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How to do calculate Pension Expense? Pg, 14-3

How do you calculate each component?

A-SPIDER +++++-- (this is only the elements) => you need to know the order

A +/- Amortization of Existing Net Obligation or Net Asset at implementation
S + Service Cost
P +/- Prior Service Cost Amortization (cal: beg PSC/avg service life) => service this year/service in the future
I + Interest Cost (cal: beg PBO x discount rate)
D + Deferred Gain (unrecognized pension gain/ - loss)
(cal: return on Plan Asset - beg PA x expected rate of return)
E - Excess amortization of deferred gain/ + loss; pick bigger of PBO and FV plan asset; multiply by discount; subtract by unamortized; divide by service life
R - ACTUAL Return on PLAN assets (cal: end PA - beg PA - contributions + benefits paid) => EXPECTED return on plan assets (cal: beg PA x expected rate of return)


What are the 3 broad categories of funds? Pg. 30-11

Name the types of funds within each broad category
Pg. 30-13

1) Governmental Funds: similar to GASB chart Pg. 30-1;
utilizes MODIFIED ACCRUAL; expenditures

*PD-Consents-to-Smoking Grass Pg. 30-13
P Permanent: Set aside and cannot be spent => must be
invested in a permanent basis
D Debt Service: Services bonds (principle and interest)
C Capital Projects: Construction
S Special Revenue: Earmarked sources (ie maintains
bridge from tolls) => use of funds are restricted (only
to paint/maintain bridge)
G General: Junk drawer

2) Proprietary Funds similar to FASB chart Pg. 30-1; utilized
ACCRUAL; expenditures; like private business
a) Internal Sevice: for insiders of govt; no user fee
b) Enterprise: for outsiders / insiders of govt; user fee
(ie for public pools there are user fees)
3) Fiduciary Funds: like non-profit; ACCRUAL
a) Pension trust: for govt employees
b) Investment trust: pool govt money and invest
c) Private purpose trust: tabacco tax => use for cancer
d) Agency: IRS; collect money and give to someone else;
no fund balance


For government what is the main objectives for the financial reports?
Pg. 30-27


A Actual VS Budgeted
C Compliance with finance-realated laws, rules, and regulations
E Efficiency and effectiveness
F/S Financial condition and results of operations


What is the statement of operations / activities for a hospital? State the function of each component?
Pg. 32-11

*Where is charity CARE recorded? Pg. NFP #74 WB


P Patient service revenue (all costs of taking care: hotel type, medical, lab)
P - Provision for contractual adjustments (no bad debt included; allowance included; medicare, employee discounts, not charity)
N = Net patient service revenues
O + Other Operating revenues gains and losses (earned, not patient service, RESTRICTED donations, net assets released from restriction, and interest/dividends) => revenues and gains that represent amounts received for reasons other than performance of health care related service; EARNED
O - Operating Expenses (cost of running hospital); includes bad debt
N + Non-operating revenues (UNEARNED); UNRESTRICTED donations
E = Excess of Rev/Exp

*Charity care is recorded in the notes and NOT in the statement of activities Pg. 32-11


What are the Primary Qualitative characteristics that makes the financial statements USEFUL? Pg. 2-1

Roger is PC (politically correct) but is Materialistic
1) Relevance - capable of making a difference in user's decision
a) P Predictive value - helps predict or forcast results
b) C Confirmatory value - confirm or correct predictions

2) F Faithful representation - info depicts what it represents
a) E Free from ERROR
b) N Neutrality
c) C Completeness


What are the Enhancing Qualitative characteristics that makes the financial statements USEFUL? Pg. 2-1

Roger is CUT like a V
C Comparability
U Understandability
T Timeliness
V Verifiability

**It enhances Relevance and Faithful representation (relates to BOTH)


What to remember for PP&E IFRS? Pg. 8-19 (2)

Describe the revaluation model

a) Cost model
b) Revaluation model: when you write up / down, and above cost goes to OCI [DENT-R]; when you write up / down, and below cost goest to I/S


What does a financial instrument include? Pg. 6-1

*What is its significance?

C Cash
O Ownership interest in an entity (stock)
D Derivative contracts that create a right and obligation to transfer other financial instruments (stock options)

*If its not a financial instrument, then its not a derivative


Definition of Derivatives Pg. 6-1

*Derivatives do not include?

S Settlement in cash or equiv (net settlement)
U Underlying (variable) and Notional amount (number of units)
N No net investment

*Underlying is APPLIED to notional (what will be paid)
*Has to be changing, not for a fixed price => derives value from something else

*LAND, certificate of deposit (CDs)


What are the characteristics of a Capital Lease for a lessee? Pg. 11-3


Risk of ownership passes to lessee by:Title,Bargain Purchase Option (BPO),Substance - Lease is more than 75% of asset's useful life or PV of minimum lease payments are more than 90% of fair value


What is the trick for admitting a new partner for the bonus method and the goodwill method? Pg. 16-2

GAL: Goodwill adjust left, by using number on right

BAR: Bonus adjust right, by using number on left


How do you approach a deferred tax problem? Pg. 19-16

Think of the journal entry for deferred taxes

Income tax expense: debit
Current tax liability: credit
Deferred tax liability


Definitions for Liabilities: Pg. 12-2
a) Accrued Liabilities / Expenses
b) Prepaid Expenses
c) Deferred Revenues
d) Revenue Receivable

a) An expense that is incurred but not yet paid in cash
b) Expenses paid in cash, but not yet incurred
c) Revenue collected, but not yet earned
d) Revenue earned, but not yet collected


Definitions for 5 fund balance classifications Pg. 30-13
a) Non spendable fund balance
b) Restricted fund balance
c) Commited fund balance
d) Assigned fund balance
e) Unassigned fund balance

a) Fund that cannot be spent due to legal or contractual restrictions or are not in spendable form
b) Funds that are either externally restricted for a specific purpose or restricted by law => lein
c) Funds committed for a specific purpose by formal government action
d) Neither restricted nor committed, but are constrained by the governments INTENT to be used for a specific purpose
e) Represents the general fund's balance that is not restricted, committed or assigned to a specific purpose


What is the absolute minimum number of funds for government accounting?

One, the general fund


For declaring a stock dividend, what must you remember about it? Pg. 15-12

If its small stock use FMV

If its a big stock use PAR


For intagibles, what is the proper treatment of the cost of equipment used in R&D activities that will have alternative future uses? 2013 AICPA #46

Capitalized and depreciated over its estimated useful life


For bonds how do you determine interest expense VS interest paid? 2013 AICPA TBS

Interest expense: when it is issued or how often interest is paid (annually, semi annually) => when using bond interest table; dont use when trying to find bond proceeds

Interest paid: what month was interest paid


Name the appropriate valuation technique to measure fair value Pg. 2-5

M Market Approach: uses prices and relevant information from market transactions for identical of comparable assets/liabilities
I Income approach: uses present value techniq earnings
C Cost approach: uses current replacement cost


What is included in other comprehensive income? Pg. 2-3


D Derivative cash flow hedges
E Excess adj of Pension PBO and FV of plan assets at year end
N Net unrealized gains or losses on "AFS"
T Translation adj for foreign currency

R Revalutation gains; losses go to income statement


Bank Reconciliation Calculations Pg. 3-2
a) Balance on bank statement
b) Checkbook Balance

+ Deposits in transit
- Outstanding checks
+/- Errors made by bank
= Corrected balance

+ Amounts collected by bank
- Unrecorded bank charges
+/- Errors made in recoreding transactions
= Corrected balance


Does maintenance of goodwill count in the calculation of goodwill? Intagibles #7

No it doesnt count; Goodwill is only determined from the initial purchase


What is the difference between franchise revenue VS revenue in the current year? Intagibles #19 & 21

First you have to see if all services were performed (if it wasn't, do not recognize any revenue)

Franchise revenue: only recognize the amount received in the current period

Revenue: recognize the WHOLE agreed upon amount


What is the difference between capitalize, and expense for PP&E and inventory? Pg. 8-32 & Pg. 7-1

Both for PP&E and inventory, the costs of acquisition and preparation for sale (INTENDED USE) => it is capitalized; debit asset, and credit cash; when you sell then expense it (COGS); considered a product cost

Expense for PP&E and inventory will be considered a period cost (SGA); debit expense, and credit cash


How to determine if there is an IMPAIRMENT LOSS for Held for SALE? Pg. 8-13

*Journal Entry as a result?

*What is significant about this term?

Check if CV > NRV then write down to NRV; if CV is less than NRV leave at CV

*Loss: debit
Other asset: debit (NRV)
Accumulated Depreciation: debit
Equipment: credit

*Restoration are allowed for impairment loss held for sale (can be written up or down), but not for held for use

*NOT to be depreciated


What is the Cost to Cost Method? (Percentage of Completion) Pg. 23-2 Purpose?

*What if there is a loss? Import!!!

*Purpose: To find profit; not used to find liability; better matching

Cost Incurred to Date / TOTAL construction costs (acutal + estimated to complete)
= Percentage of Completion
x Total Profit (profit always changes) => contract price - total cost
= Profit Recognized to Date (what you spent so far, and not just that year)
- Profit Previously Recognized (prior years)
= Profit to recognize This Year

*Expense immediately (dont use percentage)


a) When does a company that is a large accelerated filer must file its Form 10-Q with the US Securities and Exchange Commission?
b) All others for Form 10-Q

a) 40 days
b) 45 days


What are the 3 reportable segments to test for > or equal to 10%? (3) Pg. 21-4

What are the 3 tests for segment reporting?

1) Operations in different industries (meet any 3 tests => disclose all)
2) Foreign operations (meet test 1 or 3, disclose all)
3) Major customer or export sales (meet test 1 => disclose only that)

1) Revenue test
2) Profit/Loss
3) Segment asset test


Rates used for foreign currency? 2014 AICPA #18
a) Assets and Liabilities
b) I/S (remeasurement)
c) B/S (translation)

a) Current exchange rate
b) Wtd avg
c) Historical


How do you treat costs incurred in the business acquisition? ie) Consolidation Pg. 31-2
a) Direct, indirect, or general costs
b) Costs associated with the issuance and registration of debt or equity securities

a) ALL EXPENSED in the period incurrred => results in the reduction of net income
b) Decrease to APIC (debit)