Flashcards in Financial Statements Deck (81)
Which Personal Financial Statements are required?
Statement of Financial Condition & Statement of Changes in Net Worth
How are assets and liabilities valued in a Personal Financial Statement?
Estimated current value
How are estimated taxes that would be paid if all assets were converted into cash and all liabilities paid presented on a Personal Financial Statement?
Presented on Statement of Financial Condition between Liabilities and Net Worth
What is the general presentation on a statement of financial condition?
- Estimated taxes on assets sold
: Net Worth
How is life insurance presented on a Personal Financial Statement?
Only shown if there is cash surrender value
It is shown net of loans against the policy
How are business interests shown on a Personal Financial Statement?
Business Interests that constitute a large percentage of total assets should be separated from other investments
What is the discreet view in an Interim Financial Statement?
Interim period is a separate accounting period - not GAAP
Same accounting principles used for annual reporting should be used.
What is the integral view in an Interim Financial Statement?
Interim period is a part of the annual period - GAAP
Gross profit method may be used to estimate COGS and inventory
Temporary declines in inventory aren't recognized
How are discontinued operations & extraordinary items reported in Interim Financial Statements?
Fully recognized in Interim Period as incurred
If it occurs in Q3 - it's recognized in Q3
How are cumulative gains and losses reported in Interim Financials?
Reported as if they occurred in the first quarter
How is inventory valuation handled in Interim Financials?
If inventory experiences a decline in value during an interim period - the loss is recognized in the interim period
If the loss is expected to be only temporary - no loss is recognized
What is one of the primary problems with interim reporting?
The matching principle gets messed up - Expenses incurred in one period may benefit future periods
For whom is Segment Reporting required?
Publicly traded companies
What factors cause a segment to be significant and therefore to be reported separately?
Revenue of segment is 10% or more of total
Profit is 10% or more of total
Segment assets are 10% or more of total
75% Test - All segment revenues must equal 75% of total external revenues
What is the disclosure requirement regarding sales of 10% or more for one customer?
If 10% or more of enterprise revenue comes from one customer - the segment making the sales must be disclosed
How to report gain or loss from single occurrence not directly related to operation of pension plan
Report as part of that occurrence and not part of plans activity
What is the corridor approach
Determines gain or loss amortization on unrecognized net loss
Recognized gain or loss is excess of 10% of greater of PBO or MRAV over unrecognized net loss
Value / average remaining service period is amortization
Number of years required to disclose estimated future contributions to defined benefit plan
Following year only
What is prior service cost? How is it recognized?
PV of retroactive benefits given to employees for years of service provided before date of amendment to plan
Recognize as expense (amortized) during service periods of those employees who are expected to receive benefits under plan
What is pension interest cost?
Increase in FV of plan assets due to passage of time
How does plan amendment for prior service cost affect current and past financial statement
Change reflected on current and future statements
No retroactive change
What is unfunded accrued pension cost?
A liability recognized when the net periodic pension cost exceeds amount the employer has contributed to the plan
Beg PBO + service cost + interest - benefits paid
What is used as the Defined benefit plan discount rate
Treatment of multiple defined benefit plans
Aggregate all overfunded plans as no current asset ; aggregate all underfunded plans as noncurrent liability
Journal entry to record underfunded plan
CR pension liability
What is included in special termination benefits
Lump sum payments and PV of future payments
What is included in the PBO reconciliation
Contribution by plan participants
Divestiture and settlements
Special termination benefits
Disclosure of health care costs for pension
Must disclose the effect of 1% increase or decrease in health care costs