Gleim CH 1 - 3 Flashcards
(194 cards)
1
Q
Realization
A
Gain or losses for cash or claims to cash
2
Q
IFRS Elements of FS
GAAP Elements of FS
A
These five elements are assets, liabilities, equity, income, and expenses and capital maintenance. Gains and losses are not treated as separate elements under IFRS.
Comprehensive Income, Revenue, Expenses, Gains, Losses, Assets, Liabilities, Equity, Investment by Owners, Distributions to Owners
3
Q
Rental Revenue Recognition
A
Recorded Evenly over the period of time rented
4
Q
Form 8-K
A
describing specified material events: (1) changes in control of the registrant, (2) the acquisition or disposition of a significant amount of assets not in the ordinary course of business, (3) bankruptcy or receivership, (4) resignation of a director, and (5) a change in the registrant’s certifying accountant.
5
Q
Salary expense
versus
Commission Expense
A
Salaries are not traceable but commission costs are
6
Q
expense recognition principle of systematic and rational allocation
A
Items that don’t have a direct cause and effect relationship; amortization & depreciation
7
Q
FS valuation for liquidating companies
A
assets and liabilities should be reported as cash proceeds
8
Q
Financial liabilities under IFRS are current
GAAP
A
settled within 12 months even if (1) the original term was for more than 12 months and (2) an agreement to refinance on a long-term basis was completed after the balance sheet date and before the issuance of the financial statements.
Reclassification as long as before the balance sheet
9
Q
For an investment in a limited business activity not conducted in a separate business entity (such as an investment in real estate and a related mortgage), the assets and liabilities must not be presented as
A
net amount. Instead, they should be presented as SEPARATE assets at their estimated current values and SEPARATE liabilities at their estimated current amounts.
10
Q
personal statement of financial condition assets
A
presented at their estimated current values at the date of statement of financial condition
11
Q
Balloon note
A
requires one payment at maturity
12
Q
interest expense classification on income statement
A
other expenses
13
Q
Life Insurance investment value on personal FS
Life Insurance Expense
Life insurance revenue
A
cash surrender - any borrowing against life insurance
Premium paid - increase in surrender value - dividend received
cash collected - cash surrender value
14
Q
Income tax expense or benefit is allocated to
A
(1) continuing operations, (2) discontinued operations, (3) extraordinary items, (4) other comprehensive income, and (5) items debited or credited directly to other components of equity.
15
Q
Noncancelable commitments to pay future sums must be presented at their estimated current amounts as liabilities in personal financial statements if they
A
(1) are for fixed or determinable amounts, (2) are not contingent on another’s life expectancy or the occurrence of a particular event such as disability or death, and (3) do not require the future performance of service by another.
16
Q
If an entity that presents a full set of financial statements has items of other comprehensive income (OCI), it must present comprehensive income either
A
(1) in a single continuous statement of comprehensive income or (2) in two separate but consecutive statements (an income statement and a statement of OCI).
17
Q
COGS
A
COGM + BI - EI
18
Q
OCI Tax effect
A
net of tax
19
Q
Effective Interest
A
Interest Expense (CV of the bonds w/o accrued interest) - Interest Paid
20
Q
Fair Value Election means
Decision of election
A
change in FV at the date of the balance sheet in comparison to to current value (NOT SELLING PRICE)
cannot be revoke unless and entity changes the type of the investment (trading to afs)
21
Q
fair value option
VERY IMPORTANT
A
both dividends received and unrealized gains and losses are reported in earnings.
22
Q
fair value method
A
same as the cost method
23
Q
only time OCI can be reversed out
A
at time of sale; NEVER FOR change in investment to trading or held to maturity
24
Q
NSF
BANK
BOOK
A
BANK - already included
25
Dividends received after a sale on an equity method investment
Percentage Owned before sale * 1 - Percentage Sold
26
Bonds
Cash interest received
Cash interest recognized
Interest Paid
Interest Expense
27
Under the cost method how is investment in investee reported
At the FMV value of the stock owned
28
Unrealized G/L on investments
only recognized under the cost method
29
Note receivable sold before maturity
DISCOUNTED
30
deferred charge
prepaid
31
Accrued interest
always nominal amount * stated rate
32
Allowance for uncollectibles
AMOUNT CURRENTLY COLLECTIBLE
33
Gross
Net
Actual discount that can be applied
Everything has been discounted
34
Bad Debt Expense
amount to get to the ending A/R
35
Derecognition Criteria
Transfer of asset or asset cash flow
36
Assignment versus Factoring
Assignment use as collateral and once repaid returned
Factoring is outright sold
37
Purchase Commitment Loss Journal Entry
```
Unrealized Loss (DR)
Liability (CR)
```
38
Goods Available for sale
COGS + EI
39
Perpetual
Periodic
Moving average at the end of each sale BACKWARDS from sale
Weighted Average at the end of the period FORWARDS from BI
40
Relationship between inventory and COGS
If inventory is understated COGS is overstated
BI + Purchases - EI = COGS
41
interim GAAP inventory
unless permanent remains at historical cost
42
Lower of Cost or Market TRICK!!
if replacement is the in between but market is lowest go with MARKET
43
Cosignor Sales Revenue
the amount sold @ the price sold to the cosignee; do not deduct other costs from revenue
44
IFRS & GAAP reversal difference
IFRS permit inventory to be written up to the lower of cost and NRV if previously written down. The reversal is permissible only to the extent of the prior write-down
GAAP
However, if the long-lived asset is held for sale, a gain is recognized for a subsequent increase in fair value minus cost to sell. But the gain is limited to the extent of prior write-downs.
45
Depreciation asset life
LESSER OF
46
Renewal Options and Amortization
Lesser of ecomic life or INTENDED TO RENEW renewal term + remaining life
IF UNSURE OF RENEWAL DO NOT INCLUDE
47
IFRS fair value method does not require
DEPRECIATION
48
sum of the year
ignore accumulated depreciation
49
To find CV in depreciation
ALWAYS ADD BACK SV
50
Equivalent Price over purchase price rule
The excess of the total cash to be paid over the cash equivalent price of the machinery will be recognized as interest expense, not depreciation
51
How to record taxes that benefit property
Taxes assessed for local benefit that tend to increase the value of real property, such as sidewalks, are added to the property’s adjusted basis and are not currently deductible as tax expense.
52
Capitalizing of Interest
cannot exceed the interest expense incurred during the year
53
Capitalizing of Interest can only be recognized
in the year that asset is able to be used
54
Write down of assets is included in
depreciation expense
55
held for sale assets are carried at
lower of cost or FV - cost to sell
56
involuntary conversion
difference between CV + any capitalized costs - insurance proceeds
57
Value in use
is the present value of the future cash flows of an asset or a cash-generating unit.
58
IFRS investment property held for sale valued at FMV
NOT DEPRECIATED
59
Software costs
lesser of NRV or current amortized cost/ remaining sales value - disposal
Depreciation Expense
Write down if NRV is less than CV
60
Trademark amortization
may be amortized but only if they have finite useful lives.
61
Royalties based on gross or net
NET
62
Direct Response Advertising Costs
Capitalized
63
IFRS CGU
the test for impairment under IFRS is whether the carrying amount of the CGU (including goodwill allocated solely for the purpose of impairment testing) exceeds its recoverable amount. An impairment loss for a CGU is allocated first to reduce allocated goodwill to zero and then pro rata to the other assets
64
RD development stage capitalization
application stage only
65
Software R&D
Costs incurred internally in creating a computer software product are expensed when incurred as R&D until technological feasibility has been established. Afterward, all software production costs incurred until the product is available for general release to customers shall be capitalized and amortized.
66
IFRS, an entity that acquires an intangible asset may use the revaluation model for subsequent measurement only if
fair value must be determined based on an active market.
67
Under both U.S. GAAP and IFRS, intangible assets with indefinite useful lives
are not amortized. They must be tested for impairment.
68
IFRS interim reporting
items must be reported at lower of cost of NRV in the interim even if these are temporary declines
69
Current Liability of a lease
Payment - interest expense
70
Operating Lease Profit
Income - depreciation on asset
71
Debt guarantees - cosigning
disclosed & accrued for
72
IFRS does not disclose if
remote only
73
Gross investment
Net investment
Before PV
After PV
74
BOND
Issuance Expense
Interest Expense
1 - Subtract the number of months between dated and issuance from total months; then multiply issuance/adjusted # of months
2 - issuance date/ total months
75
PV over FV
FV describes the amount you want to have in the future
76
Bonds Accrued interest Rules
Purchaser pays then is reimbursed
used at the face * STATED
77
warrants are considered
EQUITY
78
transactions not in the ordinary course of business
measured @ PV
79
TRICK transactions with value and interest
must PV amount and INTEREST
80
Restructing
1 - ordinary loss
2 - gain or loss on restructing
ordinary FV-CV
81
bond issuance costs are
amortized and added to CV
unamortized portion is subtracted from CV
82
Discount
Premium
when discount is not amortized it is a loss
when premium is not amortized it is a gain
83
Warranties
Expense
Liability
Recognized
Expense is what is actually expensed
what has not yet been paid
at sale date
84
A/P encompasses
incurred when an entity purchases inventory, supplies, or services on credit.
85
deferred tax asset valuation allowance
Under IFRS, a deferred tax asset is recognized for most deductible temporary differences and for the carryforward of unused tax losses and credits, but only to the extent it is probable that taxable profit will be available. Thus, no valuation allowance is recognized. Under U.S. GAAP, a separate valuation allowance must be recognized. This credit equals the amount needed to reduce the asset to the amount more likely than not (the probability exceeds 50%) to be realized.
86
Under IFRS, a deferred tax asset
is recognized for most deductible temporary differences and for the carryforward of unused tax losses and credits, but only to the extent it is probable that taxable profit will be available to permit the use of those amounts. Probable means more likely than not. Thus, no valuation allowance is separately recognized under IFRS.
87
tax changes take place
enacting date
88
deferred tax asset must be reduced by a valuation allowance
more likely
89
permanent differences require
no disclosure
90
premium/discount
Effect on
1- interest
2- NI
Premium
1 - decreasing
2 - NI is increasing because interest is decreasing
Discount
1 - increase
2 - NI is decreasing because interest expense is increasing
91
TOTAL INCOME TAX EXPENSE
Current Tax Expense + Current Deferred Portion
92
Changes in noncurrent/current tax asset and liabilities
offset income tax expense
93
IFRS change criteria
(1) is required by a new standard or Interpretation or (2) results in reliable and more relevant information about transactions, financial condition, financial performance, and cash flows.
94
Change inventory to a high inventory cost effects NI how
lower COGS and higher NI
lower COGS is because inventory is valued at a higher amount
95
IFRS does not require restatement ever for
change in estimate
96
discounted operations count gain and losses
as long as they are in the same YEAR
97
How to find if EPS is dilute
take the basic EPS numerator
98
Proceeds from sale of a machine
investing activity
99
Exchange of an asset for a mortgage
non-cash financing activity
100
cash flow used includes
items that are positive and negative
101
FASB vs prefered CF
fasb likes direct even though indirect is preferred by organizations
102
WHEN DEALING WITH CF FOR EXPENSE
REVERSE ASSET AND LIABILITY TREATMENT
103
GAAP + IFRS CASH FLOWS
DIVIDENDS RECEIVED IS EITHER OPERATING/INVESTING
104
Bond cash flow effect of amortization of a discount/premium
discount increases cash flow - because it decreases NI
| premium decreases cash flow - because it increases NI
105
financing activities
include treasury stock transactions
106
deprecation of an asset sold
accumulated depreciation for the sold asset is added to operating expenses
107
Cash Flows affect
cash on the balance sheet
108
Cash dividend distributions is taken from
RE
109
Difference between equity and stockholder equity
equity refers to assets = liabilities
| stockholders equity refers to APIC, CS, RE
110
APIC re issuance rule
you can only have an APIC balance if you have previously REISSUED APIC
111
After a quasi-reorganization, the retained earnings account
dated for a period of 10 years to disclose the quasi-reorganization and the date that it occurred.
112
value of common stock
ALWAYS PAR
113
TREASURY STOCK
contra asset
114
contributed capital is
same thing as APIC
115
when you see a question asking for cash dividends
1- subtract preferred dividends in arrears
2 - preferred current dividends
3 - common stock dividends (same % as preferred)
Get that # and multiply by the proportion of CS and preferred
116
restriction
only applies to donor
117
Financial reporting by an NFP must provide information about noncash investing and financing activities that affect recognized assets and liabilities.
reported in related disclosures.
118
amortization of goodwill
tested for impairment no amort.
119
consolidated accounts receivable and accounts payable
reciprocal transactions, to find the amount given to one subtract the amount given to the other
Eliminated in their entirety on parent NOT sub
120
deconsolidation
cash received + FV of retained investment + NCI prior to switch - purchase price
121
acquisition parent reports only sub dividends
that are NCI
122
Consolidated NI, Equity, OCI is reported as
portion of parent and portion of subsidiary
123
Revenues, Expense, Gains, Losses (I/S items )
combined for the parent
124
% of sales bad debt
A/R bad debt
is related only to I/S - doesn't effect balance sheet; write-offs are irrelevant
is related to the balance sheet & effects uncollectibles
125
Aging accounts receivable
based on year end receivables
126
write-off effect on NI/Asset
Uncollectibles (DR)
A/R (CR)
NO EFFECT
127
cash surrender value of life insurance
subtracted from life insurance
128
When a noninterest-bearing note is exchanged for property, the note, the sales price, and the cost of the property exchanged for the note should be recorded
FMV
129
Effective interest versus S/L
1 - Discount
2 - Premium
1 - intial S/L has a higher CV
| 2 - initial S/L has a lower CV
130
Equity transactions goodwill is
depreciated over time
131
estimates for sales return effects revenue by
decreasing it
132
Unfair, extremely low interest rate on a bond
1 - multiple by the interest rate
2 - multiply the interest by the number of years
3 - principle + total interest * PV
133
PV for revenue received immediately
PV of the lesser year + initial payment
134
AFS to held to maturity unrealized treatment
stays in OCI and is amortized
135
IFRS and GAAP pension OCI
only difference is that IFRS does not allow for prior service costs to be amortized
136
Under IFRS, interest income
on plan assets is recognized in profit or loss. Under U.S. GAAP, the expected return on plan assets is a component of the minimum required pension expense.
137
equity method only type of dividends paid recognized as income on I/S
PREFERRED
138
sick days are accrued only if
rights vest
139
stock options are priced at what if options are not fully vested
FMV at grant date
140
grant date begins
when option period begins
141
stock options are valued at what if stock options are fully vested
FMV @ grant date DR
APIC - to reverse prior comp exp DR
CS
APIC for the difference
142
compensation expense is recognized
at date when compensation agreement is made to date services are performed
143
intrinsic value is always
market - exercise
144
Disclosures
Basis of consolidation
Depreciation methods
Amortization of intangible assets (excluding goodwill, which is not amortizable)
Inventory pricing
Recognition of profit on long-term construction-type contracts
Recognition of revenue from franchising and leasing operations
Policy for determining which items are cash equivalent
145
disclose in reporting segment data
```
Other items typically disclosed include
revenues from external customers and other operating segments,
interest revenue and expense,
depreciation, depletion, amortization,
unusual items,
equity in the net income of equity-based investees, income tax expense or benefit,
extraordinary items,
and other significant noncash items.
```
146
risk disclosures need to be at a minimum
reasonably possible
147
interim extraordinary items/discontinued/gains/losses are reported as
full amount in the interim of loss
148
change in accounting principle interim
not allowed to take effect
149
write downs interim IFRS
must take place in the interim period
150
market decline
GAAP
IFRS
unless permanent last quarter, if permanenent and changes write up to loss
IFRS in the period incurred
151
NPOS record gifts and grants as
other revenue
152
interfund transfer
a non reciprocal activity; usually the general fund
153
proprietary fund records interfund transfers
item below nonoperating revenue and expense
154
Governmental Funds
| Propietary/ Fiduciary
OFS
| DUE
155
capital lease reported in governmental funds
expenditure XX
| OFS XX
156
general capital assets
assets only reported in GW - always at FMV
157
transfers from other funds are recorded as revenue
by proprietary and fiduciary only
158
income approach uses
values that are current
159
Bonus is subtracted from NI then bonus % is taken
B = %(NI-B)
160
contributing partner value
| acquisition of an asset value
FMV
| COST
161
IFRS GAAP segment reporting difference
LIABILITIES IFRS
162
IRS REVALUATION
ENTIRE CLASS
163
AFS NOT IFRS
GAINS OR LOSSES ON DEBT SECURITIES, EXCLUDES UNREALIZED
164
IFRS DEFERRED ASSET/LIABILITY
ALWAYS NONCURRENT
165
precentage of completion
constant revaluation of income off project
always % completed it total amount done/new cumulative total
166
intangible asset EXCEPT goodwill must have what life to be amortized
finite
167
IMPLIED GW
TEST IMPAIRMENT
WRITE DOWN
FMV - CURRENT ASSETS + CURRENT LIABILITES
CURRENT FV
168
impairment GAAP
CV
169
consildated dividends
parent dividends get reported only
170
IFRS parent can exclude from consildation
1 - wholly owned and no opposition to consolidation
2 - no publically traded items
3 - parents FS complies w/ IFRS
171
consolidated equity
parents NI + NCI
172
required supplementary information
part of CAFR, budgetary comparisons info
173
Budgetary comparison schedules must be reported only
for the general fund and each major special revenue fund with a legally adopted annual budget.
174
SPGS require
statements, MD&A, RSI
175
MD&A
RSI that proceeds the basic financial statements
176
State and local governments are required to prepare and publish a comprehensive annual financial report (CAFR)
As a minimum, the CAFR should include (1) an introductory section, (2) MD&A, (3) the basic financial statements, (4) required supplementary information in addition to the MD&A, (5) combining and individual fund statements, (6) schedules, (7) narrative explanations, and (8) a statistical section. The basic financial statements should include (1) government-wide financial statements, (2) fund financial statements, and (3) notes to the financial statements. Thus, the statistical section is not a part of the basic financial statements.
177
GW depreciation
capital assets that are INEXHAUSTIBLE
178
Legally enforceable right to taxes
When collectible
A/R
Deferred Inflow
Deferred Inflows
Rev
179
Bond Anticipation Notes
only reported in GW if they have been refinanced
180
GW reports assets at
historical
181
1- Derived Revenues
| 2- Imposed NONEXCHANGE
1- sales/income taxes - when exchange occurs
| 2- as long as time restraints have been met
182
Tuition revenue and discounts
reported net of scholarships
183
CAPITAL financing activities
only used for proprietary NOT NPO
184
DILUTIVE EPS ADDITIONAL SHARES
OF SHARES - (# OF SHARES * EXERCISE/MKT)
185
Software after tech feasibility is the
NRV or sales %
186
Cosignor included in inventory
anything attributiable to inventory sale
| EXCEPT commission which is an expense
187
warranty expense
current % of sales
188
remeasurement
Balance Sheet
I/S
Balance Sheet
Monetary - current
Non-monetary historical
I/S
Weighted AVG
EXCEPT
Balance sheet items at historical
189
translation
BS
IS
BS
Assets/Liabilites - current
CS APIC - historical
RE - rollforward
I/S
Weighted
190
Full NCI Goodwill
Partial NCI GW
FV * NCI %
FV of subs assets * NCI
191
Full GW
Partial GW
FV of sub - FV of sub NA
Acquistion cost - FV of sub NA ACQUIRED
192
CF
| Cash Paid to Suppliers
```
COGS
+ Increase in Inventory
- Decrease in Inventory
+ Decrease in AP
- Increase in AP
```
193
```
IFRS
Interest Received
Dividends Received
Interest Paid
Dividends Paid
Taxes Paid
```
```
1 - CFO CFI (CFO)
2 - CFO CFI (CFO)
3 - CFO CFF (CFO)
4 - CFO CFF (CFF)
5 - CFO CFI CFF (CFO)
```
194
Difference between a forward and future contract
forward is a prvate negotiation between parties
