Financial Statements

Question 1

GAAP Multi-Step Income Statement Pneumonic

Answer 1

ON-TIDe-N-OC:
O- Operating Income
N- Nonoperating/Other (interest/unusual/infrequent)
T- Taxes (current/deferred)
\_\_\_\_
I- Income from Continuing operations
De- Discontinued Component Unit (net of tax)
\_\_\_\_
N- Net Income 
O- Other Comprehensive Income (DENT)
\_\_\_\_\_\_
C- Comprehensive Income

Question 2

Other Comprehensive Income Pneumonic

Answer 2

DENT (DENT-R for IFRS)
D- Derivative Cash Flows (cash flow hedge)
E- Excess Amortization for Pensions
N- Net Unrealized G/L for AFS securities
T- Foreign Currency Translation
R- Revaluation Adjustment (IFRS only)

Question 3

Debt Securities Overview: Balance Sheet

Answer 3

Trading
- Usually Current
- Recorded at FMV
Available For Sale
- Current/Noncurrent
- Recorded at FMV
- **Unreal G/L goes to OCI on stmt of comp inc
- Income is Accum on B/S in Shr Equity as AOCI
- DE(N)T
Held to Maturity
- Noncurrent
- Recorded at Amortized Cost
- Cost net of unamort disc/premuim

Question 4

Debt Securities Overview: Income Statement

Answer 4

Trading
            - ****Unreal G/L 
            - Realized G/L
            - Interest Income
Available For Sale
            - Realized G/L
            - Interest Income
Held to Maturity
            - Realized G/L
            - Interest Income

Question 5

Debt Securities Overview: Statement of Cash Flows

Answer 5

Trading
            - Usually Operating Activity (purch/sale)
Available For Sale
            - Investing Activity
Held to Maturity
            - Investing Activity

Question 6

In order for an item to qualify for recognition on the financial statements, what is required?

Answer 6

• it should meet the definition of an element of financial statements
• be measurable with reasonable reliability
• be relevant to users
• based on information that is representationally faithful, verifiable, and neutral