Financial Reporting (F1 & F2)

Question 1

discontinued operations

Answer 1

recorded separately from operating in the income statement and is shown net of tax

Question 2

types of entities to be considered and what must be present to be discontinued operations

Answer 2

has been disposed of or is classified as held for sale, and must represent a strategic shift that has or will have a major effect on the operations of the company

Question 3

foreign currency JE: purchase

Answer 3

DR purchases
CR accounts payable

Question 4

foreign currency JE: at balance sheet date

Answer 4

DR accounts payable
CR foreign exchange transaction gain

Question 5

foreign currency JE: actually paid

Answer 5

DR accounts payable (full amount)
DR foreign exchange transaction loss
CR cash (using last exchange rate)

Question 6

other comprehensive income

Answer 6

PUFI: pension adjustments, unrealized gains or losses on AFS debt securities and hedges, foreign currency items, and instrument specific credit risk

Question 7

Form 10-K

Answer 7

public companies annual report
60 days for large accelerated
75 days for accelerated

Question 8

Form 10-Q

Answer 8

quarterly, 40 days for large accelerated or 45 days for others

Question 9

Form 8-K

Answer 9

whenever a material event occurs

Question 10

Basic EPS (for simple capital structure)

Answer 10

income available to common shareholders / weighted avg number of common shares outstanding

Question 11

weighted avg number of common shares outstanding

Answer 11

shares outstanding at beg
+ shares sold during period
-shares acquired during period
+ stock dividends and stock splits
- reverse stock splits

Question 12

how to treat stock dividends and stock splits

Answer 12

like it happened at the beg of the period

Question 13

diluted EPS (for complex cap structures)

Answer 13

income avail + interest on dilutive securities/ weight avg (assuming that all dilutive securities are converted to common stock)

Question 14

common stock

Answer 14

basic ownership in a corporation

Question 15

preferred stock

Answer 15

an equity security with preferences and features not associated with common stock

Question 16

retained earnings

Answer 16

accumulated earnings in the life of the corp that have not been paid out as dividends

Question 17

cost method for treasury stock (mostly used)

Answer 17

recorded and carried at their reacquisition cost

Question 18

legal method for treasury stock (rarely used)

Answer 18

recorded by reducing the amounts of par and additional APIC at time of original sale