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CPA - FAR > Flashcards - F1 - F3 > Flashcards

Flashcards - F1 - F3

1
Q

FASB

A

Single authoritative body establishing GAAP in 2009

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2
Q

IASB

A

International accounting standards established in 2001

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3
Q

1 Diff between IFRS & GAAP

A

IFRS: Apply principals (conceptual framework) GAAP: do not apply conceptual framework

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4
Q

Fundamental Qualitative Characteristics

A

Relevance, Faithful Representation

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5
Q

Relevance

A

Capable of making a difference in decisions by users

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6
Q

Faithful Representation

A

Completely neutral is free from error (Reliable)

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7
Q

Enhancing Qualitative Characteristics

A

Comparable, Verifiable, Timeliness, Understandable

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8
Q

When to report discontinued operations

A

1) Has been disposed 2) Held for sale Strategic shift or major effect on operations

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9
Q

Exit or Disposal Activity (not discontinued operations)

A

Must have obligating event 1) Calculate PV of costs to close, book now 2) Book operating loss when occurred

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10
Q

Book Change Prospectively

A

Changes in estimate

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11
Q

Book Change Retrospectively

A

Change in Principles, Entity and Error correction

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12
Q

IDEA

A

1) Income Statement 2) Discontinued Operations 3) Extraordinary items 4) Accounting Principles

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13
Q

Change in LIFO or Depreciation

A

Treated as change in estimate and accounted for prospectively

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14
Q

Other Comprehensive Income

A

Direct to equity - accumulated OCI shown on BS in equity

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15
Q

PUFER

A

P) Pension Adjustments U) Unrealized Gains/Losses F) Foreign Currency E) Effective Cash Flow Hedges R) Revaluation Surplus

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16
Q

Going Concern Basis of Accounting

A

Accounting as if expected to continue operations

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17
Q

Liquidation Basis of Accounting

A

Imminent (no question) of closing

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18
Q

Compensation Arrangements included in Related Party Disclosure??

A

GAAP - exclude compensation arrangements IFRS - include compensation arrangement

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19
Q

Requirements for Segment Reporting

A

Revenues/Assets greater than 10% - Report, External Revenue - identify until 75% and disclose

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20
Q

Form 10-Q and 10-K Filing Timeline

A

10-Q: Large = 40days, Accelerated= 45days 10-K: Large = 60days, Accelerated = 75days

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21
Q

Form 11-K, 8K

A
  • employee benefit plans - any major corporate event
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22
Q

Form 20F, 40F, 6K

A
  • 20F &40F: annual foreign private issuers - 6K: semi-annual foreign private issuers
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23
Q

Revenue Recognition (4 Items)

A

1) Contract 2) Transfer Risk 3) No Contingencies 4) Standard Collection Terms

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24
Q

Expired vs Unexpired

A

Expired: Book expense Unexpired: Stay on BS until “used”

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25
Q

Franchisor Initial Fees/Continuing Fees

A

Initial Fees: Recognize revenue when “substantially performed” Continuing: when earned

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26
Q

Intangible Assets Capitalized?

A

If purchased book at cost; Internally developed expense

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27
Q

Valuation of Intangible Assets; GAAP vs IFRS

A

GAAP: valued at cost IFRS: valued at cost or revaluation to FV

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28
Q

Where are gains/losses booked for Intangible Assets?

A

Losses to Income Statement - Gains to OCI

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29
Q

Franchisee Initial Fees/Continuing Fees

A

Initial Fees: Book as Int. Asset @ PV and amortize Continuing Fees: expense as incurred

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30
Q

Capitalize start-up costs?

A

No, expense as incurred

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31
Q

When can R&D costs be capitalized?

A

If there is an alternate use or on behalf of others

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32
Q

Technological Feasibility

A

Expense R&D prior to Technological Feasibility for software to be sold and used internally

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33
Q

How to amortize Computer Software

A

When Sold: Greater of % of Revenue or Straight-line Used Internally: Straight-line

34
Q

Completed Contract Revenue Recognition

A

Recognize only upon completion (not permitted under IFRS)

35
Q

Percentage of Completion Revenue Recognition

A

(GAAP & IFRS) Work Complete/Total Work Expected x Profit

36
Q

Rule of Conservatism

A

Always recognize loss when probable; No gains until realized

37
Q

Installment Sales Revenue Recognition

A

Calculate GP%, apply to cash receipts and book as “realized profit,” remaining profit is deferred

38
Q

Cost Recovery Method

A

Calculate GP% and only recognize profit when cash collections exceed COGS

39
Q

Commercial Substance

A

Future cash flow impact

40
Q

Nonmonetary Exchange with Commercial Substance

A

Add gain/loss on old asset plus cash exchange = New Asset Value

41
Q

Nonmonetary Exchange lacking Commercial Substance (NO BOOT or PAY BOOT)

A

Record no gain

42
Q

Nonmonetary Exchange lacking Commercial Substance (BOOT RECEIVED

A

Recognize proportional gain

43
Q

Nonmonetary Exchange lacking Commercial Substance (BOOT RECEIVED >25% of FV)

A

Recognize Full Gain

44
Q

Recognize Gain/Loss on Involuntary exchanges

A

Yes/Now

45
Q

Historical Cost

A

Cost at acquisition - no effect on prices

46
Q

Current Cost

A

Cost that would have incurred at present time - appreciation effects prices

47
Q

Nominal Dollars

A

Unadjusted for changes in purchase power - no effect on prices

48
Q

Constant Dollars

A

Restated based on Price Index - Inflation effects prices

49
Q

Foreign Currency Adjustment

A

Restate to “reporting currency”

50
Q

Reporting Currency

A

Currency of entity reporting financial results

51
Q

Functional Currency

A

Currency of Primary economic environment in which entity operates

52
Q

Foreign Remeasurement

A

(Dysfunctional) 1st translate from foreign currency to functional currency (BS 1st -> IS 2nd as plug adjustment)

53
Q

Foreign Translation

A

(Functional) 2nd translate from functional currency to reporting currency (IS 1st -> BS 2nd as plug to OCI)

54
Q

Report @ Historical Rate

A

Equity and dysfunctional non-monetary assets

55
Q

Report @ Weighted Average Rate

A

Income Statement

56
Q

Report @ Current/Spot Rate

A

Dysfunctional monetary assets/liabilities, all functional assets/liabilities

57
Q

Personal Financial Statements Include

A

Statement Financial Condition; Statement Changes in Net Worth

58
Q

Statement of Financial Condition

A

Personal statement; Book at FV; Tax liability is on diff assets - liabilities

59
Q

Trading Securities

A

(Current Asset) Purpose is to sell; Book gain/loss to IS

60
Q

Available for Sale Securities

A

(GR=Non-current Asset) @FV; Book gain/loss to OCI

61
Q

Held-to-Maturity Securities

A

(GR=Non-current Asset) @historical/amortized cost; Amortize to IS

62
Q

Change TO Trading Security

A

Recognize gain/loss immediately to IS

63
Q

Change FROM Trading Security

A

No Adjustment

64
Q

Change FROM Held to Available

A

Recognize adjustment in OCI

65
Q

Change FROM Available to Held

A

Amortize to IS

66
Q

How to report @ Cost Method

A

(0 - 20%) Book @ FV; Dividends/Earnings to IS; Return capital reduces investment

67
Q

How to report @ Equity Method

A

(20-50%) Book @ FV; Earnings increase investment/Dividends decrease investment; Book asset/goodwill increase and amortize asset

68
Q

Ability to exercise significant influence

A

Use Equity Method

69
Q

How to report @ Acquisition Method

A

(>50%) Book @ FV on closing date; Book 100% net assets; remove subs entire equity

70
Q

CAR - IN - BIG

A

Remove Subs CAR (Common, APIC, RE), Remove parents I (investment), Book NCI, Add BS adj. to FV, Add Intang. Assets, Add Goodwill

71
Q

Business Combination Costs

A

Direct/Indirect= Expense Stock Registration= Reduce APIC Bond Issue= Cap. & Amortize

72
Q

Non-controlling Interest

A

Book to equity, Book % RE not owned to NCI

73
Q

Consolidated Retained Earnings

A

Equals Parent’s RE’s due to eliminate Sub’s RE’s

74
Q

Consolidated Stockholder’s Equity

A

Parent + NCI + % Income - % Dividends

75
Q

Intercompany Transactions

A

Eliminated 100% of BS and IS Transactions

76
Q

Inventory Transfers

A

Eliminate profits from Inv & COGS

77
Q

Bond Transfers

A

If extinguished, eliminate from both and book gain/loss

78
Q

Land Transfers

A

Book on both sides, eliminate gain and record back @ carrying value on sub

79
Q

Depreciable Asset Transfers

A

Book on both sides, eliminate gain and record back @ carrying value on sub; record depreciation @ new purchase but then adjust back @ year end

80
Q

Combined Financials

A

Common owner; eliminate intercompany, include all equity

CPA - FAR (4 decks)

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