Misc

Question 1

Journal entry for increase in available for sale securities Fair value (using valuation account)

Answer 1

Debit to Valuation Account; credit to Unrealized gain

Question 2

Bond is re-classified as trading security from held-to-maturity
reported on BS:

Answer 2

fair value, current asset

Question 3

Bond re-classified as a trading security from held-to-maturity
impact on Financial Statements from G/L:

Answer 3

Income statement, as CY earnings

Question 4

stock purchased during the year, with unrealized gains by YE

Reported on Balance sheet

Answer 4

fair value, current asset

Question 5

stock purchased during year, with Unrealized gains by YE

Impact on F/S from G/L:

Answer 5

income statement, as CY earnings

Question 6

reclassified stock as Held to Maturity

report on BS:

Answer 6

ineligible- an equity security cannot be re-classified as held-to-maturity, only applies to debt

Question 7

debenture re-classified as held to maturity from AFS

reported on BS:

Answer 7

fair value, non-current asset

Question 8

debenture re-classified as held to maturity from AFS

impact on F/S from G/L:

Answer 8

amortized G/L moved from OCI to IS

Question 9

stock reclassified as trading security from AFS

reported on BS:

Answer 9

fair value current asset

Question 10

stock reclassified to trading security from AFS

impact on F/S:

Answer 10

income statement, as CY earnings

Question 11

debenture reclassified as AFS from held-to-maturity

reported on BS:

Answer 11

fair value, non-current asset

Question 12

debenture reclassified as AFS from held-to-maturity:

impact on F/S from G/L:

Answer 12

unrealized G/L goes to OCI

Question 13

bond purchased at par, near fiscal YE

reported on BS:

Answer 13

amortized cost, non-current asset

Question 14

stock purchased at beginning of year

reported on BS:

Answer 14

fair value, non-current asset

Question 15

stock purchased at beginning of year

impact on financial statements from G/L:

Answer 15

unrealized G/L goes to OCI

Question 16

COGS for consignment sales

Answer 16

BI+Purch+Freight-in+Transportation to cosignees - EI (held by owner) - EI (held by cosignees

Question 17

material overstatement in ending inventory means current assets is: and gross profit is:

Answer 17

CA: Overstated
GP: Overstated

Question 18

Unreailzed holding loss from AFS securities would:

Answer 18

cause earnings to differ from comprehensive income

Question 19

dollar value LIFO

Answer 19

1. Current year / index = base
2. base x index = result
   Do for year one, then for year two, calculate the difference in base layer from year 2 to year 1? add to result

Question 20

under IFRS, a change in accounting principle made in current period, the cumulative effect adjustment for change is shown as an adjustment to beg RE as of:

Answer 20

beginning of the prior period

Question 21

if a transaction lacks commercial substance, and boot is involved

Answer 21

gain recognized proportionally if less than 25% of total consideration recieved. (proportion is calculated by FV boot/FV consideration)

Question 22

Disclosure requirements of identified concentrations:

Answer 22

the concentration exists at the financial statement date

2. the concentrationmakes the entity vulnerable to the risk of near term severe impact
3. Reasonably possible that event that could cause severe impact will occur in the near term

Question 23

FICA taxes- only include

Answer 23

employer portion in payroll

Question 24

warranty costs should be recognized/expensed when:

Answer 24

the product is sold

Question 25

under accrual accounting, how is warranty expense calculated

Answer 25

sales for the year x % estimated

Question 26

disclosed? concentration of credit risk for financial instrutments

Answer 26

yes

Question 27

disclosed? market risk for financial instruments

Answer 27

no

Question 28

disclosed? fair value for financial instruments

Answer 28

yes

Question 29

disclosed? carrying value for financial instruments

Answer 29

yes

Question 30

gains and losses from changes in the fair value of a derivative designated as fair value hedge should be:

Answer 30

recognized in current net income in the period in which the fair value of the derivative changes

Question 31

how should effective and ineffective portions of change in value of derivative which qualifies as a cash flow hedge be reported in F/S

Answer 31

effective portion: other comprehensive income | ineffective portion: current income

Question 32

gain in value of fair value hedge

Answer 32

reported on income statement (effective portion)

Question 33

gain in value of cash flow hedge

Answer 33

not reported on income statement

Question 34

first IFS financial statements must include

Answer 34

1. three balance sheets 2. two statements of comprehensive income 3. two income statements (if usisg two-statement approach to presenting comprehensive income) 4. two cash flow statements 5. two statements of changes in equity 6. explicit statement regarding compliance with IFRS

Question 35

impairment loss under IFRS

Answer 35

difference between the carrying value and recoverable amount. recoverable amount = greater of FV-costs to sell or PV future cash flows

Question 36

recording impairment loss after gain under IFRS

Answer 36

Under IFRS, if a revalued asset becomes impaired, the impairment is recorded by first reducing any revaluation surplus to zero, with further impairment losses reported on the income statement.

Question 37

in a sale leaseback transaction under IFRS a gain resulting from the sale should be deferred at the time of the sale-leaseback and amortized when:

Answer 37

lease is classified as a finance lease or lease is classified as an operating lease and the sales price is above fair value

Question 38

goodwill impairment test under IFRS

Answer 38

carrying value of CGU is compared to CGU's recoverable amount. Recoverable amount = greater of the FV less costs to sell or PV future cash flows

Question 39

what effect does a 70% owned sub declaring and paying a dividend have on RE and NCI balances in parent's cons. BS

Answer 39

No effect on RE | Decrease in NCI

Question 40

IFRS partial goodwill

Answer 40

goodwill= acquisition cost- FV net assets acquired

Question 41

a company issued a bond with a stated rate of interest less than effective interest rate on the date of issuance. The bond was issued on one of the interest payment dates. What should the company report on the first interest payment date?

Answer 41

an interest expense that is greater than the cash payment made to bondholders

Question 42

when the effective interest method of amortization is used for bonds issued at a premium, the amount of interest payable for an interest period is calculated by multiplying the

Answer 42

face value of the bonds at the beginning of the period by the contractual interest rate

Question 43

gain on bond retirement

Answer 43

bonds at fv + unamortized bond premium = CV of bonds to be retired Less: Cash paid = gain on bond retirement

Question 44

warranty expense

Answer 44

current deferred tax asset

Question 45

depreciation

Answer 45

noncurrent deferred tax liability