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CPA FAR > FAR Retake > Flashcards

FAR Retake Flashcards

1
Q

How is the correction of an error in prior year Financial Statements treated?

A

The prior year Financial Statements have to be restated

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2
Q

How is the change from cash basis to accrual basis treated?

A

It’s treated as a correction of an error (non-GAAP to GAAP) the cumulative effect would be a prior period adjustment.

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3
Q

How is the voluntary change in accounting principles recognized? (retrospective or prospective)

A

Retrospective. The cumulative effect is reported as an adjustment of the beginning of year retained earnings at the earliest year presented

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4
Q

If you cannot determine whether a change in accounting estimate or change in accounting principle has occurred, how should the change be considered?

A

As a change in estimate

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5
Q

Acquisition Method - How are acquisition related costs treated?

A

They are expensed as incurred

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6
Q

How does an acquirer recognize a “Bargain Purchase” in a business acquisition?

A

It is treated as a gain in earnings at the acquisition date

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7
Q

Consolidations - How are intercompany loans and profits treated?

A

They must be eliminated in the preparation of combined financial statements

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8
Q

EPS - How is basic EPS reported?

A

On the face of the income statement

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9
Q

Stock Options - What kind of effect do options have when the average market price of common stock exceeds the exercise price of the options?

A

Diluting effect

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10
Q

Fair Value Measurements - If there is no principal market, what should the entity do?

A

The entity should use the most advantageous market for that asset

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11
Q

Fair Value Hedges - What is the intrinsic method?

A

The intrinsic method is the excess of the market price over the exercise price

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12
Q

How is the Gain or Loss on a Forward Contract computed?

A

Computed by multiplying the foreign currency amount of the forward contract by the difference between the Spot Rate at the BS date and the Spot Rate at the date of inception of the forward contract

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13
Q

Impairment - How is a loss calculated

A

If the carrying amount exceeds the future cash flows, an impairment loss should be recognized.

The loss is the excess of the asset’s carrying value over it’s fair value.

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14
Q

Interim Financials - How are discontinued operations treated?

A

They should be reported separately, net of tax, on the income statement for the interim period.

Disclosure in the notes to the interim statements is required

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15
Q

Interim Financials - How are temporary market declines that are expected to reverse treated?

A

They are not recognized in interim FS

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16
Q

If a transfer of Financial Assets does not qualify as a sale according to ASC 860 - how is it treated?

A

The transfer should be accounted for as a secured borrowing with a pledge for collateral

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17
Q

Statement of Cash Flows - Direct Method Disclosures

A
  • Major classes of gross cash receipts and gross cash payments
  • Amount of income taxes paid
  • A reconciliation of NI to NCF from operations
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18
Q

Statement of Cash Flows - How is interest classified?

A

A cash outflow that is classified as an operating activity

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19
Q

Statement of Cash Flows - How are Lease Payments classified?

A

Only the principal portion of the monthly lease payment would be reported as cash outflows for financing activites

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20
Q

Statement of Cash Flows - How is cash flow per share disclosed?

A

It should not be disclosed under either the direct or indirect method

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21
Q

Statement of Cash Flows - How are cash payments to acquire equity instruments classified?

A

Investing activities

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22
Q

SEC Rulemaking Process (3)

A
  • Concept Release
  • Rule Proposal
  • Rule Adoption
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23
Q

Most Authoritative accounting pronouncement?

A

FASB ASC

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24
Q

Who develops and distributes accounting standards for nongovernmental nonprofit entities?

A

FASB

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25
Q

What is Financial Accounting primarily based on?

A

The historical cost principle which specifies that assets be recorded and carried and their historical acquisition cost

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26
Q

GASB requires the issuance of 2 FS:

A
  • Balance Sheet

- Statement of Activities

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27
Q

Define Inter-period Equity

A

Financial Reporting should provide information to determine whether current year revenues were sufficient to pay for current year services

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28
Q

Primary characteristics of Governmental Structure (3)

A
  • The representative form of government and the separation of powers
  • Federal system at government and the prevalence of intergovernmental revenues
  • Relationship of taxpayers to services received
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29
Q

Who developed the Private Company Decision Making Framework?

A

FASB

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30
Q

Regulation S-K

A

Contains instructions for filing the non-financial statement forms required by the SEC

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31
Q

The Statement of Net Assets available for Benefits of the Plan must include: (4)

A
  • Total Assets
  • Total Liabilities
  • Net Assets reflecting all investments at FV
  • Net Assets available for Benefits
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32
Q

Credit Risk

A
  • Is the potential loss from any party to an agreement failing to perform
  • Must be disclosed
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33
Q

How is PP&E presented under IFRS on the BS?

A

It may be presented first on the BS

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34
Q

Price Earnings Ratio

A

Stock Price / EPS

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35
Q

IFRS/GAAP Comprehensive Income

A

Both allow a separate statement of comprehensive income or a combined statement

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36
Q

Inventory turnover

A

COGS / Average Inventory

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37
Q

(Gov) What is Derived Tax Revenue?

A
  • Results from assessments imposed on exchange transactions

- Generally from earnings or consumption, such as income taxes or sales taxes

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38
Q

(Gov) How should component units be included in the Financial Reporting Entity?

A

Discrete Presentation

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39
Q

(Gov) What is the measurement focus of governmental fund accounting?

A

Current Financial Resources

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40
Q

(Gov) How are investments held in a permanent fund recognized/valued?

A

At their Fair Values

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41
Q

(Gov) How do governmental funds report acquisitions of capital assets under the modified accrual basis of accounting?

A

As expenditures, not assets.

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42
Q

(Gov) 5 Governmental Funds (PD-Consents to Smoking Grass)

A
  • Permanent
  • Debt Service
  • Capital Projects
  • Special Revenue
  • General
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43
Q

(Gov) What is included in the Governmental Activities column of the Government wide FS?

A

-The Five Governmental funds and the Internal Service Fund

  • Permanent
  • Debt Service
  • Capital Projects
  • Special Revenue
  • General
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44
Q

(Gov) Fiduciary Funds

A
  • Pension Trust
  • Investment Trust
  • Private Purpose Trust
  • Agency
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45
Q

(Gov) How does the general fund report transfers to other funds?

A

As Other Financing Uses; a form of expenditure under the modified accrual basis of accounting

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46
Q

(Gov) Required Basic Financial Statements

A
  • Governmental Wide FS
    • Statement of Net Position
    • Statement of Activities
  • Fund FS
  • Notes
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47
Q

(Gov) MD&A

A

-Should compare current year results to the prior year with emphasis on the current year

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48
Q

(Gov) What fund type is excluded when governmental fund FS are converted to government wide FS?

A

Fiduciary Funds

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49
Q

(Gov) Assigned Fund Balance

A

The governing board “intends” to use for a specific purpose

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50
Q

(Gov) How are the Government wide statement of Net Position presented?

A

It must be divided into governmental and business type activities

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51
Q

(Gov) What method of accounting do Government Wide Financial Statements use?

A

Accrual Basis

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52
Q

(Gov) What is a “Fund” (2)

A
  • The basic accounting unit

- Used to assist in ensuring fiscal compliance

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53
Q

(Gov) Required Proprietary Fund Financial Statements

A
  • Net Position
  • Revenues, Expenses & Changes in Net Position
  • Statement of Cash Flows
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54
Q

How are Amendments incorporated into the FASB ASC?

A

By releasing ASU’s

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55
Q

Which tax rate do temporary differences use?

A

The enacted future rate

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56
Q

The 3 basic elements of financial reporting

A
  • Assets
  • Liabilities
  • Equity (Net Assets)
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57
Q

2 primary Qualitative characteristics that make accounting information useful?

A
  • Faithful Representation

- Relevance

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58
Q

Relevance incorporates

A
  • Predictive value

- Confirmatory value

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59
Q

Faithful Representation includes principles of:

A
  • Completeness
  • Accuracy
  • Neutrality
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60
Q

Fair Value Measurement Option

A
  • Is irrevocable
  • Must be approved on an instrument by instrument basis
  • Must be applied to the entire instrument
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61
Q

Enhancing Qualitative characteristics of financial reporting (Roger is Cut like a V)

A

Relates to both Relevance and Faithful Representation

  • Comparability
  • Understandability
  • Timeliness
  • Verifiability
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62
Q

Faithful Representation (Roger is never on the FENCe)

A
  • Free from Error
  • Neutrality
  • Completeness
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63
Q

3 Approaches to measure Fair Value (MIC)

A
  • Market Approach
  • Income Approach
  • Cost Approach
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64
Q

Fair Value is what kind of approach?

A

Market Approach

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65
Q

Fair Value

A
  • Does not take in account transaction costs or disposal costs
  • When there is no principle market, the value is determined using observable market data from the most advantageous market
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66
Q

Fair Value Input levels for measuring Assets/Liabilities (#)

A
  1. Unadjusted quoted market prices for identical assets or liabilities in active markets
  2. Quote market prices derived from or corroborated by observable market data
  3. Inputs based on the reporting entity’s internal data
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67
Q

What adjustments are usually needed from a prior year error.

A

A prior year error will normally result in adjustments to the affected Asset & Liability accounts as of the beginning of the current year and also a prior period adjustment to Retained Earnings.

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68
Q

How is the correction of an error accounted for?

A

By retrospectively restating the prior period financial statements

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69
Q

(IFRS) IFRS allows a change in an accounting policy under 2 circumstances

A

1) Change is required by IFRS

2) Change will result in Financial Statements that are reliable and more relevant

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70
Q

Related Party disclosures

A
  • Amounts due to or from related parties as of the Balance Sheet date
  • Amount of Purchases/Sales to related parties
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71
Q

When is the liability for a dividend recorded?

A

On the Declaration date

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72
Q

(IFRS) Treasury Stock - Methods

A
  • Cost Method
  • Par Value Method
  • Constructive Retirement Method
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73
Q

(IFRS) Constructive Retirement Method - Treasury Stock

A
  • Similar to the par value method except common stock is debited for the par value of treasury shares acquired, rather than treasury stock
  • Generally used when the company does not intend to reissue shares
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74
Q

What is the Intrinsic Value of the call option?

A

It is the difference between the exercise price and the market price.

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75
Q

What is the primary purpose of a qausi reorganization?

A

It is to give a corporation the opportunity to eliminate a deficit in retained earnings

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76
Q

Journal Entry for a stock dividend?

A

Debit: RE (For the FV of the shares issued)
Credit: Common Stock (Par value)
Credit: APIC (Excess)

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77
Q

What kind of disclosures are made for Cash?

A

Disclosures should be made for restricted cash and compensating balances

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78
Q

Bank Reconciliation Formula

A 
Bank Statement
\+Deposits in transit
-Oustanding checks
\+-Bank Errors
= Book Balance
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79
Q

The noncontrolling interest in a subsidiary is considered a component of…?

A

Stockholder’s Equity

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80
Q

Core Revenue Recognition Principle - Components (2)

A

1) Revenue is to be recognized upon the transfer of promised goods and service to customers
2) The amount of revenue recognized represents the consideration the entity expects to receive in exchange for those goods and services

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81
Q

Interest Rate Swap Agreement - Inherent Risks

A
  • Risk of exchanging a lower interest rate for a higher interest rate
  • Risk of nonperformance by the counterparty to the government
82
Q

For a financial instrument to be a derivative (4)

A
  • At least one underlying amount
  • At least one notional amount
  • Contract may be settled on a Net basis
  • No Net initial investment
83
Q

A derivative financial instrument is best described as..?

A

A contract that has its settlement value tied to Underlying Notional Amount

84
Q

The Underlying

A

Is the factor that is used in the formula applied to the notional amount to determine that amount that will be exchanged between parties

85
Q

At what level should Goodwill be tested?

A

Goodwill shall be tested for Fair Value Impairment at each reporting unit level

86
Q

(IFRS) Revaluation Model

A

May be applied to an intangible asset provided there is an active market for the asset

87
Q

(IFRS) Can internally generated goodwill be recognized as an asset?

A

No

88
Q

(IFRS) Which valuation methods does IFRS allow for intangible assets?

A

Cost Method or Revaluation Method

89
Q

(NFP) Required Financial Statements

A
  • Statement of Financial Position
  • Statement of Activities
  • Statement of Cash Flows
90
Q

(NFP) New Financial Disclosures Required

A

Qualitative - Management of Liquid Resources

Qualitative & Quantitative - Ability of organization to meet short term cash expenditures

91
Q

(NFP) Required Financial Statements for Non-Governmental Hospitals

A
  • Balance Sheet
  • Statement of Operations
  • Statement of Changes in Net Assets
  • Statement of Cash Flows
  • FS Notes
92
Q

(NFP) Is Hospital Charity Care considered Revenue?

A

No

93
Q

(NFP) What are Unconditional pledges to contribute classified as? Current and multi year contributions?

A

Revenue

  • Current Year Only
  • Multi Year Future contributions are restricted
94
Q

(NFP) What kind of revenues are expenses deducted from?

A

Expenses are only deducted from unrestricted revenues

95
Q

(NFP) Endowments

A
  • Use of investment is restricted; Income can be restricted or unrestricted
  • Must be under control or receiving entity (Quasi Endowment) in order to be recorded in unrestricted Net Assets
96
Q

(NFP) Refundable Advance

A
  • Liability
  • Promise to contribute assets pending on certain conditions being met
  • Becomes unconditional once the possibility that it won’t happen is remote
97
Q

(NFP) What valuation method is used for Investments?

A

Fair value is mostly used

EXCEPTION: Equity method used when significant influence exists

98
Q

(NFP) How is depreciation allocated?

A

Allocated proportionately to various functions

99
Q

(GOV) The GAAP Hierarchy for state and local governments

A

-GASB Statements
-GASB Technical Bulletins
-GASB Implementation Guides
-GASB Approved Literature
NON AUTHORITATIVE
-GASB Concept Statements
-FASB Pronouncements

100
Q

(GOV) The 3 fund types

A
  • Governmental
  • Proprietary
  • Fiduciary
101
Q

(GOV) Fund Accounting - 2 Types

A

Accrual Basis

  • Current Economic Resources
  • Revenues Recognized when Earned

Modified Accrual Basis

  • Current Financial Resources Focus
  • Revenues recognized when available
102
Q

(GOV) Budge Estimates - Appropriations & Encumbrances

A

Appropriations - Highest amount allowed for an Expenditure

Encumbrance - Record purchases and reserves it

103
Q

(GOV) Governmental Funds - Basis of accounting, focus, revenue recognition

A
  • Use Modified Basis of Accounting
  • Have a Current Economic Financial Resource focus
  • Revenue recognized when available and measurable (60 days)
104
Q

(GOV) Governmental Fund Balance Types

A
  • Restricted - restricted by contributor
  • Committed - restricted by government
  • Assigned - intended to be used
  • Unassigned - available
  • Non spendable - Isn’t in a “spendable” state (inventory)
105
Q

How is Net Income treated by Noncash expenses that did not result from a cash outflow?

A

Net Income must be increased

106
Q

(NFP) How are operating expenses normally reported?

A

As change sin Net Assets without donor restrictions

107
Q

(NFP) Statement of Activities - Characteristics

A
  • Includes Net Asset reclassification

- Activities that occurred during a period resulted in changes to net Assets

108
Q

(NFP) Investments in debt securities

A

All investments in debt securities are measured at Fair Value in the statement of Financial Position

109
Q

(NFP) When should a donation be reported as a “refundable advance”?

A
  • When it is based on a conditional promise (matching funds)

- Reported as a liability until the condition is met, then revenues

110
Q

(NFP) When should a conditional pledge be recognized?

A

When the pledge conditions have been met

111
Q

(NFP) Primary focus of the Statement of Activities

A

To demonstrate how the organizations resources are used in providing various programs and services

112
Q

(NFP) How are donor restricted cash contributions for long term purposes reported?

A

As a financing activity in cash flows

113
Q

(NFP) Residual Interest

A
  • Is the appropriate characterization of Net Assets of a NFP

- Equity or Net Assets is the residual interest in the assets of an entity that remains after deducting liabilities

114
Q

(GOV) CAFR Sections

A
  • Introductory
  • Financial
  • Statistical
115
Q

(GOV) Government Wide Financial Statements - Measurement & basis

A

Measurement Focus - Economic Resources

Basis of Accounting - Modified Accrual

116
Q

(GOV) Program Revenues

A

Resources that are generated in the process of a particular service or operating a particular part of a government

117
Q

(GOV) Imposed Non Exchange Revenues

A
  • Property taxes and fines

- Are assessed and not derived from transactions

118
Q

(GOV) How is bond interest reported

A

Since governmental funds uses the modified accrual basis, Bond Interest will not be accrued, but merely recorded as an expenditure when paid

119
Q

(IFRS) Change in Accounting Principle/Policy

A
  • Same as US GAAP

- Retrospective Basis

120
Q

(IFRS) Revaluation Method

A

Assets are periodically revalued and adjusted to their Fair Values and are amortized between revaluation dates

121
Q

(IFRS) In order to be considered intangible, an asset must…

A

Be separable or it must arise from contractual or legal rights

122
Q

When must the goodwill impairment test be performed for a public entity?

A

Any time during the fiscal year, provided that it is performed at the same time every year

123
Q

Gain Contingencies

A

They are never accrued, but they should be disclosed in the notes

124
Q

Under GAAP how are organization costs treated?

A

They are expensed immediately

125
Q

The two acceptable inventory estimation methods under GAAP.

A

The Retail method and the Gross Profit Method

126
Q

(IFRS) Allows for the recoveries of previously written down inventory, limited by the lower of:

A
  • The amount required to restore the inventory to its current value
  • The extent of the previously recorded loss
127
Q

How are IFRS and GAAP inventories valued?

A

At the lower of cost or NRV

128
Q

Periodic Approach - Inventory

A

Sales are recorded only after all the purchases for a period are recorded

129
Q

3 Characteristics of a segment

A

1) Involved in a business activity that may result in earning revenues and incurring expenses. whether internal or external
2) Performance is evaluated by management for the purpose of resource allocation
3) Financial information identifiable to the component is available

130
Q

A reportable segment contributes at least 10% total for all segments for 1 of the following

A
  • Revenues
  • Assets
  • Profits
131
Q

(Segment Reporting) - Revenue Test

A

Based on combined revenues of all segments, including those resulting from intersegment sales
-DOES NOT INCLUDE INTEREST EARNED

132
Q

(Segment Reporting) - Asset Test

A

Includes identifiable assets only, Not Goodwill

133
Q

(Segment Reporting) - Major Customers

A

Those that provide >= 10% consolidated revenue

134
Q

(Segment Reporting) How many reportable segments are you limited to?

A

10 segments

135
Q

(IFRS) Segment Reporting

A

Similar to GAAP

  • Revenue test
  • Asset test
  • Profits test
136
Q

Who is required to report segment information?

A

Only publicly traded entities

137
Q

(Segment Reporting) Disclosures for Segments

A

For each reportable segment, a company will separately disclose its revenues from external customers and from transactions with other operating segments

138
Q

(Segment Reporting) Management Approach

A
  • Method used under ASC 280

- Method in segment reporting that helps define what constitutes a “segment”

139
Q

Interim Financial Statements can be described as emphasizing:

A
  • Timeliness

- Relevance

140
Q

(IFRS) If Interim Financial Statements are presented, what else is required?

A

Four Basic Financial Statements and selected notes

141
Q

Accumulated Benefit Obligation

A

Is the present value of all future retirement payments that the employee is already entitled to based on services rendered prior to that date

142
Q

How are large stock dividends recorded (greater than 25%)?

A

They are recorded at Par or Stated Value

143
Q

What entry is made when Rights are issues without consideration?

A

No Entry is made

144
Q

How do expiring “Stock Warrants” effect the equity account

A

No effect on the overall equity account balance

145
Q

How are dividends in arrears on preferred stock reported?

A

They are disclosed, but not accrued

146
Q

If a company’s dividends exceeds its Retained Earning balance how is it treated?

A

The excess is considered a liquidating dividend, or return of capital.

147
Q

When a company undergoes a “Quasi reorganization” how is a deficit in Retained Earnings is treated? Assets?

A

The deficit in RE is eliminated and assets that are overstated are written down to their Fair Values?

148
Q

(IFRS) How is can Treasury Stock be accounted for? (3)

A
  • Cost Method
  • Par Value Method
  • Constructive Retirement Method
149
Q

When an asset is received in exchange for a noninterest bearing note, how is the transaction recognized?

A

At the FV of the note, the FV pf the asset, or the PV of the payments called for under the note. Whichever is more readily determinable

150
Q

How are Type 2 Subsequent Events treated?

A

They are no recognized in the Financial Statements, but must be disclosed

151
Q

Liquidation Basis of Accounting - How are assets valued?

A

Valued at the amount expected to be generated upon liquidation

152
Q

How is interest expense on self constructed long terms assets treated?

A

It may be capitalized to the extent that interest is actually paid, subject to certain rules

153
Q

How are deferred tax assets and liabilities classified?

A

As noncurrent on the balance sheet

154
Q

Acquisition Method - How are expenses treated?

A

Direct costs associated with the acquisition are recognized as an expense in the period incurred

155
Q

How should an acquirer recognized a “Bargain Purchase” is a business acquisition?

A

As a gain in earnings at the acquisition date

156
Q

How is a majority voting interest determined?

A

Greater than 50% of the directly or indirectly owned outstanding voting shares of another entity

157
Q

(Disclosures) Deferred Taxes

A
  • Nature and amount of each type of operating loss and tax credit carry forward
  • Types and amount of existing temporary differences
  • NO requirement to disclose information about the types and amounts of permanent differences
158
Q

(Gov) When are special revenue funds used?

A

they are used to account for revenues that are restricted or committed to being used to finance designated activities other than capital providers or debt service

159
Q

(Gov) When is a debt service fund used?

A

Used to make principal and interest payments on the tax supported debts of the government and collect funds for that purpose

160
Q

How are impairment losses treated for assets held for use?

A

Once an impairment loss is recognized it cannot be reversed for assets held for use.

161
Q

If a transaction has commercial substance, how are gains and losses treated and what amount should the net asset be valued at?

A

Gains and losses are recognized and the new asset should be recorded at FMV

162
Q

What costs should be included in the capital cost of land?

A

Any costs preparing it for its intended use

  • surveying (title search and assessments)
  • clearing
  • grading
  • landscaping
  • razing or demolishing of old building
  • real estate taxes in arrears
163
Q

(IFRS) If an item in PP&E is revalued, what else must also be revalued?

A

The entire class of which the assets belongs to must also be revalued

164
Q

(IFRS) How is inventory valued?

A

At the lower of cost or NRV

165
Q

(IFRS) How are payments for interest reported on the statement of cash flows?

A

As a cash outflow for either operating activities or for financing activities

166
Q

(IFRS) How are deferred tax assets or liabilities classified?

A

Same as GAAP; noncurrent

167
Q

The 2 primary objectives for accounting for income taxes

A
  • recognizing current year amount of taxes payable or refundable
  • recognize amount of DTL’s and DTA’s reported for future tax consquences
168
Q

How is the effect of a change in the opening balance of a Valuation Allowance that results from a change of circumstances reported?

A

In income from continuing operations

169
Q

Which approach is used to calculate “Income Tax Expense”

A

The asset and Liability Approach

170
Q

When cash is transferred to a sinking fund what kind of transaction is taking place.

A

A transfer from a current asset to a noncurrent asset

171
Q

Which bonds mature in installments?

A

Serial Bons

172
Q

List some Bond Issue Costs

A
  • Legal and accounting fees
  • Printing of prospectus
  • Underwriting fees
173
Q

When debt is issued at a discount, what does the interest expense equal?

A

The cash interest paid plus the discount

174
Q

Formula for interest payable and Interest Expense on the bond

A

Face Value x Stated Coupon Rate

Carrying Value x Effective Rate

175
Q

What is a defining feature of “Convertible Debt Securities”

A

An interest rate that is generally lower than nonconvertible debt

176
Q

Asset Turnover

A

Sales / Total Assets

177
Q

AR Turnover

A

Credit Sales / Average AR

178
Q

Inventory Turnover

A

COGS / Average Inventory

179
Q

Price Earnings Ratio

A

Market Price / EPS

180
Q

If AFS securities experience a loss that is considered “other than temporary” (permanent); what must be down?

A

The security must be written down to a new cost basis and it is treated as a realized loss

181
Q

How is a reclassification of a debt security from AFS to HTM handled? Unrealized holding gains/losses?

A

The transfer occurs at its market value on the date of the transfer.
-Any unrealized holding gain/loss is recognized in OCI and amortized as an adjustment to the effective interest rate on the security

182
Q

How are investments in bonds that will be held to maturity recorded?

A

At cost; any discount or premium is amortized adjusting the carrying value of the bonds to the amortized cost

183
Q

How are AFS securities gains/losses reported when the Fair Value Option is elected?

A

They are reported as a component of income from continuing operations

184
Q

(Disclosures) Debt securities held to maturity

A

The market value of the investments in debt that are classified as HTM must be disclosed

185
Q

When changing from the cost to the equity method; is it treated prospectively or retrospectively?

A

Prospectively

186
Q

(IFRS) The equity method accounting approach used for Joint Operations under IFRS is known as…

A

The Proportionate Consolidation Approach

187
Q

Gains and Losses of the effective portion of a hedging instrument will be recognized in current earnings in each reporting period for which can of hedge?

A

Fair Value Hedge; NOT Cash Flow Hedges

188
Q

For a non issuer to apply the “Simplified Hedge” accounting approach to a cash flow hedge

A

The variable interest rate on the interest swap rate and the variable interest rate on the hedged borrowing are linked to the same index (ex: Federal Prime Rate)

189
Q

What is the intrinsic value of a stock option?

A

Market Price - Exercise price

190
Q

How are shipping of goods or transporting of goods to customers treated?

A

A selling expense and it is not included in either inventory or cost of sales

191
Q

For inventory purposes what is NRV?

A

NRV is the sales price reduced by the costs to complete the units as well as costs required to sell the units

192
Q

What interest rate is the Accretion expense for an Asset Retirement Obligation recorded at?

A

At the credit adjusted risk free interest rate, NOT the risk free interest rate

193
Q

When are gains/losses recognized for Non monetary exchanges that have commercial substance?

A

Immediately

194
Q

(Disclosures) PP&E

A
  • Balances in each major class of property
  • Accumulated Depreciation by major class or in aggregate
  • Depreciation Expense
  • Description of methods used to calculate depreciation
195
Q

Direct Financing Lease

A

The lessor does not recognize any gain or loss on the sale of the leased asset and will only recognize interest income over the term of the lease, using the rate implicit in the lease

196
Q

The Percentage of completion Method

A

Is recommended when collection is assured and the estimates of progress toward completion are reasonably dependable

197
Q

When is the Completed contract method generally used?

A

When collection or progress toward completion cannot be measured

198
Q

Completed Contract Method - When is revenue recognized?

A

Total revenue is recognized in the period in which the contract is complete
-Progress Billings are not considered

199
Q

When a loss is expected for long term contracts when is it recognized?

A

Immediately

200
Q

(IFRS) Foreign Operations - Currency classifications

A
  • Foreign
  • Functional
  • Presentation
201
Q

Unfunded accrued pension cost represents

A

Represents the cumulative amount by which cost exceeds the amounts contributed to the plan

CPA FAR (3 decks)

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