FAR

give away for expense or net position

fiduciary or proprietary

What are examples of significant accounting policies

measurement bases, accounting principles and methods, basis of consolidation, depreciation methods, revenue recog.

what is the amount capitalized for leased equipment?

monthly payment * the present value factor

how do you account for an error?

prior period adjustment

contingent liabilities

probable and can be estimated show on b/s reasonable possible or probable but not estimate, just disclose gain contingencies wait until realized

describe depreciation expense for a public college or a private college

public not required private required

Whats included in inventory cost ?

purchase returns frieght in sales tax insurance

FACT: about Non-profits

record nothing if there is major uncertainties in value

Statement of net position for gov wide financial statements

two separate columns for proprietary and government. For all gov wide financial statements these are separated.

How is a gain on a trading security reported on the I/s

unrealized gain

what are debenture bonds?

unsecured bonds

What uses lower of cost or net realizable value What uses lower of cost or market

Fifo and the average cost LIFO

BONDS

For PV tables ONLY USE MARKET RATE. Very often the market rate needs to be cut in half becuase interest is payable semiannually. Also, when the happens the period doubles. For example, 5 year bonds have ten periods. Question asks for total issue price Face amount* present value factor (market interest and periods) (semiannual, double periods, cut interest in half USE PRESENT VALUE OF 1 Plus Interest payments Interest payments = stated rate* FV. (semiannual cut the state rate in half) Then multiply the interest payment by the present value for whatever kind of annuity it is. ADD the two numbers.

Information about NFP

For a NFP to recognize revenues they have to wait for a condition to be met. If the NFP gets variance power its a revenue if not its a liability NFP does not recog non-financial donations Donated services are an expense and revenue if they require special skills, person has those skills, and the value can be measured

How do you calculate depreciation expense for a consolidation?

For after intercompany (after the acquisition)Purchase price/depreciation (number of years) Depreciation if the acquisition never happened Cost/ number of years Then take the difference between the two

describe the accounting treatment for a transaction with commercial substance?

For gain/loss, Cash paid/received does not matter. gain/loss = FV - book value. Then the NEW asset is valued at FV given up. PLUS cash paid or MINUS cash given up.

percentage of completion method

GP = (total cost in all years that has happened/expected costs ) * total expected GP - GP prevously recog

Operating Section of Cash flows.

Start with net income + dep exp - equity in earnings - gain on sale of fixed assets - increased in accounts receivable + decrease in inventory + increase in accounts payable

What is the recoverability test? What is a 20-F What is a 11 k

Undiscounted future cash flows vs. CV. If the CV is higher you proceed. Can only be done on intangible assets (not physical) like a patent with a limited useful life. Yearly report of a non - us registrant like Canada Yearly report of an employee benefit plan

What is a vertical chain?

When a parent owns more than 50% of a sub and the sub own more than 50 % of something. Everything is consolidated when this happens.

When do you recog rev for a bill n hold agreement?

When the item is complete if its customized.

When is revenue recog at a point in time?

When the product is not unique/customized. The logic is another buyer can be found bc the product in not customized. For a house revenue is recog at closing

how are cost to register stock vs. legal and consulting fees accounted for ?

cost to register lower APIC and legal and consulting fees are expensed

When should employees compensation for future absences be accrued ?

1. Already rendered 2. vested 3. payment is probable 4. reasonably estimated

Describe transactions w/o commercial substance and cash is recieved.

1. Check if there is a gain CV to FV If there is a loss, record the loss, then the new asset at FV 2.If there is a gain but no cash received. IGNORE THE GAIN. New asset at BV of your asset + plus cash you paid 3. If there is a gain but you received cash. The gain is a proportion to cash. EXAMPLE of 3. 4,000 cash 20,000 fair value 12,000 carry amount. Proportion = 4,000/20,000 = 20 %. Gain is 8,000 *.20 = 1600. UNRECOGNIZED PORTION of the gain is 6400 (8000 -1600) Record the new asset at is FV - unrecognized portion of the gain. 16000 - 6400 = 9600

ASC 606 five steps of revenue recognition

1. identify the contract 2. identify the performance obligations 3. transaction price 4. allocate the transaction price to the performance obligations in the contract 5. recognize revenue

Standard Setting Process

1. project gets added 2. research and discussion memorandum 3. public hearings 4. evaluate research and exposure draft 5. comments 6. if 4 out 7 members say yes you issue ASU

Disclosures for direct method cash flows

1. reconcilliation from net income to net cash flow 2.income taxes paid 3. gross cash receipts and gross cash payments

what is an operating lease?

12 months or longer. Lessee recognizes the lease on the b/s. Lessee records a right of use asset (debit) and Lease obligation (credit). To get the right of use value take the annual lease payment and multiply it by the PV factor, (annuity due, on the implicit rate).

Information about small stock dividend.

< 25 percent of shares outstanding. Comes out of Retained earnings. Debit retained earnings becuase retained earnings as an equity balance. Common stock is always PAR ADPIC is whatever is not PAR. Retained Earnings Common Stock ADPIC

Describe disclosures with public and private companies

A public company's future event evaluation period runs through the date they are issued. This is when a corporation distributes the f/s. Public companies do not have to disclose the day through which subsequent events have been evaluated. ,for private companies it is the date they are available (a middle number between b/s date and when they are issued). They have to disclose when subsequent events have been evaluated

*COGS for consolidation* ADD TO THIS

A/R 100,000 intercompany sales 100,000 COGS 60,000*** Inventory 60,000***** Next party: Inventory. 100,000**** problem (compare with other inventory) A/P 100,000 Now next party sells the goods

how to consolidate inter-company sales

AR + AR - Consolidated amount

***** carrying value ****** for patents

Add Carrying Value, add legal cost for a sucessful patent, add legal fees for new patent,

Cash basis to accrual

Add ending AR Subtract beginning AR Subtract deferred REV Add beginning unearned rev (I think this way is most relevant) Add increase in current asset subtract decrease in current asset add decrease in current liabilities subtract increases in current liabilities

how do you consolidate sales?

Add revenues together - consolidated revenue

what amount should be reported as land?

All cost to get the land ready for use - proceeds from sale of salvaged materials

how is warranty expense calculated?

As a percentage of sales

translations

Assets and liabilities current rate bc b/s is on a specific day I/S is weighted average exchange bc its the whole year

10 Q F/S statments

B/S for preceding year and the quarter. I/S quarterly and YTD for current and preceding year. Cash flow year to date and previous year.

Direct write off method

BDE A/R

How do you reconcil a balance to bank statement

Bank - outstanding checks + Deposit in transit = book (cash balance) Cash balance information If a check is recorded to low. Subtract the difference from the cash balance of the amount that should have been taken out. Add interest earned to the cash balance. Subtract bank service charged .

COGS equation

Beginning Inventory + Purchases - Ending Inventory = COGS

What happens when a change in accounting principles is recoded? What about an error What happens when you can not determine the difference between a change in accounting estimate and principal?

Beginning Retained Earnings earning is adjusted for the cumulative effect of the change. An error is a prior period adjustment It is treated as a change in estimate. Because of this, it is a part of continuing operations.

Redemption of bonds payable

Beginning balance + issuance of bonds for equipment - ending balance

Direct Financing Lease

Both have to met. the present value of the lease payments + guaranteed residual value exceeds or is equal to the FMV of the asset it is probable that the lessor will actually the lease payments and residual value.

government fund balance to net position of governmental activities column

CAN Capital Assets Accum dep Non-current liabilities

stockholders equity reported?

CAR plus non-controlling interest

CPAS RIDES

Capital outlay Principal payments on debt Asset Disposals Sources (uses) financing Revenue (accrual) Interest expense Depreciation expense Service (internal income)

Calculations for APIC, Capital Stock, Retained Earnings

Capital stock shares* par value (common stock) APIC Shares * anything besides parr Retained earnings net income all years - dividends Add all these together for shareholders equity

How do you account for interest incurred during the construction period?

Capitalized NOT expensed. Interest b4 or after is expensed

How do you calculate carrying amount when something has been permanently impaired

Carrying amount/ number of years left on the useful life. Subtract this from the Carrying amount

Journal entry for sales tax

Cash Sales revenue (revenue/ 1 + sales tax) sales tax payable

LESSOR OPERATING

Cash Unearned Unearned Lease revenue Dep exp accum dep

What is the journal entry to record a bond at a discount?

Cash Discount bonds payable

What are the ENHANCING qualitative characteristics? What are the fundamental qualitative characteristics ?

Comparability, verification, timeliness, and understandability. Relevance and faithful representation. Predictive value, confirmatory value, materiality. Completeness, neutrality, free from error.

Comprehensive guide on Amortization and Capitalization and expense*********

Cost that get the asset ready for use are capitalized(shipping cost) Something that just maintains it is expensed Exploration costs - cost of successful efforts are variance power. Cost of unsuccessful efforts are expensed. "Full cost: all exploration costs are capitalized" (not sure what this is referring to exactly) Software costs - before software is technologically feasable costs are EXPENSED (like r &D) after CAPITALIZED ARO - capitalized "weighted present value of the future costs to retire the asset" Dividends - Dividend of < 25 percent outstanding shares is capitalized at market value >25 percent it is capitalized at par value cloud computing - transfer of license, entire cost is capitalized no transfer of license only service costs are capitalized Lease improvements are capitalized to leasehold improvement and amortized to shorter of lease term of the useful of the improvement Amortization of software costs greater of Ration of software sales to expected total sales straight line method over economic life of the software

When are derived tax revenues (income tax) recorded. And when are imposed non-exhcange revenues recorded (property taxes)

Derived income taxes are recoded when recieved and imposed non-exchange revenues are recorded when billed. Dont forget about 60 day rule

What are forms 3, 4, and 5?

Directors that own more that 10 percent of a company stock. An XBRL financial statement is not needed.

Journal entry showing unearned sales rev to earned sales rev

Dr. Cash Cr. Unearned Revenue Dr. Unearned Revenue Cr. Sales Rev Dr. COGS Cr. Inventory

Journal entry for the beginning of budgetary control

Dr. Estimated revenue Control Dr. Budgetary Control (if deficit) Cr. Appropriations Cr. Bugetary control (if surplus)

How do you calculate additional paid in capital right after a business combination?

Dr. Investment in SUB (shares* FV) CS (shares * par) APIC (difference)

journal entry for an unavailable deferred tax asset

Dr. income tax expense Cr. deferred tax valuation account

Equation for ending ARO

Ending ARO = Beginning ARO + PV of new ARO + Accretion expense - ARO settled in the period

percentage of receivables method for the ending balance in the allowance account

Ending balance is = to accounts receivable * percentage uncollectible. adjustment for allowance for uncollectible accounts is ending balance - beginning balance.

What is the entry to record a budget?

Estimated Revenues Control Budgetary Control

Patent cost

Expense unsuccessful patent cost and capitalize successful patent costs

Describe COGS and ending inventory for FIFO vs. LIFO

FIFO COGS lower, Net income higher, EI higher LIFO COGS higher, Net Income lower, EI Lower

How do you report plant assets for consolidated F/S?

FV of sub plus BV of parent

Calculation for notes payable at 12/31

Face amount - discount for the full year - amortization of discount = carrying amount

Which of these business segments are deemed to be reportable segments?

Has to be 10 % of revenues, operating income, identifiable assets

criteria for a finance lease

If any are true it is a finance lease. if one of these is met for the lessor its sales-type lease . if ownership transfers at the end of the lease if there is a purchase option that the lessee is reasonably certain to exercise if the lease term is greater than or equal to 75 percent of the leased asset present value of leased payments is 90 percent of more of the FMV of the leased asset specialized in nature so no alternative use

What are the shipping terms related to ending inventory?

If i buy something on FOB shipping point I count it b4 it even gets to me. If I sell something FOB destination I count it until it gets to the buyer.

When is a transaction considered a monetary exchange?

If the amount of cash a company paid for an asset is more than 25 percent of the value plus the FMV. When this happens ALL gains and losses are recognized.

When is there impairment and how does it affect financial statements? Can there be the restoration of previously recog impairment?

If there is impairment Goodwill on the B/S is affected and a loss on impairment is reported on the I/S. UNDER GAAP after impairment is recognized, a reduction, it CANNOT be brought back. UNLESS an asset is held for disposal. These are assets the company plans to SELL.

When are losses from permanent market decline recognized?

In the QUARTER they OCCUR! If it ends up being a gain that is RECOG in the quarter is occurs.

share of earning of sub

Income comes from the change in retained earnings of SUB.

Where are Foreign currency transactions and foreign currency remeasurement recoded ? Where are translation adjustments recorded?

Income statement. OCI

Amortization table

Interest expense (CV * market rate) Cash payment (FV * coupon rate) Amortization

short term lease

LESSE Lease expense cash Lessor A/R Lease revenue

New year interest

Lease expense (annual payment) right of use (PLUG) lease liability (2-3) - (2-3) * implicit rate. Times this amount by the implicit rate

End of the year journal entry (interest expense) 4

Lease expense (payment) (same as 3) right of use (plug) Lease liability (2-3) *implicit rate

operating lease payment journal entry 3

Lease liability (payment) cash

interest expense component for leases

Lease liability * implicit rate Lease expense right of use (the amount) lease liability (the amount)

Journal entry for purchase order/residual value (leases) 1

Leased equipment (PV of lease payments + present value of residual value/purchase order likely to be used) Lease obligation

What are current liabilities?

Liabilities due within a year including income tax payable and SUBTRACT OUT DISCOUNT ON BONDS PAYABLE

Where is required supplementary information reported?

MD & A

Ways to determine FV

Market approach Income approach: discounts future amounts to current value cost approach: cost to replace

Lease question asking what amount should be reported as interest expense

Multiply the PV of lease payments by the interest rate. This would be for 1 year. Double for two years

How to calculate expense related to asset retirement obligations

Multiply the depreciation expense by the accretion rate.

How to show discontinued operations

NET OF TAX Results of operations Gain/Loss on disposal of Segment B Combine the two

Comprehensive income

Net income + OCI = Comprehensive Income OCI Unrealized AFS securities Unrealized pension costs translation adjustments Unrealized derative transactions

Are conditional promised recorded as revenue? How are good Faith deposits recoded?

No. good faith deposits are recorded as a refundable advance. There is no entry required for conditional promised.

Describe how to account for legal costs associated with patents

Once the patent exists legal cost to successfully defend the patent should capitalized and expensed.

How to calculate gain on sale?

PAID. Then * by percentage sold and compare that to selling price. (watch dates for income)

How much interest revenue is from a lease?

PV of lease payments - first payment. Times this by the discount rate.

How to calculate consolidated Net Income

Parents net income - equity in subs income = parents income only (from the i/s) Subs net income (i/S) * parents share = parents share of subs net income Add these two numbers.

depreciation expense for leases

Present value of lease payments/lease term

Whats in the Statement of Activities for Government Wide Financial Statements?

Program expenses, program revenues, Net program (expense) or revenue, GENERAL REVENUES. (Governmental and business activities are separate)

Lower of cost or market method

market value is the middle value of replacement cost, NRV, and NRV - PM. (Fifo, and average cost)

How to calculate Non-non controlling interest

Purchase price/ controlling interest % = Fair Value of SUB Non-controlling % * FV of sub gives you beginning noncontrolling interest Now take beginning noncontrolling interest + NCI % of sub-net income - NCI % of sub dividend = ending non controlling interest

BONDS *********

Question asks for interest expense. Answer market rate* CV. interest payment is FV times stated rate (stays the same) FV does not fluctuate CV does. The price a bonds is sold for is carrying value. This number is not the face value. Determine the bond premium. Get the intitial premium FV - CV and work from there. Accrued interest determine the issuance price (CV) determine the periodic interest payment Divide this buy the number of months in the period this gives u 1 month interest Acrrued interest is the period u did not own the bond

journal entry for a liquidating dividend

R/E ADPIC Cash

What is included in a single step income statement?

REVENUES are included NOT purchase discounts (affect COGS) NOT recovery of accounts written off

How are discontinued operations reported on the I/S

Recog losses and gains for the full year of when something is APPROVED to be sold.

What kind of situation books a transaction as a financing agreement?

Repurchase price >= sale price and Expected Market Value.

multiple step income statement

Rev - Exp GM - SGA -Dep Exp = Operating income +/- gains and losses/ misc rev/exp (interest income) = income b4 tax -income tax expense = income from continuing operations +/- discontinuing operation = net income

Government fund statement of revenues, expenditures, and change in fund balance.

Revenues, expenditures, changes in fund balance, separate columns for each major fund, and a column showing combined major funds.

Primary government

Separately Elected governing body Legally separate entity Financially indpendent status

Cash to accrual

Subtract beginning balance a/r. Add ending balance A/R. Subtract the beginning balance because it is already counted in the cash balance. Also, Subtract the beginning salary payable. Add ending Add ending balance interest payable subtract beginning balance interest payable Subtract unearned revenue at year-end. Add unearned revenue beginning year. (if they start with cash, not net income) Add beginning prepaid balance Subtract ending prepaid balance Net income SubTRACT beginning prepaid Add ending prepaid

In a consolidated b/s what is the difference between the bond carrying amounts in the two companies

The bonds go away when companies are combined and the gain or loss goes to R/E. When the big company pays a premium it is a decrease to R/E

When does depreciation of equipment begin?

The installation date becuase all the costs must happen before depreciation occurs.

Allowance method

To lower the allowance allowance for doubtful accounts A/R Note: these are both asset accounts so there is no effect on i/s or b/s to bring it back to where management wants it BDE allowance for doubtful accounts B/S approach percentage of A/R and this gives you the allowance amount I/S percentage of sales and this give you BDE

what kind of account is accum dep?

contra asset.

buzz words for serial bonds

X maturing annually beginning in

Remeasurement

a and L are spot rate historic rate for non monetary items rev and exp use weighted average

how do you record land?

all costs that get the land ready. (cash, title search fees, country assessment, removal of buildings,. (NOT DEBT)

What do you do with bond issuance cost?

amortized over the life to the interest expense (accounting fees, legal fees)

When are F/S restated?

an error in past years, and a change in accounting entity

permanent accounting differences

any tax exempt interest fines and penalties life insurance on key employees dividends received deduction municipal bonds

formula for unencumbered

appropriation LESS encumbrances Less expenditures =

what is a not for profit b/s?

assets = liabilities + net assets. Called a statement of net position. Net assets w/o donor restrictions and net assets with donor restrictions.

Compare the income using accrual accounting vs. cash basis. Accrual to Cash income

assets inversely related Liabilities directly related

where does due from other funds appear

balance sheet, not a component of changes in net position.

When do you expense r & d?

before technological feasibility is established a person expenses those as r and d. For example, planning costs and design.

when is interest capitalized?

before the building is ready for use

Describe blended vs. discrete presentation

blended is part primary government and discrete is not.

what are other financing sources

bonds or long term debt

Reconciliation

book = cash for book to book add checks not included Only count checks for the correct time period(subtract out NSF checks) add cash on hand

What goes in the investing section of a statement of cash flows?

buying and selling investments/ long-term assets GIVING a loan (notes receivable)

what is net investment in capital assets

capital assets - accum dep -and debt

What do you do with interest expense incurred in the construction period?

capitalized so no interest expense

asking for bonds liability

cash

Journal entry to record a bond at a premoim

cash premium bonds payable

Name suplemental disclosures for indirect cash flow statement

cash paid for interest and income taxes.

what goes in the operating section of an indirect statement of cash flows?

cash received from customers, dividend income, interest income/expense, cash paid for a business expense, amortization, add back dep exp. Common one gain/loss on sale of equipment. The sale of equipment is also recorded for investment. We are going to accrual to cash. Change in assets inverse relationship change in liabilities direct DEPRECIATION EXPENSE IS ADDED GAIN is subtracted Amortization expense is ADDED

What are examples of cash and cash equivalents?

checking account, petty cash, depositary account, 3 months CD, t- bills

book value per share

common equity / shares outstanding

what balance does estimated revenues, appropriations, estimated other financing sources, estimated other finance uses

debit ,credit ,debit, credit

Name an example a non-cash transaction

debt to stock

What kind of account is a discount account?

discount account is a contra liability account

how does premium/ discount effect interest expense

discount raises it. premium decreases it

lessor sales types lease criteria OPERATING LEASE

does not meet the criteria for a direct financing lease

foreign currency transactions

domestic currency weakens, A/R is a gain, A/P is a loss domestic currency goes up A/R is a loss, A/P is a gain Key dates: Date of transaction Date of b/s note the gain or loss at this point Settlement date of transaction gain or loss at this point this is all foreign currency * spot rate

where is goodwill tested?

each reporting unit

Dollar value lifo conversion index

ending inventory in current year dollars/ ending inventory in base year dollars

When are stock options outstanding reduced?

exercise date

Expected credit loss model

expected credit loss is = to the difference between the amortized cost and cash flows. If the FV is higher than the amortized cost it is not recorded in the I/S.

how are reimbursements recorded

expenditure of the fund giving the reimbursement and a reduction in expenditure for the other fund

How are compensation cost recognized?

expense over the service period

how is a bargain purchase recognized?

gain in earnings at the acquisition date

What is the equity section for proprietary, fiduciary, and gov funds

gov funds fund balance (restricted, committed, assigned, unassigned). Proprietary net position.

What are the clues with expenditure or fund balance?

governmental funds

Modification of terms vs. extinguishment of debt

if it is not an extinguishment it is a modification. To be an extinguishment there needs to be a > 10 % difference of the present value of the new loans cash flow and the present value of the old loans remaining cash flows. ALSO embedded conversion options were changed.

net current asset or net current liability related to construction activity

if the sum of cost occurred and gross profit recog is equal total billings ITS 0. If cost are more is current asset. Less its a current liability.

what is the joint presentation of government wide and fund financial statements called

integrated approach

explain the relationship between interest expense and stockholders equity

interest expense overstated, net income understated, so stock holder equity understated.

What goes in the financing section of cash flows?

issuing and selling stock, purchasing treasury stock, getting a loan and paying it off, paying dividends, issuing bonds

How do you consolidate common stock?

it is the same as the parent's common stock

temporary accounting differences

items that will be taxable in the future are a deferred tax liability Deductible in the future are a deferred tax asset

New year operating lease

lease liability (payment) cash

reacquisition price

less than original issue price is gain gain to APIC More than original issue price is a loss debited to Retained Earnings

statement of cash flows for not for profit

long term restrictions appear in the financing section

What is the difference between software maintenance cost and software modification costs

maintenance expensed, modification capitalized,

Earnings per share

net income - preferred dividends / weighted average common shares outstanding

Do governmental funds have a statement of cash flows?

no

Is depreciation recorded in an operating lease ?

no depreciation is only recorded for a finance lease.

Do proprietary and fiduciary funds use major funds?

no.

how are temporary differences classified?

non-current

journal entry for not receivable

note recievable interest recievable revenue

examples of long term liabilities

notes payable, capital lease obligation, bonds payable

Proprietary, statement of revenues, expenses, and changes in net position

operating revenues, operating expenses, operating income, non operating rev and exp, ends with change in net position. NO MAJOR FUNDS

initial entry for operating lease 2

right of use (payments *PV factor) (AD and implicit rate) lease liability

What is net realizable value ?

selling price - cost of disposal

Small vs. large stock dividends

small stock is less than 25 percent, the fair value of the shares is capitalized from retained earnings. Large stock > 25 percent you use the par value

what does xbrl do?

tags define the data

how to calculate effective tax rate

taxable income * tax rate = income tax expense Income tax expense/ net income = effective tax rate

purchase option

the amount the lessee will buy the asset at the end of the lease.

how do you calculate amortization expense for a lease improvement?

the cost/ the rest of the lease term

information about reissuing financial statements

the entity should not recognize events that occured between the date the original financial statements were issued or available to be issued and the date the financial statements were reissued

residual value

the lessee guarantees this. if the value of the asset is less than this the lessee pays the difference

how do you recog dividend revenue for the FV method?

the part of dividends that are not in excess of the investor's share of the companies retained earnings/cumulative earnings from the date of the acquisition.

yearly amortization for software costs

the ratio of software sales to expected total sales straight-line method You amortize which ever is greater

Total fund balance

total assets less total liabilities - budgetary control (if appropriations do not lapse)

how do you calculate depletion amount per ton

total cost plus preparation minus sales price/amount to be extracted

cloud computing

transfer of license capitalize (including implementation cost) not that expense (but implementation costs are capitalized)

Large accelerated filer, accelerated filer, smaller reporting company

value of 700 million or more. value of 75 million and less than 700 million. Less than 75 million. If a company has less than 100 million in revenues in cannot be accelerated of any kind. Has to be a smaller reporting company. Fancy way of saying value is public equity float. 10 k had to be audited 10 Q has to be reviewed

When is contribution revenue recognized?

when collection is assured and conditions have been substantially met.

When are property taxes recoded

when they are levied/

When are checks no longer a current asset?

when they are mailed

Do not for profits have depreciation?

yes