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Flashcards in FAR Y1-100 Deck (100):
1

A bond's contract rate = market rate. How much will the bond sell for?

Its maturity value

2

A creditor who receives an asset to settle debt records the asset at what amount?

FMV

3

An entity declares stock dividend of > 20-25% of the outstanding stock. How should this be recorded?

Debit retained earning for Par Value of the stock dividend.

4

An entity using IFRS decides to present interim Financial Reports. Name the F/S that must be included.

Stmt of Financial Position, Stmt of Comprehensive Income, Stmt of Chgs in Equity, Stmt of Cash Flows

5

Are comparative F/S required for not-for-profit entities?

No.

6

Are debenture bonds secured?

No

7

Are financial forecasts prepared for limited use only?

Financial Forecasts can be prepared for General Use or Limited Use

8

Are interco transactions eliminated in segment reporting?

No

9

Are normal costs for freight-in, handling, & spoilage included in the cost of inventory?

Yes. Normal costs are included in inventory. (Abnormal costs are not, & are period costs.)

10

Are operating leases disclosed on the B/S?

No.

11

Are significant non-cash investing & financing activities required to be disclosed under IFRS?

Yes, disclosure must be made in the footnotes (GAAP allows either footnote or on Stmt of Cash Flow)

12

Assets contributed into a partnership are recoreded by the partnership at what amount?

FMV

13

At what amount are Trading Securities presented on the B/S?

Fair Market Value (TS = FMV)

14

At what point does an entity, susing installmet sales method, recognize revenue?

As cash is collected

15

Can a fixed asset held for sale, with an impairment loss, be written up again under GAAP?

Yes, up to the amount written down.

16

Define a change in acctg principle.

A change from one GAAP method to another (Exceptions: Depr, Amort, Depl)

17

Define a component unit.

Legally separate organization for which the primary govt is financially accountable.

18

Define assigned fund balance.

Resources the govt is planning to spend, but not yet decided by the decision making authority

19

Define convertible preferred stock.

It allows the holder the option to convert their PS into CS.

20

Define Current Assets.

Resources that are expected to be realized in cash, sold, or consumed during the normal op cycle.

21

Define non-controlling interest.

Equity in aquired entity that acquirer did not obtain

22

Define the term functional currency.

The currency of the primary economic environment in which the entity operates

23

Describe each type of subsequent event and their treatment in the F/S.

1.Recognized-existed, but not resolved as of B/S date, Non-recognized.

24

Disclosure is required for major customers. How is a major customer determined?

10% or more of consolidated revenue

25

Dividends rec'd by investor using cost method (owns

Income

26

Does an entitiy that is a Development Stage Entity use US GAAP?

Yes. The entitiy's F/S are required to be identified as development stage entity.

27

Does IFRS allow for investment property to be valued at FMV?

Yes. Investmt prop may be valued at FMV. It is accounted forr separately from PP&E.

28

Does IFRS permit the use of 'push-down' accounting?

No. Not permitted.

29

Does preferred stock generally have the same voting rights as common stock?

Preferred Stock generally does not have any voting rights

30

Does the non-controlling interest receive any allocation of NI and/or dividends of the subsidiary?

Yes, a proportionate share of Net Income and/or dividends.

31

Does use of direct or indirect method of cash flows have an effect on investing & financing sections of CFS?

No. Use of direct or indirect only effects the operating activities section of the Stmt of Cash Flows.

32

During a period of rising prices, which inventory cost flow method provides a larger profit & End Inv?

FIFO

33

F/S that are remeasured create a gain or loss. Where is the gain/loss recorded?

Remeasurement gain or loss is recorded on the I/S

34

Fiscal accountability is associated with which financial statements?

Fund financial statements

35

How are assets & liabs presented on a personal F/S?

Assets and Liabs are presented at estimated current value

36

How are deferred tax items classified under IFRS?

All deferred tax items are classified as non-current. (IFRS doesn't allow for current deferred taxes)

37

How are inventories valued under IFRS?

Lower of cost or Net Realizable Value (IFRS NRV=Est Selling Price-Est Cost to Complete & Sell)

38

How are prior period adj presented on the F/S under US GAAP?

Net of Tax

39

How do you calculate the Number of Days in the Average Inventory?

365//Inventory Turnover

40

How does a lessee calculate the PV of future min lease payments?

Discount future pmts using lesser of: Incremental borrowing rate or Lessor's implicit rate (if known by lessee)

41

How does a lessee record a capital lease?

As an asset & Liab on B/S at PV of min lease pmts

42

How does an entity determine if a segment is a reportable segment?

>10%: Revenue, |sum of all segments having Profit/or sum of those w/Loss|, Assets

43

How is a deferred item caused by a loss carryforward classified?

Net operating loss carry-fwds are always future deductible amts and are deferred tax assests

44

How is an investment in a closely held business presented on personal F/S?

Appraised Value

45

How is current ratio calculated?

Current Assets // Current Liabs

46

How is non-controlling interest measured under GAAP?

Beg Bal NC interest + minority SH% of NI of acquiree - minority SH% of div pd by adquiree=End Bal NC interest.

47

How is non-controlling interest measured under IFRS?

2 Options: 1. FV, 2. Proportional share of value of identifiable assets and liabs of the acquiree.

48

How is PP&E shown on the Balance Sheet?

Net Book Value (Cost - Accum Depreciation)

49

How is profit/loss from a partnership divided among the partners?

According to their agreement, or else evenly.

50

How is the deferred gross profit on an installment sale recorded?

Ending Installment Sales Receivable * GP%.

51

How is the discount or premium accounted for when a bond is issued?

Amortized over life of the bond.

52

How is the inventory turnover ratio calculated?

COGS // Avg Inventory

53

How is the Stmt of Cash Flows per GASB different from FASB?

Direct method only, recon of op inc & net cash flow from op act. Op, noncap fin, ca & related fin, & invest. Categories; cash rec for int is investing, cash pd for int is financing, purch of cap assets is fin

54

How long should a patent be amortized?

Shorter of: 1. Legal life, or 2. Useful life

55

How many years may an operating loss be carried back?

2 years; if loss remains, it can be carried fwd 20 years: 2 back/20 fwd = operating loss

56

How often are interim reports required to be filed under IFRS?

IFRS doesn't require interim reporting

57

How should a deferred tax asset be presented on the B/S?

The deferred tax asset should be presented net of the allowance.

58

If a sales lease-back transaction is considered to be major, how is the gain or loss recorded?

Gain is deferred up to PV of lease paymts. If capital lease,amortize gain as reduction to depreciation: OW-life; NS-lease

59

If a loss contingency can be reasonably estimated, & likelihood is reasonably possible, should it be accrued?

No, footnote only. Events that are probable are accrued.

60

If FV of asset aquired in a non-monetary exchange cannot be determined, the asset is recorded at__?

Book Value

61

In a defined benefit pension plan, what are the 5 components that make up pension expense?

Svc Costs, Interest, Return on plan assets, Amort of Prior Svc Costs, Gain/Loss

62

In order to recognize a nonmonetary exchange in the entity's FS, what must the transaction have?

Commercial Substance

63

In what situations is a blended component unit presentation appropriate?

1Gov body of org ? primary gov 2PGMgmt has operational responsblty 3Org svc only for PG 4.Org's debt covered by PG

64

Information that is a faithful representation has what 3 characteristics?

Neutral, Complete, & Free From Error

65

Inventory must be recorded at LCM if the utility of the goods is

Replacement Cost, limited to ceiling of NRV (Sell $-Cost to complete & sell) and floor of NRV- PM

66

Investing activities section of Stmt of Cash Flows generally includes items from which B/S sections?

Noncurrent assets

67

Is comparative info required on GAAP F/S?

No. Comparative F/S are required by IFRS and SEC

68

Is freight out considered to be a product cost?

No, it is a selling expense, which is a period cost

69

Is the Comprehensive Annual Financial Report required by GASB?

No, it is optional.

70

Is the loss on the inventory write down added back in the operating section of the Cash Flow Stmt?

No. This loss is an exception and is not added back.

71

Name 2 exceptions the the general rule regarding R&D costs.

1. Fixed assets that have alternative future uses 2. R&D performed under contract for another entity

72

Name several ways that an entity could segment their financial info.

Service/Product Line, Geographic Area, Entity Type, or by the Type of Customer

73

Name some examples of derivative instruments.

Swaps (interest rate & currency), Options (call & put), Futures contracts, & Forward Contracts.

74

Name some examples of permanent differences.

Municipal Bond Int; Life Insur Premium/entity is beneficiary; Fed Income Tax, Dividend Recd Deduction

75

Name the 10 elements of financial statements as described in SFAC 6.

Comprehensive Income, Revenues, Expenses, Gains, Losses, Assets, Liabs, Investments by owners, Distributions to owners.

76

Name the 2 methods for amortizing a bond discount or premium.

Effective Interest Method and S/L Method.

77

Name the 2 requirements for a creditor to reclass debt restructuring as troubled debt.

The restructuring is a concession by the creditor and the debtor is having financial difficulties.

78

Name the 2 requirements for an item to be "Discontinued Operations".

1. On-going operations & cash flows have or will terminate, 2. entity will not take part in any signifant operations of disco segment

79

Name the 2 stmts that are generally included in personal f/s.

Stmt of Financial Condition & Stmt of Changes in Net Worth

80

Name the 2 types of debt restructuring.

Modification of terms & Settlement of debt for less than the carrying amount

81

Name the 2 types of revenue earned on an installment sale.

Realized Gross Profit and Interest Income

82

Name the 3 approaches to measuring Fair Value.

Market Approach, Cost Approach, Income Approach.

83

Name the 3 criteria that must be met to classity items as "Collections".

1. Held for exhibition, research, education, not for gain 2. Cared for & preserved 3. Sale proceeds reinvested to other collection items

84

Name the 3 features of derivative instruments.

1.Underlying & 1 or more notional amts 2. No/minimal investmt 3. Settlement

85

Name the 3 IFRS methods for accounting for treasury stock.

Cost Method, Par Value Method, & *Constructive Retirement Method (*IFRS only)

86

Name the 3 major sections of the CAFR

Introductory Section, Financial Section, and Statistical Section

87

Name the 3 proper titles for the financial statements included in the Proprietary Funds.

Stmt of Net Position, Stmt of Rev, Expenses, & Changes in Fund Net Position, *Stmt of Cash Flows (*only for Prop Funds)

88

Name the 3 sections of the Stmt of Cash Flows under GAAP.

Operating, Investing, and Financing

89

Name the 4 non-exchange revenues.

Imposed, Derived, Govt Mandated, Voluntary

90

Name the Enhancing Qualitative characteristics of acctg info.

Comparability, Verifiability, Timeliness and Understandability

91

Name the financial statements that are included in the Govt-Wide FS.

1. Statement of Net Position and 2. Statement of Activities

92

Name the primary users of Government F/S.

Citizenry, Legislative/Oversight body, Creditors & Investors

93

Name the significant requirement of the integrated approach.

A reconciliation between the govt-wide FS & the Fund FS is required.

94

Non-controlling interest is shown in which scetion of the B/S?

Equity section

95

Operational accountability is measure in which financial statements?

Government-wide financial statements

96

Over what period of time is a Cap Lease Amort/Depr:Ownership, Bargain Purch, 90% FV, 75% Life?

Ownership & Bargain Purch: over life of asset. 90% & 75%: over lease term.

97

Provide an example of a contribution that would be recorded at FV.

All contributions are recorded at FV on the date of the contribution

98

Provide examples of what may be included in the general fund.

General Government, Public Safety, Recreation,etc. IT accounts for all financial resources not included in another fund.

99

Revaluation of fixed assets is allowed under GAAP and IFRS. True or False?

False. Only IFRS.

100

SEC requires that an entity's F/S present how many I/S & how many B/S?

3 Income Statements, 2 Balance Sheets (Not required by GAAP)