FAR Review

Question 1

How to record Stock Rights?

Answer 1

No entry, only memorando entry

Question 2

How to Calculate Aquisition Goodwill Methods & NCI?

Answer 2

1. Full Goodwill ( GAAP) = FV Sub - FV of SUB Net Assets
   
   • NCI= FV sub * NCI
2. Partial Goodwill (IFRS preferred) = Acquisition Cost - FV net identifiable Assets
   
   • NCI= FV sub net identifiable Assets * NCI

Question 3

Net Periodic Pension Plan Calculation & Entry?

Answer 3

Net Periodic Pension Cost=
S ervice Cost
+ I nterest = Beg PBO * Disc. Int.
- R eturn on Asset= Beg. FV Plan Asset * Expected Rate
+ A mortization of Unrecognize Prior Service Cost = unrecog. Prior Service Cost / Ave. Remaining service life
- G ain and + Loses= (Unrecog. G or L - 10 % Greater of PBO FV Plan Asset ) / Ave. Remaining Service Life
E xisting Net Obligation Amortization= funded status / greater of 15 years or ave. remainin service life

• JE:
  Pension Compensation Expense (Service Cost)
  Net Pension Cost
  Pension Benefit Liability- Current (SC)
  Other Comprehensive Income (NPC)

Question 4

Reconciliation from Gov. Fund to Statement of Net Position (BS)

Answer 4

Total Gov. Fund Balance
\+ C apital Assets
-  A ccumulated Depreciation
-  N on Current Liabilities
\+ S ervice Fund Net Position
\+  I nterfunds
\+ T ransfers
=  Net Position from governmental Activities

Extras:

• Deferred Inflows
• Accrued Int. Payable

Question 5

Reconciliation from Funds to Statement of Activities

Answer 5

Net Change in fund balance- total govenmental funds
\+ C apital Outlay Expenditures
\+ P rincipal PMT on Debt
- A sset disposed NBV
- S ource Other Financing
\+ R evenue measurable but not available
-  I nterest Expense Accrued
- D epreciation
  E xpense
\+Service Fund Changes in Net Position
\+Interfunds
\+Transfers
=Change in Net Position of Governmental Activities

Question 6

JE Percentage of Completion vs Completed Methos

Answer 6

A. % of Completion
1. Record Materials:
CIP (Cost & GP)
Materials , Cash, etc.

2. Record Billing:
   AR
   Progress Billing ( Billed to date)

3. Record PMT:
    Cash
            AR
4. Record Est. GP:
    Expense/Cost of LT Construction (Materials)
    CIP (GP)
             Revenue

5. Closing Entries
   Progress Billings
   CIP

B. Completed Method (GAAP Only)
JE 1 to 3 SAME as % of Completion

    1. Close Billing to rev
        Progress Billing
               Rev
    2. Close CIP to Exp.
        Cost of LT Construction
               Exp

Question 7

How to Determine if it’s a Liability or an Asset in % of Completion Method

Answer 7

Current Asset= CIP > Progress in Billings

Current Liability = CIP < Progress in Billings

Question 8

Goodwill Impairment GAAP vs IFRS

Answer 8

A. GAAP:

1. Qualitative Evaluation: perform quantitative evaluation if the following factors failed:
   a. Macroeconomic conditions b. Overall Financial Performance
   c. Entity- Specific Events: Bankrupcy,litigation etc.
   d. Industry & Market Conditions
2. Quantitative Evaluation:
   a. Reporting Unit NBV vs FV
   b. FVRU identifiable - unidetifiable assets= max. goodwill impairment

B. IFRS
1. Recoverable Amount, greater of:
NRV vs PV of Future $ Flows
2. Cash Generating Unit NBV vs CGU Recoverable Amount

Question 9

Intangible Impairment GAAP vs IFRS

Answer 9

A. GAAP

1. NBV vs undiscounted future $ Flows
2. NBV vs FV

B. IFRS
1. Recoverable Amount, greater of:
NRV vs PV of Future $ Flows
2. NBV vs Recoverable Amount

Question 10

FOB shipping Point vs FOB Destination

Answer 10

1. FOB Shipping Point= Freight IN= COGS

2. FOB Destination= Freight Out= Selling Expense

Question 11

Fundamental Qualitative Characteristics

Answer 11

1. Relevance = Predict & Confirm your Material Value

2. Faithful Representation= Completely Neutral is Free From Error

Question 12

Enhancing Qualitative

Answer 12

U nderstandability
C omparability
T imeliness
V erificability

Question 13

Assumptions

Answer 13

P eriodicity
G oing Concern
M onitary Unit
E ntity

Question 14

Principles

Answer 14

R ev. Recognition
E xp. Recognition
F ull Disclosure
M easurement

Question 15

SEC Forms

Answer 15

1. Form 10 K= US Annual
   * L= 60 d ; A= 75 d; O= 90 d
2. Form 20 F = Non US Annual
3. Form 40 F=Canadian Annual
4. Form 10 Q= US Quarterly
   
   • L & A= 40 ; O= 45
5. Form 6 K= Foreign Semmi Annual
6. Form 8 K= Major Events
7. Form 11 K= Annual Report Employee Benefit Plan
8. Form 3, 4 &5 = 10% owners

Question 16

Large Accelerated vs. Accelerated

Answer 16

1. Large Accelerated= $700 million or more market value

2. Accelerated= $75 million or more market value < $700 m

Question 17

Lower Cost vs NRV vs Lower Cost vs Market

Answer 17

1. LCNRV (IFRS All & GAAP: FIFO / WA) = Lower of Cost vs NRV ( SP- Cost to sell)
2. LCM (GAAP only: LIFO/Retail)=
   a. Middle Amount of: Replacement Cost , NRV & Normal Profit ( NRV - Profit Margin)b. Cost vs Middle Amount

Question 18

Which items are not eligible to be measured using the fair value option?

Answer 18

Financial instruments that are classified by the user as a component of shareholder’s equity.

Note: Certain commitments, rights and obligations, and a host financial instrument resulting from the separation of an embedded nonfinancial instrument from a nonfinancial hybrid instrument are eligible to be measured using the fair value option.

Question 19

Premiun & Discount Bonds Amortization Effects

Answer 19

1. Discount= Interest Expense > $ Paid , amort. increase interest exp.
2. Premium= Interest Expense < $ Paid, amort. reduce interest Exp.

Note: If amort. isn’t recorded:

1. Discount= Int. Exp. understated; RE: overstated
2. Premium= Int. Exp. overstated; RE: understated

Question 20

Which are the fundamental aspects that shape financial reporting in the application of accrual accounting to pensions?

Answer 20

1. Delaying recognition of certain events
2. Reporting net cost
3. Off setting liabilities and assets.