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FARR Flashcards

1
Q

transfer debt sec. from trading to AFS

A

diff b/w cost and FV is treated as REALIZED on income statement

recorded at FV of sec on the date of transfer.

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2
Q

not for profit fs

A

statement of financial position
statements of activities
statements of cash flows

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3
Q

disclosure of credit risk

A

in notes

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4
Q

IFRS

provision =

A

probable and estimable

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5
Q

IFRS

contingencies

A

not probable or estimable

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6
Q

disclosure required if sales are 10% of

A

sold to single customer

sale derived from foreign operations

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7
Q

research and development cost

A 
facilities
material used
personnel involved (wage+benefits)
contract services used
indirect costs assigned
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8
Q

capitalized and expense over time

A

equipment and facilities used

purchase or developed intangibles used

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9
Q

IFRS two methods of accounting for intangibles,

A

the cost method or the revaluation method.

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10
Q

price earning ratio

A

net income minus preferred dividends/

divided by the number of common shares

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11
Q

govt wide fs

A

(EA)

Economic resources
Accrual

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12
Q

functional currency = local currency

A

translation

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13
Q

functional currency= U.S currency

A

remeasure

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14
Q

face value of bond at redemption

A

FV + premium - issue cost

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15
Q

component of other comprehensive income (OCI)

A

Derivative cash flow hedges
Excess adjustment on defined pension benefit plans
Net unrealized g/l on AFS debt securities
Translation adjustments from foreign currency

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16
Q

sale of investment

A

investing activity

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17
Q

purchase common stock of another company

A

investing activity

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18
Q

dividend received

A

operating

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19
Q

dividend paid

A

financing

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20
Q

intro section of local govt comprehensive annual financial report (CAFR)

A

letter of transmittal

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21
Q

order of sections in CAFR

A

intro (includes transmittal letter)

financial section (auditor’s report, md and a, govt wide and fund fs, notes to fs, required supplementary info)

statistical sections (addtional info)

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22
Q

discontinued operating

A

will be reported NET of TAX

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23
Q

inventory turnover

A

= cost of sale/avg inventory
= cogs/avg inventory

cost of sale = purchase + change in inventory

beg
+ purch
- end
= cogs

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24
Q

asset turnover

A

= sales/ avg assets

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25
Q

a/r turnover

A

=sales/avg a/r

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26
Q

if there’s a permanent impairment occurs

A

must reduce book value to fv by crediting loss to accumulated depreciation

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27
Q

discounting note back to bank for cash

A
  1. calculate how much proceeds will be after interest income
  2. calculate how much discounting back to new bank will be plus interest
  3. reduce (1) with interest expense in (2) to get cash received
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28
Q

Capitalized interest equals the smaller of the total interest incurred or the avoidable interest.

A

avoidable interest: equals the interest on the weighted-average amount of accumulated expenditures

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29
Q

Construction period interest capitalization

A

Construction period interest is capitalized based on the weighted average of accumulated construction expenditures. The interest rate paid on borrowings specifically for asset construction is used first to determine the amount of interest cost capitalized. If the average accumulated expenditures outstanding exceed the amount of the specific new borrowing, interest on the excess is computed based on the interest rate for other borrowings of the company

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30
Q

Variable interest in an equity

A
  1. explicit investments at risk
  2. explicit guarantees of debt, the value of assets or residual value of leaded asset
  3. implicit guarantees with related party involvement
  4. most liabilities, excluding short term payables (A/P)
  5. most forward contracts to sell assets owned by entity
  6. option to acquire leased assets at the end the learn terms at specified prices
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31
Q

what can be measured at fair value?

A
  1. debt and equity securities
  2. liabilities (note payable)
  3. stock div and stock splits
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32
Q

what CANT be mearsured at FV?

A
  1. leases
  2. investment in subsidiaries
  3. pension benefit asset/liab
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33
Q

asset retirement obligation (ARO)

A

cumulated accretion expense (pv of cost * accretion rate)
+
cumulated depreciation expense (pv of cost / # years)

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34
Q

journal entry for ARO

A

D: asset retirement cost (asset)
C: asset retirement obligation (liab)

asset retirement cost = estimated cost * pv of 1

depreciation exp = pv of ARO / useful life

35
Q

accretion expense

A

increase of ARO due to passage of time

= beg ARO * risk-adjusted rate (accretion rate)

36
Q

forward contracts

A

own for speculative purposes.

held at fair value

unrealized holding gains in income statement

37
Q

basic EPS

A

net income - CUMULATIVE pref. div
divided by
WA#CSO

38
Q

lease

A

capital lease aka finance lease

operating lease = the one that doesn’t transfer over

39
Q

cash payment to reduce debt principal

A

financing activities

equal to the principal portion only
interest portion is operating activities

40
Q

issue bond

A

financing activities

41
Q

pmt div

A

financing act

42
Q

div received

A

operating act

43
Q

govt entity finds it most diff to report for

A

relevance

44
Q

change in net position of governmental activities

A

CPA RIDES

net change in fund balance - total govt funds
+ C apital outlay
+ P rincipal pmt on non-current assets
- A sset disposals (net book value)
- S ources (other financing sources - debt proceeds)
+ R evenue ( measurable but unavailable)
- I nterest expense (accrued)
- D epreciation Expense
+ internal Service fund net revenue
= change in net position of governmental activities

45
Q

government approach to reporting assets and infrastructures

A

The government must report the assessed condition of the infrastructure every three years and the estimated annual amount to maintain and preserve the conditions level established and disclosed

46
Q

program REVENUE on local govt’s govt -wide stmt of activities

A

SOC

charges for SERVICES
Operating GRANTS and contributions
Capital grants and contributions

47
Q

joint presentation of govt wide AND fund financial stmt

A

The Integrated Approach

48
Q

acquisition of subsidiary

A

parent company is issuing their own stock for all of sub’s stock

D: investment in sub.
C: COMMON STOCK (# shares * PAR value of common stock given up)
C: APIC (# shares * FV-PAR value)

49
Q

direct cost of combination (acquisition cost)
such as legal and consulting fees

(other than registration and issuance cost)

A

expensed in period incurred

D: legal fees exp
C: cash

50
Q

registration and issuance cost

in an acquisition method business combination

A

reduce value of stock issued by reducing APIC

51
Q

when acquisition price exceeds fair value of net assets acquired

A

assets and liab are presented at FAIR VALUE

52
Q

fair value method

A

less than 20% ownership

does not have ability to exercise significant influence

53
Q

VIE

A
  • voting rights are small in proportion to focus of parntership
  • voting rights are out of line

must use consolidation

54
Q

EQUITY METHOD

20-50%

  • significant influence can be exercised
  • consolidated stmt should be presented when ownership is great than 50% and there is control over investee
  • if parent company does not consolidate a sub that’s more than 50% owned must use equity method

if under 20%, but significant influence exist = equity method

A

ADD % share of income to investment
REDUCE investment when dividend distributed

initial investment at cost:
D: investment in investee
C: cash

increase investment by share’s of earnings
D: investment investee
C: equity in earnings/investee’s income

dividend distributed
D: cash
C: investment in investee (reduce)

55
Q

most authoritative source us US GAAP

A

FASB accounting standards of CODIFIcation

56
Q

realization

A

process of converting noncash resources and rights into money

57
Q

recognition

A

process of recording item in the fs

58
Q

governmental (proprietary fund)

OPERATING ACTIVITIES

A
  1. cash inflow from sales/services
  2. cash outflow to suppliers / employees
  3. cash inflow from INTERFUND reimbursements/exchanges including pmt in lieu of taxes
  4. cash transactions not meeting other categories
59
Q

governmental (proprietary fund)

INVESTING ACTIVITIES

A
  1. cash inflow/outflow relating to LOANS to others (including interest income)
  2. cash inflow/outflow related with DEBT or EQUITY transactions
60
Q

governmental (proprietary fund)

CAPITAL AND RELATED FINANCING ACTIVITIES

A
  1. issue debt associated w capital assets (including interest expense)
  2. cash inflow from capital GRANT
  3. cash inflow from contribution act. related w capital assets
61
Q

governmental (proprietary fund)

NON-CAPITAL FINANCING ACTIVITIES

A
  1. cash flow from issuing debt for noncapital purposes (including interest exp)
  2. cash receipts for GRANTS or SUBSIDIES
  3. cash received from PROPERTY taxes
  4. operating transfers (internal transfers)
62
Q

GOVERNMENTAL

A

FM

FINANCIAL RESOURCE MEASUREMENT FOCUS

MODIFIED ACCRUAL

PDCSG

PERMANENT
DEBT SERVICE
CAPITAL PROJ.
SPECIAL REV.
GENERAL
63
Q

PROPRIETARY

A

EA

ECONOMIC RESOURCES MEASUREMENT FOCUS

ACCRUAL

IE

INTERNAL SERVICE
ENTERPRISE

64
Q

FIDUCIARY

A

EA

ECONOMIC MEASUREMENT FOCUS

ACCRUAL

PIPA

PRIVATE PURPOSE
INVESTMENT
PENSION TRUST
AGENCY/CUSTODIAL

65
Q

issue purchase order

buy 2 trucks for $45k

A

D: encumbrances 90k
C: budgetary control 90k

66
Q

invoiced received (approved order)

for one truck @ $44k

reverse estimated encumbrance in budgetary accounts

A

D: budgetary control 45k
C: encumbrance 45k

67
Q

record actual expenditure of $44k

A

D: expenditure 44k
C: voucher payable 44k

PAY
D: voucher payable 44k
C: cash 44k

68
Q

other financing sources

A

proceeds from bond issue

transfer from general fund

69
Q

exception to general rule of expenditure for governmental funds - modiffied accrual

A

treatment of interest and principal payments for long term debt

  • they are recorded when they become due and payable, not when they accrue
70
Q

underfunded pension plan

record PSC

A

D: OCI
C: pension benefit liab

71
Q

liquidating dividend

A

is a return of capital

decrease APIC

72
Q

div are not liability until they are declared

on cumulative pref. stock

A

div in arrears are only DISCLOSED in notes in fs

73
Q

lessee

A

operating lease

finance lease

74
Q

lessor

A

operating lease

finance lease: sales type and direct financing

75
Q

lessee finance lease

A

POETS

pv min lease pmt is equal to or substantially exceed FV of asset (90%)

option to purchase

economic life is major part of least term (75%)

transfer of ownership to lessee at end of lease term

specialized asset, not alt. use

76
Q

IFRS goodwill impairment

A

CV compared to greater of

PV future cash flow
OR
FV-cost to sell

diff is impairment

77
Q

stock div

A

is NOT dividend income

78
Q

interest on construction debt

which to capitalize?

A

the SMALLER of

  1. the total amount of interest (interest on construction debt + other borrowings)

or

  1. weighted avg mount of accumulated expenditure
79
Q

valuation techniques for measuring fair value of equipment

A

MIC

market approach
income approach
cost approach

80
Q

deferred tax asset + liab

A

NON current on BS

81
Q

record stock option granted

FV of stock options= 30k

A

D: compensation exp 30k
C: APIC - stock options 30k

82
Q

record exercise of stock options

5000 shares @ $45
par = $20

A

D: cash $225k
D: apic - stock option 30k
C: common stock ($20*5k shares) 100k
C: apic - common stock 155k (plug)

83
Q

comprehensive income

A

net income
+
other comprehensive income (DENT)

FAR (33 decks)

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