertising, freight-out, advance commissions.

30

What costs reduce inventory?

Purchase discounts & returns/allowances

31

Periodic Inventory (WA)

COGAS/# units available, multiply by either COGS or End Inventory, whichever you are calculating.

32

Periodic Inventory (Purchases) (FIFO)

HIGHEST Net Income
COGS - lowest (earliest) costs
End Inv - highest (latest) costs

33

Periodic Inventory (Purchases) (LIFO)

LOWEST Net Income
COGS - highest (latest) costs
End Inv - lowest (earliest) costs

34

FIFO favors...

Balance sheet; approximation of CURRENT costs

35

LIFO favors...

Income statement; approximation of NONCURRENT costs, but COGS CURRENT

36

LIFO is bad and good why?

Minimizes profits & chosen to minimize income tax

37

Dollar Value LIFO advantages are...

1. reduces effect of liquidation problem
2. allows to use FIFO internally
3. reduces clerical costs

38

Dollar Value LIFO (Conversion Index)

End Inv in CY dollars/End Inv in Base Yr dollars

39

Cost-to-Retail Ratio

COGAS cost/COGAS Retail

40

Retail Inventory Method (Calculate End Inv @ cost)

End Inv @ retail X C/R ratio

41

End Inv Overstated equals...

COGS Understated (OPPOSITE)

42

Beg Inv Overstated equals...

COGS & Purchases Overstated (SAME)

43

IFRS vs. GAAP Inventory

IRFS
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

44

AAE

Accumulated Average Expenditures

45

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

46

AAE

Int. exp is difference b/t total int. cost and int. capitalized

47

AAE > debt

All interest is capitalized

48

Post-acquisition expenditures depreciate over...

the SHORTER of its useful life or remaining life of larger asset.

49

SL Method of Depreciation

Cost - salvage value / useful life

50

Sum of Years Digit Method

(N(N+1))/2

51

Double-Declining Method (SV not used)

Cost(2/N) ; i.e. Yr 2 = (Cost-depr yr1)(2/N), etc.

52

Natural Resources contains...

Cost of acquiring, exploring, etc. ; does NOT include cost of extracting of resource

53

Natural Resource (sum capitalized)

Acquisition, Exploration, and Development costs

54

Depletion is...

Allocation of costs to inventory

55

Depletion Rate

(natural resource acct balance-RV)/total est. units

56

Depletion for a period calculation is...

(Depletion rate)x(# units removed in period)

57

Extraction costs and Production costs

Debited to inventory, NOT natural resource

58

PPE IFRS

1. Est. useful life/depr. method reviewed annually
2. Revaluation PERMITTED (ENTIRE class)
3. Interest earned CAN BE offset by interest costs

59

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.

60

Investment reconciliation

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

61

IFRS Investments (debt instruments)

Amortized Cost or FV; only debt instruments may be transferred b/t categories & RESTATED.

62

Joint Venture contributions are measured at what value?

Carrying value

63

Cost of stock rights formula

MV of one right/MV of one w/out right + MV of one right

64

IFRS Investment Property valued at...

Cost or FV (subsequent measurement); GAAP -cost only

65

Leasehold improvements amortization

SHORTER of useful life or lease life

66

Cash surrender value - Revenue recognized

Proceeds less the cash surrender value

67

Goodwill impairment is tested at what level?

Reporting unit level

68

Goodwill defined as...

Excess of FMV of net assets acquired

69

IFRS Intangibles

1. Revaluation of goodwill ALLOWED in active market
2. Reversal of impairment loss ALLOWED
3. Goodwill recognized at cash-generating unit level

70

For IFRS, what is the recoverable amount?

The greater of FV less costs to sell or value in use.

71

To calculate deferred revenue

Beg DR+cash received-earned rev=End Rev

72

Note payable (Discount)

Increases liability ; stated rate

73

Note payable (Premium)

Decreases liability ; stated rate > market rate

74

Stated rate

Determines cash payment of interest

75

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.

76

Debt retirement (Gain/Loss)

When cash paid BV-DIC = Loss

77

Number of issued shares consists of...

# of O/S and Treasury

78

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

79

Increase in contributed capital T/S scenario...

Reissue price>cost ; Purchase price

80

Decrease in contributed capital T/S scenario...

Reissue priceorig. issue price