Far 2 Financial Reporting and Disclosures

FASB ASC 280-10-50-22 requires a measure of both profit or loss and total assets to be disclosed for each reportable segment of an enterprise. That paragraph states:

"A public entity shall report a measure of profit or loss and total assets for each reportable segment."

A comprehensive basis of accounting other than generally accepted accounting principles is one of the following:

(1) a basis of accounting used to comply with regulatory requirements; (2) a basis used for tax purposes; (3) a cash basis; (4) a definite set of criteria having substantial support, such as the price-level basis of accounting.

Quick Ratio (Acid Test)

(Current Assets - Inventories) / Current Liabilities

The mitigating effect should be evaluated based on

1. Plans will be effectively implemented 2.implemented plans will be successful in mitigating adverse conditions or events.

Vulnerability to concentrations refers to risk due to a lack of diversification. Disclosure of such risk must be made if, based on management's information, the following criteria are met: .

1. The concentration exists at the date of the financial statements. 2. The concentration makes the entity vulnerable to the risk of a near-term severe impact. 3. It is at least reasonably possible that the events that could cause the severe impact will occur in the near term

Financial Instrument FS presentation on the BS or in the notes to the FS, financial assets and financial liabilities are separately presented by

1. measurement category ( amortized cost, fair value through net income, and fair value through OCI) 2. form of financial asset (loan, securities, and receivables)

Form 40-F

Canadian annual report

Interim FS may be

Condensed FSs

Inventory Turnover Ratio-measure how quickly inventory is sold is an indicator of enterprise performance (HIgher better)

Cost of Goods sold/Average inventory

Monetary assets are cash or items whose amounts are fixed in terms of numbers of dollars.

Demand deposits and receivables are monetary assets; patents and trademarks are not.

Level 2 Inputs

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Concentration of credit risk: If

a business and most of its customers/suppliers all operate in the same industry, then a concentration of credit risk needs to be disclosed in the notes.

An estimate of the effective tax rate expected for the annual period is made at the end of each interim period. This rate is used in providing for income taxes on

a current year-to-date basis.

Management's evaluation for going concern should occur for each

annual and interim reporting period

Segmentation is based on

internal organization structure and the availability of separate financial information.

Level 3 input

unobservable inputs for the A/L. Unobservable inputs reflect the reporting entity's assumptions and should be based on the best avaliable information. (used only when there are no observable inputs)

FS should explain that conformity with GAAP requires management to

use numerous estimates

Definition of Vulnerability易损性；弱点

vulnerability due to concentrations arises when an entity is exposed to the risk of loss that could be mitigated through diversification.

US GAAP requires the Liquidation basis of accounting if liquidation is imminent and the going concern basis requirements are not met,

whereas IFRS does not provide guidance on the basis of accounting to use if liquidation is imminent

Purchasing power gain or loss is computed by restating monetary assets and liabilities in units of constant purchasing power. Rising prices would cause liabilities to be paid

with less valuable dollars, so equity investment in unconsolidated subsidiaries, warranty obligations, and wages payable would result in a purchasing power gain. Receipt of less valuable dollars from refundable deposits would result in a purchasing power loss.

Management is required to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern

within one year after the date that the FS are issued.

Temporary market declines expected to reverse are not recognized in interim financial statements. The decline should not be recognized until

year-end.

There need to be disclosures on significant accounting policies and how they are applied. Some of the items should be included if applicable:

• A company's revenue recognition policies • How a company determines what investments are cash equivalents • How a company prices its inventory • Methods for amortizing intangibles

Partnerships-exact method

--The incoming partner's capital account is their actual contribution --no adjustment to the existing partner's capital accounts is required

Partnerships-Bonus Method

-Balance in total capital accounts controls the computation -the incoming partner's capital account is their percentatge of the partnership total NBV (After their Contribution) -Adjust the existing partner's capital account to balance

Level 2 input include:

-Quoted prices for Similar A/L in an active market -Quoted Prices for identical or similar assets in markets not active -Quoted price for identical liabilities when traded as assets -Quoted price for similar liabilities when traded as assets -Inputs other than quoted prices that are observable for the A/L -Inputs that are derived from or corroborated by observable market date.

Partnerships-Goodwill Method

-going in investment dollar controls the computation -the incoming partner's capital account is their actual contribution -goodwill (implied) is determined based upon the incoming partner's contribution and shared by the existing partners

Recognized Subsequent Events--provide additional information about conditions that existed at the BS date. The following events

1 settlement of litigation: arose before BS date is settled after the BS date but before that, the B=FS are issued or available to be issued 2. Loss on an uncollectible receivable: customer bankruptcy filing after the BS date but before the date that the FS is issued or available to be issued.

Disclosure of risks and uncertainties existing at the dates of the FSs in the following areas:

1. Nature of operations-entity's major products or services and its principal markets, including the locations of those markets 2. use of estimates in the prep of FS 3. Certain Significant Estimates 4. Current Vulnerability due to certain Concentrations

Concentrations: Disclosure is necessary if management knows prior to issuance of the statements that

1. The concentration exists at the BS date 2. it makes the entity vulnerable to a near-term sever impact 3. such impact is at least reasonably possible in the near term

When substantial doubt exists about an entity's ability to continue as a going concern, an entity must disclose the following:

1. a statement in the notes that substantial doubt exists 2. Principal conditions or events that raise substantial doubt 3. management's evaluation of the significance of those conditions or events 4. management's plans to mitigate those conditions or events

What kind of subsequent events must be recognized?

1. affecting realization of assets or the settlement of estimated liabilities ordinary require recognition 2. They usually reflect the resolution of conditions that existed over a relatively long period. 3.Examples: the settlement of litigation for an amount different from the liability recorded in the statements; loss on receivable resulting from a customer's bankruptcy 4. adjustments to earning per share are made as a result of stock dividends and stock splits that occurred after the BS Date but prior to the issuance of the FS

The estimated annual effective tax rate is based on the statutory rate adjusted for the current year's expected conditions. These include:

1. anticipated tax credits 2. foreign tax rates 3 capital gains rates 4. Other tax planning alternatives

Certain disclosures about policies of business entities are commonly required these items include the following:

1. basis of consolidation 2. depreciation methods 3.amortization of intangible assets (excluding goodwill, which is not amortizable) 4. inventory pricing 5.recognition of profit on long-term construction-type contracts 6. recognition of revenue from franchising and leasing operations 7. policy for determining which items are cash equivalents

Concentration should be disclosed if all of the following criteria are met:

1. concentration exists at the FS date 2. the concentration makes the entity vulnerable to the risk of near-term severe impact 3. it is at least reasonably possible that the events that could cause the serve impact will occur in the near term

Operationg segments may be aggregated if

1. doing so is consistent with the objective 2. they have similar economic characteristics 3. they have similar products and services, production processes, classes of customers, distribution methods, and regulatory environments.

A operating segment has three characteristics

1. earn revenues and incur expenses 2. its operating results are regularly reviewed by the entity's chief operating decision maker for the purpose of resource allocation and performance assessment 3. its separate financial information is available

Public business entities must disclose, either in the body of the FSs or in the notes the

1. fair value of financial instruments, regardless of whether they are recognized or not in the BS and 2. Level of the fair value hierarchy 3. not required for certain financial instruments, such as trade receivables and payables due in 1 year or less and investment accounted for under equity method

What are the characteristics of an operating segment? (Revenue, supervisor, Infor available)

1. it engages in business activities from which if may earn revenues and incur expenses 2. its operating results are regularly reviewed by the entity's Chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance 3. its discrete FI is available.

An operating segment has three characteristics:

1. it is a business component of the entity that may earn revenues and incur expenses 2. its operating results are regularly reviewed by the entity's chief operating decision maker for the purpose of resource allocation and performance assessment 3. its separate financial information is available.

One set of disclose concerns risks and uncertainties relating to the nature of operations. Entities must disclose their

1. major productions and services 2. Principle markets 3. the locations of those markets 4. all industries in which they operate 5. the relative importance of each 6. the basis for determining the relative importance However, this set of disclosures need not be quantified.

one set of disclosure concerns risks and uncertainties relating to the nature of the operations. entities must disclose their

1. major products or services 2. principal markets 3. location of those markets 4. all industries in which they operate 5. the relative importance of each 6. the basis for determining ther relative importance

Interim FS required disclosures should includes

1. material contigencies 2.events subsequent to the end of the most recent fiscal year that have a material impact on the entity, including changes in accounting principles and practices changes in estmates, changes in the status of long-term contracts, significant new borrowings or modifications of financing arrangements, and business comninations or dispositions

What type of event must be recognized in the FS?

1. sub-events affecting the realization of assets or the settlement of estimated liabilities ordinarily require recognition. ( Resolution of conditions that existed over a relatively long period, for example, loss on a receivable resulting from a customer's bankruptcy) 2. adjustments to earnings per share are made as a result of stock dividends and stock splits that occurred after the BS date but prior to the issuance of the FSs.

Management's evaluation of going concern should consider both quantitative and qualitative factors, such as

1. the entity's current condition -- the source of liquidity 2.obligations due or anticipated in the next year--even not recognized in FS 3.funds necessary to maintain operations based on resources, obligations, and expected cash flows in the next year. 4. other conditions that could adversely affect the entity's ability to meet its obligations.

FASB ASC 825-10-15-5 lists the following items that are not eligible for the fair value election:

1.An investment in a subsidiary that the entity is required to consolidate 2.An interest in a variable interest entity that the entity is required to consolidate 3. Employers' and plans' obligations (or assets representing net overfunded positions) for pension benefits, other postretirement benefits (including health care and life insurance benefits), post-employment benefits, employee stock option and stock purchase plans, and other forms of deferred compensation arrangements, as defined in [FASB ASC] Topics 420; 710; 712; 715; 718; and 960. 4. Financial assets and financial liabilities recognized under leases as defined in [FASB ASC] Subtopic 840-10 (This exception does not apply to a guarantee of a third-party lease obligation or a contingent obligation arising from a canceled lease.) 5. Deposit liabilities, withdrawable on demand, of banks, savings and loan associations, credit unions, and other similar depository institutions 6. Financial instruments that are, in whole or in part, classified by the issuer as a component of shareholder's equity (including "temporary equity"). An example is a convertible debt security with a noncontingent beneficial conversion feature.

interim financial statements

1.GAAP not required reported 2. GAAP must be applied inclusing when publicly traded companies issue summarized interim information. 3.limited usefulness 4. best qualitative characteristic is timeliness 4.each interim period is treated primarily as an integral part of the annual period 5. Based on the same accounting principles the entity used in preparing annual statements 6 IFRS --interim period is a discrete reporting period

If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include the following:

1.Quoted prices for similar assets or liabilities in active markets 2. Quoted prices for identical or similar assets or liabilities in markets that are not active 3.Inputs other than quoted prices that are observable for the asset or liability, for example: (1)Interest rates and yield curves observable at commonly quoted intervals (2)Implied volatilities (3)Credit spreads (4) Market-corroborated inputs.

Result of management's evaluation and required disclosures: Substantial doubt Alleviated as a result of management's plan, the FS should be prepared under the going concern basis of accounting and should include the following footnote disclosures:

1.The primary conditions or events that initially substantial doubt about the entity's ability to continue as a going concern 2.managements evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligation 3. Management's plans that alleviated the substantial doubt

The types of risks and uncertainties discussed in the topic are:

1.the nature of the entity's operations, 2.the use of estimates in the preparation of the entity's financial statements, and 3.significant concentrations in certain aspects of the entity's operations.

at which management should consider whether its presentation of segment information has become overly detailed.

As a practical limit, more than 10 reportable segments is a recommended level

Ace Co. settled the litigation on February 1, 2002, for an event that occurred during 2001. An estimated liability was determined as of December 31, 2001. This estimate was significantly less than the final settlement. The transaction is considered to be material. The financial statements for year-end 2001 have not been issued. How should the settlement be reported in Ace's year-end 2001 financial statements?

As of February 1, 2002, Ace Co.'s financial statements have not been issued and the actual amount of the final settlement is known. That amount should be included in Ace Co.'s December 31, 2001, financial statements and disclosed as a "subsequent event."

financial instruments

Assets consisting of cash, accounts receivable, an ownership interest, or a contractual right to receive or obligation to deliver cash or another financial instrument.

Which of the following items would best enable Driver Co. to determine whether the fair value of itsinvestment in Favre Corp. is properly stated in the balance sheet? A. Discounted cash flow of Favre's operations. B. Quoted market prices available from a business broker for a similar asset. C. Quoted market prices on a stock exchange for an identical asset. D. Historical performance and return on Driver's investment in Favre.

C

CPA-05411A change from the cost approach to the market approach of measuring fair value is considered to bewhat type of accounting change?A. Change in accounting estimate.B. Change in accounting principle.C. Change in valuation technique.D. Error correction.

Choice "A" is correct. A change in the valuation technique used to measure fair value is a change inaccounting estimate.

CPA-06057ABC Company owns stock in XYZ Company. The stock is traded on the New York Stock Exchange andthe London Stock Exchange. Stock price information from the two stock exchanges on December 31 isas follows:Exchange Quoted Stock Price Transaction Costs NetNew York $103 $1 $102London $106 $5 $101What is the fair value of the XYZ stock on December 31 if there is no principal market for the stock? A. $101 B. $102 C. $103 D. $106

Choice "C" is correct. If there is no principal market, then the price in the most advantageous market isthe fair value of the stock. The most advantageous market is the market with the best price afterconsidering transaction costs. Although the London quoted market price is higher, after transaction coststhe net amount is lower, so New York is the most advantageous market and the fair value is $103.

The fair value of which of the following was determined using a Level 3 input? A. A building whose price per square foot is derived from prices in observed transactions involvingsimilar buildings in similar locations B. Common stock traded and quoted on the New York Stock Exchange. C. Shares of a privately held company whose value is based on projected cash flows. D. A privately placed bond whose value is derived from a similar bond that is publically traded

Choice "C" is correct. Projected cash flows are an unobservable input based on entity assumptions andwould be classified as a Level 3 input.

AP Turnover-indicates the number of times trade payables turn over during the year. A low turnover may indicate a delayed payment, such as from a shortage of cash

Cost of goods sold/Ave AP

AR Turnover-indicates the receivables quality and indicates the success of the firm in collecting outstanding receivables.

Credit Sales/AR, a liquidity ratio.

_____________of these risks and uncertainties is a critical component of the user's process of evaluating these variables. FASB ASC 275-10 addresses the disclosures required to facilitate a user's evaluation of an entity's risks and uncertainties.

Disclosure

Form 11-King

Employee benefit plans

Days' Sales in Account Receivables-indicates the average number of days required to collect AR

Ending (Ave AR)/sale/365

Days of payable outstanding -indicates the average length of time trade payables are outstanding before they are paid

Ending AP/ Cost of goods sold/365

days in inventory ratio-average number of days required to sell inventory

Ending Inventory/cost of goods sold/365

Unrecognized Sub Events?

FIRE- Loss of plant or inventories as a result of a fire or natural disaster. 1. sale of bond or capital stock issue 2. a business combination 3.settlement of litigation when the event resulting in the claim occurred after the BS date 4. 5. losses on receivables resulting from conditions occurring after the BS date.

Example of unrecognized subsequent events requiring disclosure only include: FIRE CRAB FALL

FIRE-Loss of plant or inventories as a result of a fire or natural disaster C-Combination-a business combination R- Receivable-loss of receivables resulting from conditions occurring after the BS date. a B-Bond- Sale of a bond or capital stock issue F-Fair Value-changes in the fair value of assets, liabilities, or foreign exchange rate. a L-Litigation-litigation arose after BS date L-liabilities-entering into significant commitments or contingent liabilities

If an entity 's Liquidation is imminent即将来临的；迫近的

FSs are prepared under the liquidation basis of accounting

Nonrecognized Subsequent Events (Fire CRaB FaLL)

Fire-Loss of plant or inventory due to the fire C- Business Combination R- Receivable-Loss on receivable resulting from conditions occurring after the BS date. a B- Sale of BOND or Capital stock F-Changes in FAIR value of assets, liabilities, or foreign exchange rate a L-settlement of LITIGATION L-Liabilities-enter into Contingent Liabilities

In order to conform with US GAAP and IFRS, FS for public business entities must report information about the company's: Girl POM

G-Geographic Area irl P-products and services O-Operating Segments (Annual, and interim) M-Major Customers

Constant dollars are dollars of equal purchasing power. To convert historical cost dollars to constant dollars, the following formula is used:

Historical cost to be restated X current Year's index /base Year's Index =Constant Dollar Index

US GAAP requires management to assess going concern condition within one year of the FS issuance date, whereas

IFRS requires assessment at least one year from the BS date.

US GAAP requires certain disclosures when there is substantial doubt about an entity's ability to continues as a going concern, even if that doubt is alleviated by management's plans to address it

IFRS requires disclosures when management is aware of material uncertainties that may give rise to substantial doubt about an entity's ability to continue as a going concern

Requirements for Annual FSs US GAAP: 2BS-most recent fiscal years 3IS - 3CF Statement of owner's Equity for each of the three fiscal years preceding the date of the most recent audited BS

IFRS: 2 BS 2Statement of comprehesive income 2 Statement of changes in quity 2 Statement of CF notes

FASB ASC 270-10-45-6 provides that inventory losses from market declines should be recognized in the interim period in which the decline occurs. If these losses are recovered in a later period gain should be recognized in that period but these gains "should not exceed previously recognized losses."

In regard to the situation described in the question, the dollar amount of inventory would decrease by the amount of price decline in the first quarter and increase by the same amount in the third quarter.

Disclosure of these significant estimates must be made when both of the following conditions are present (FASB ASC 275-10-50-8):

It is at least reasonably possible that the estimate of the effect on the financial statements will change in the near term due to one or more future confirming events (reasonably possible is the chance is more than remote but less than likely). The effect of the change would be material.

IFRS difference LIFO liquidation is not an issue in interim (or annual) period because

LIFO is not a permitted accounting policy

Form 10-Q Quarterly Report filed quarterly by the US registered CO. (issuers). contains unaudited FSs prepared using the US GAAP , interim period MD&A and certain disclosures. The Filing Deadline?

Large Accelerated=40 days Accelerated=40 days All Others=45 days

Form 10-K Annual Report, thess form contain financial disclosures, including a summary of Financial Date, MD&A, and Audited FS prepared using GAAP. The Filing Deadline?

Large Accelerated=60 days Accelerated=75 days All Others=90 days

The common Example of Concentrations: MS. ViP

M-- market or geographic area S- supply of resources V- Concentrations in the volume of business transacted with a particular customer, supplier, lender, grantor or contributor i P- revenue from particular products, services or fundraising events

Fair Value Mesurement Framework-Valuation Techniques Approaches:

M-market approach-uses prices and other relevant information from market transactions I-income approach-converts future amounts to single discounted amounts. C-cost approach uses current replacement cost to measure the fair value of assets

Summary of Significant Accounting Policies includes disclosures of (Mad -PACIFIER)

M-measurement bases used in preparing the FS a D-Depreciation Method P-Specific accounting PRINCIPLEs and methods used during the period A-Amortization of Intangible C-basis of Consolidation I-Inventory Pricing F-fiscal year definition I -investment-criteria for which are equivalents E-Use of estimates R-Speical Revenue Recognition issues

Form 8-K Current Report (8Kitty) Form 8-K within 4 business days of the occurrence of the event.

Major corporate events such as corporate asset acquisitions or disposals, amendments to financial statements, changes in accountants and auditors, changes in securities and trading markets and other such kinds are mandated to be reported to the SEC using the Form 8-k.Common events reported include quarterly earnings releases, notification about entering into material agreements (including mergers), and entering into debt or other direct financial obligations. This would include the creation of an obligation under an off-balance sheet arrangement of a registrant, the unregistered sale of equity securities, and a change in a registrant's certifying accountant.

In applying these criteria, operating segments may be combined in order to meet these criteria if they have the following similar characteristics (no cover on the book)

Nature of products and services Nature of the production processes Type or class of customer Distribution methods for products or services Nature of the regulatory environment (if appropriate)

US GAAP and IFRS have established a framework for measuring fair value. This framework for measuring fair value:

O--Outline the Valuation techniques E--Establishes a hierachy of the inputs that can be used in these valuation techniques.

Substantial doubt not alleviated

Prepared under going concern basis of accounting. The footnotes must state that there is substantial doubt about the entity's ability to continues as a going concern within one year of the FS issuance date. Also, 1.The primary conditions or events that initially substantial doubt about the entity's ability to continue as a going concern 2.managements evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligation 3. Management's plans that are intended to mitigate the adverse conditions or events.

Subsequent event evaluation period

Public co.-- must evaluate subsequent events through the date that FS ARE ISSUED. Private --Other entities must evaluate subsequent events through the date that FS are AVAILABLE TO BE ISSUED (lower standard). Don't recognize events that occurred between the original FS issue, and date FS were reissued.

The reportable segment must be separately disclosure if one of the following quantitative thresholds is met:

Revenue Test-- Asset test- Profit (Loss) Test-

Those segments that meet at least one of the tests represent reportable segments for which specified information must be reported.

Revenue test: If its revenue is 10% or more of the combined revenue of all operating segments (for purposes of this test, revenue includes both sales to external customers and intersegmental sales or transfers) Profitability test: If the absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of: the combined reported profit of all operating segments that did not report a loss or the combined reported loss of all operating segments that did report a loss Asset test: If its assets are 10% or more of the combined assets of all operating segments

Quantitative Tresholds for Reportable Segments :10 % Size Test

Revenue-both sales to external customers and intersegment sales or tansfers (excluding interest income on advances and loans to other segments) is 10% or more of the combined Revenue, internal and external, of all operating segments Reported profit or loss--segment reported profit or loss is 10% or more of the greater in absolute amount of combined reported profit of all operating segements that did not report a loss, or the combined reported loss of all operating segments that did report a loss. Assets--10% or more of the combines assets of all operating segments.

The Fact about Fair Value: SHAME PaNT

S-measure for SPECIFIC A/L H-the fair value of nonfinancial asset assumes the HIGHEST and best use of the asset A-should reflect all of the assumptions that market participants would use in pricing the A/L M-MARKET-based measure, not an entity based measure E-is an EXIT price, not an entrance price P-measured in the PRINCIPLE market for the A/L the most advantageous market in the absence of Principal market a N-the fair value of liability should include the liability's nonperformance risk, which the risk that the obligation will not be fulfilled. T-fair value don't include TRANSACTION Costs but may include transportation costs if a location is an attribute of the A/L

The following are examples of non-recognized subsequent events addressed in [FASB ASC] 855-10-25-3: Disclosure needed

Sale of a bond or capital stock issued after the balance sheet date but before financial statements are issued or are available to be issued A business combination that occurs after the balance sheet date but before financial statements are issued or are available to be issued ([FASB ASC] 805 requires specific disclosures in such cases.) Settlement of litigation when the event giving rise to the claim took place after the balance sheet date but before financial statements are issued or are available to be issued Loss of plant or inventories as a result of fire or natural disaster that occurred after the balance sheet date but before financial statements are issued or are available to be issued Losses on receivables resulting from conditions (such as a customer's major casualty) arising after the balance sheet date but before financial statements are issued or are available to be issued Changes in the fair value of assets or liabilities (financial or nonfinancial) or foreign exchange rates after the balance sheet date but before financial statements are issued or are available to be issued Entering into significant commitments or contingent liabilities, for example, by issuing significant guarantees after the balance sheet date but before financial statements are issued or are available to be issued.

Discountinues operations should be reported___________, net of tax, on the income statement for the interm period. Disclosure in the notes to the interim statements is ________________.

Separately, required

The decision about whether to elect the fair value option:

Shall be applied instrument by instrument, except as discussed in [FASB ASC] 825-10-25-7 Shall be irrevocable (unless a new election date occurs, as discussed in [FASB ASC] 825-10-25-4) Shall be applied only to an entire instrument and not to only specified risks, specific cash flows, or portions of that instrument.

Both GAAP and IFRS require that a description of all significant policies be included as an integral part of the FS. The preferred presentation is to include the

Summary of Significant Accounting Polices as the first or Second note to the FS. Policies presented in other notes should not be duplicated.

Fair Market Measurement valuation Techniques:

The market approach is based on information from market transactions involving identical or comparable items The income approach uses valuation methods based on current market expectations about future amounts. The cost approach is based on the current replacement costs. It is the cost to buy or build a comparable asset.

Define "fair value (for accounting purposes)".

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A company that wishes to disclose information about the effect of changing prices should report this information in:

This information would be supplementary information to the financial statements.

True/False Pension Plan not an operating Segment

True

True/False Corporate Headquarters Not an operating Segment

True may not earn revenues

IFRS requires the disclosure of segment liabilities if such a measure is regularly provided to the chief operating decision-maker

US GAAP does not require the disclosure of segment liabilities.

IFRS requires disclosure of judgments and estimates that management has made in the process of applying accounting policies and which have a significant effect on the FS.

US GAAP requires disclosure of significant estimates but does not require the disclosure of judgments made in preparing the FSs.

Inventory losses from not temporary declines below cost must be recognized at the interim date. If the loss is recovered during the year, it is treated as

a change in estimate. The amount recovered is limited to the losses previously recognized.

During times of price instability,

a disclosure is required discussing the effects of the instability on the company's business.

Which of the following information should be disclosed in the summary of significant accounting policies?

a. Guarantees of indebtedness of others. b. Criteria for determining which investments are treated as cash equivalents. (MaD Pacifier) c. Adequacy of pension plan assets relative to vested benefits. d. Refinancing of debt subsequent to the balance sheet date.

The disclosure of significant accounting policies should include

accounting principles adopted and methods of applying them that materially affect the FS. Disclosure extends to accounting policies that involve: 1 .a selection from existing acceptable alternatives 2. policies unique to the industry in which the entity operates, even if they are predominantly followed in that industry 3. GAAP applied in an unusual or innovative way

Level 1 inputs are quoted prices in

active markets for identical assets or liabilities that the reporting entity has access to on the measurement date. Most reliable

Disclosures should be made at the balance sheet date about certain items that could significant __________________________ in the near term, that is, within 1 year of the balance sheet date

affect reported amounts

off-balance-sheet risk occurs when the amount of an accounting loss exceeds the

amount of the associated asset or liability recorded on the BS,

Risk of accounting loss as the amount of write-off that a company would record if any party to

an agreement failed to fully perform in accordance with the term of the contract

Ratio

are financial indicators that distill relevant information about a business entity by quantifying the relationship among selected items on the FS

Asset Test

at least 10% of the combined assets of all operating segments

For interim financial reporting:

at the end of each interim period, an estimate should be made of the expected tax rate applicable to the full fiscal year and this rate should be used to develop the income tax provision for the affected interim period.

Interim FS disclosure should omitted the following:

because users have access to the most recent annual FS, interim reports may omit the summary of significant accounting policies, the details of accounts that have not changed significantly

Information about operating segments that do not meet any of the quantitative criteria, and that is not combined with other operating segments to create reportable segments, are

combined and presented in an "all other" category.

Disclosure about certain significant estimates used to value assets, liabilities, or contingencies is required when the estimated effects of

condition, situation, or set of circumstances at the BS date are subject to a reasonable possibility of change in the near term and the effects will be material.

Recognized Subsequent Events: one type of subsequent event provides additional evidence about

conditions that existed ate the date of the BS, including the estimates inherent in statement preparation.

Under US GAAP, preparation of FS. presumes that the reporting entity will

continue as a going concern (Going concern basis of accounting.

Revised FS are FS that have been revised to

correct an error or to reflect the retrospective application of US GAAP. Revised FSs are considered reissued FS.

Curent Ratio

current assets/ current liabilities indicated liquidity

A third set of disclosures concerns ________________________ due to concerntrations, for example, when entities fail to diversify

current vulnerability

EDGAR stands for the Electronic Data Gathering, Analysis and Retrieval System. EDGAR is intended to benefit electronic filers,

enhance the speed and efficiency of SEC process, and readily make financial information available to users.

Interim period tax expense (benefit)equal the

estimated annual effective tax rate (EAT Oat), X year-to-date ordinary income(loss) before income taxes, minus the tax expense (benefit) recognized in previous interim periods.

Disclosures should be made in the notes of annual and interim FS when substantial doubt:

exists about an entity's ability to continue as a going concern or was alleviated as a result of management's plans.

Form 6-Kids

filed semi annual by foreign private issuers

Under FASB ASC 270-10-45-4, interim financial reports should be based on the principles, practices, and policies used in the preparation of the last annual report. Other-than-temporary market declines in inventory should be recognized. If losses recognized in early interim periods are recovered in the same year, such recoveries are recognized as

gains in the appropriate interim periods.

The fair value hierarchy prioritizes the inputs that can be used in the valuation techniques described Level 1 inputs have the _______priority

highest

75% Reporting Sufficiency Test

if the total (consolidated) revenue reported by operating segments constitutes less than 75% of external (consolidated) revenue, additional segments need to be identified as reportable, even if they don't meet the 10% tests, until at least 75% of external revenue is included in reportable segments. -The practical limit to the number of segments is 10, which is not a precise limit.

The Financial Accounting Standards Board in FASB ASC 270-10-45-1 noted that "each interim period should be viewed primarily as an IFRS difference : each interim period is a _______________________

integral part of an annual period." Discrete reporting period.

Segment reporting includes

interim financial reports and annual FS of public business entities.

Segment Reporting includes? the objective is to?

interim financial reports and annual FS of public business entities.; Provide information about the different business activities of the entity and the economic environments in which it operates

Selectivity

involves the specified criteria that serve to screen the risks and uncertainties encountered by every entity. The objective is to restrict the required disclosures to matters that are significant to that specific entity.

Fair Value Measurements: Fair value

is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Subsequent events are events or transactions that occur after the BSdate and prior to the issuance or availability for

issuance of the FSs

Management's evaluation going concern should be based on relevant conditions and events that are

known and reasonably knowable at the FSs issuance date.

Activity ratios

measures of how effectively an enterprise is using its assets

IFRS Difference for an interim period, an inventory loss from a market decline must be recognized even if

no loss is reasonably expected for the year.

For interim report: Gain and losses that are similar to gains and losses that would not be deferred ate year-end are

not deffered to later interim period.

Disclosures should be made in the __________ of annual and _________FS when substantial doubt existis about an entity's ability to continues ___________________________ or was alleviated as a result of _________________________________

notes interim as a going concern management's plans

Management is required to evaluate whether there are factors that raise substantial doubt about the entity's ability to continue as a going concern within

one year after the date that the financial statements are issued. The evaluation should be based on "relevant conditions and events that are known and reasonably knowable at that date that the financial statements are issued

Form 20-F (Non US 10 K Annual report) is filed by

other Non US registrants including a summary of financial data, MD&A and audited FS. The FS may be prepared using US GAAP, IFRS, or comprehensive body of accounting principles other than US GAAP or IFRS.

Substantial doubts exists when relevant conditions and events, when considered in the aggregate, indicate it is

probable (Defined as likely to occur) that the entity will not be able to meet its obligations as they become due within one year from the FS issuance date.

The objective of segment report is to

provide information about the different business activities of the entity and economic environments in which it operates.

Disclosure about certain Significant Estimates used to value assets, liabilities, or contingencies is required when the estimated effects of a condition, situation or set of circumstances at the balance sheet date are subject to

reasonable possibility of change in the near term and the effects will be material.

Revenue Test

report revenue, including sales to external customers and intersegment sales or transfers, is at least 10% of the combined revenue of all operating segments.

Disclosures should be made at the BS date about certain items that could significantly affect

reported amounts in the near term, that is within 1 year of the balance sheet date.

If an operating segment becomes reportable because it meets one or more of the quantitative criteria in the current period but did not meet those criteria previously, prior-period segment information that is presented for comparative purposes should be

restated, unless it is not practicable to do so.

Under the pure cash basis, Revenue? Expenses? Long-term assets? Accruals?

revenues are recognized when cash is received, rather than when earned; expenses are recognized when cash is disbursed rather than when incurred; long-term assets are not capitalized, and, hence, no depreciation or amortization is recorded; and no accruals are made for taxes and no prepaid expenses are recorded.

The preferred presentation is a summary of accounting policy is a

separate section preceding the notes or in the initial note

Liquidity ratios measure

short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.

Significant Accounting policies preferred presentation is a

summary of accounting policies in a separate section preceding the notes or in the initial note.

Profit (lost) test

the absolute amount of reported profit or loss is at least 10% of the greater, in absolute amount, of either the combined reported profit of all operating segments that did not report a loss or the combined reported loss of all operating segments that did report a loss.

Regulation S-X governs

the form and content of financial statements filed with the SEC.

Form 3, 4, 5

the form required to be filed by directors, officers and owners with more than 10% stake

In meeting these requirements,

the identity of the customer is not necessary. A group of entities under common control is considered a single customer, as are each of the following: the federal government, a state government, a local government, and a foreign government.

Additional guidance for identifying reportable segments and presenting information about reportable segments is provided in FASB ASC 280-10-50-14. Additional operating segments shall be identified unless:

the total of external revenues of all reportable segments must make up at least 75% of the total consolidated revenues or an operating segment that previously met the criteria as a reportable segment, but does not meet those criteria in the current period, may still be treated as a reportable segment if management judges it to be of continuing significance.

Financial statements are considered available to be issued when

they are complete in a form and format that complies with GAAP and all approvals necessary for issuance have been obtained, for example, from management, the board of directors, and/or significant shareholders. An entity that has a current expectation of widely distributing its financial statements to its shareholders and other financial statement users must evaluate subsequent events through the date that the financial statements are issued. All other entities must evaluate subsequent events through the date that the financial statements are available to be issued. (FASB ASC 855-10-20)

IFRS requires an explicit and unreserved statement of compliance with IFRS in the notes to the FS. An entity cannot describe FSs as complying with IFRS unless

they comply with all IFRS requirements. US GAAP does not have a similar requirement