Quiz Day 2 Wrong Answers Flashcards
When is a nonprofit allowed to use “operating profit” and segregate its recurring items from its nonrecurring items in its statement of activities?
The organization reports the change in unrestricted net assets
For the period
Are losses from discontinued operations, accrued starting from the beginning of the year of when operations are discontinued or after the board of directors votes to discontinue operations?
Beginning of the year
If an operating segment’s revenue (sales to unaffiliated customers and inter segment sales) is 10% or more of the combined revenue…
It is a reportable segment
For a security transferred from the trading category, the unrealized holding gain or loss at the date of the transfer will…
Have already been recognized in earnings and shall not be reversed
For a security transferred into the trading category, the unrealized holding gain or loss at the date of the transfer will…
Be recognized in earnings immediately
If a $20,000 rental payment is received on June 15th for a July 1st 1 year lease, when the current year’s tax rate is 28% and the next year’s tax rate is 30%, what is the amount of the deferred tax asset? (2 step calculation)
Rental payment - BV of rental payment. = temporary difference
$20,000 - (6/12 x $20,000). = $10,000
Temporary difference x applicable tax rate = deferred tax asset
$10,000 x 30%. = $3,000
If a company fails to record a depreciation expense of $10,000 from an asset being depreciated on a straight line basis in the previous year. What is the depreciation expense in the current year’s financial statements?
$10,000, the correction of an error in year 1 would not affect the amount of depreciation expense for year 2
Voluntary changes in accounting principle should be recognized using…
The retrospective approach
Retrospective approach, where cumulative effect is reported as an adjustment of the beginning of year retained earnings of the earliest year presented, thus the cumulative effect of a change in accounting principal would…
Not be included in the current year’s financial statement
When the customer pays the annual fee, the related revenue should be recognized…
Evenly over the contract year
Land donated to a city, for the city to build a parking garage should be reported as…
A capital asset in the government wide statement of net position
In governmental activities column
Significant influence vs. Consolidation, should a intercompany receivable be recorded separately under either?
Recorded in the case of significant influence
The gain or loss on the settlement of the ARO liability is the difference between…
ARO liability on settlement date and the actual settlement cost
It is required that the initial liability on the ARO be increased to…
The expected cash flow adjusted for market risk and inflation
IFRS allows an exception of impracticality for…2
1 changes in accounting principles
2 correction of errors
If a collection is not capitalized by a non profit, the existence of the collection can not be disregarded and…
A note describing the collection must be referenced on a line
On the face of the financial statement
GASB 1500.118, requires disclosure of principal and interest requirements to maturity, presented separately for…
Each of the five subsequent fiscal years and in 5-year increments
Thereafter
Criteria that identify operating segments that may be combined in identifying reportable segments do not include…
Overlapping personnel
Operating segments that may be combined in identifying reportable segments, may have 5 following similar characteristics
1 nature of products and services 2 nature of production processes 3 type or class of customer 4 distribution methods 5 nature of regulatory environment
Intercompany dividends and dividends paid to noncontrolling interest shareholders, which are included in consolidated financial statements?
Dividends paid to noncontrolling interest share holders only
When switching from the fair value method for a 10% ownership interest to the equity method for a 40% ownership interest, the 10% ownership interest should…
Get retrospective treatment as if it was under the equity method
If income before taxes is $100,000, but because of a permanent difference taxable income is only $80,000. What is the income tax expense, when the tax rate is 30%?
Because no temporary differences exist, income tax expense
Is the same as income tax payable
income tax expense = Taxable income x 30%
If a company wins a lawsuit and a settlement is offered, but no money has actually been received yet, the gain from the lawsuit is…
A gain contingency because the settlement offer could be revoked
Or rejected or appeal could still occur
If a company wins a lawsuit and a settlement is offered, but no money has actually been received yet, the gain from the lawsuit is reported as…
A disclosure in the notes of the financial statements
