CPA- FAR
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| 2 Components of an Income Statement | 1) Income from Continuing Ops 2) Income from Discontinued Ops |
| 2 Components of Continuing Operations | 1) Operating Rev/Exp 2) Non-Operating (Other Rev/Exp, Gain/Loss) |
| Elements of Other Comprehensive Income | Pension, Unrealized G/L on Debt Securities, Foreign Currency Translation, Instrument Specific Risk, Effective Portion of CF Hedge, Revaluation Surplus (IFRS ONLY) |
| Comprehensive Income Calculation | Net Income (after tax) + OCI [PUFIER] (net of tax) |
| Single-Step Income Statement vs Multiple-Step | Single Step: Revenues - Expenses Multiple Step: Multiple Subtotals |
| Changes in Accounting Estimate are adjusted: | Prospective - DO NOT RESTATE |
| Change to LIFO or Depreciation Method is adjusted: | Prospective - DO NOT RESTATE |
| Changes in Accounting Principle or Error Correction: | Retrospectively- Adjust Beginning RE NET OF TAX (earliest period presented) |
| Going Concern: Management should evaluate the entity's going concern within one year of ??? | The BS ISSUE date NOT Statement date |
| Going Concern: Results of management's evaluation should be disclosed unless ??? | There is no substantial doubt |
| Subsequent Events: 1. When should subsequent events be recognized? 2. When should they be recorded/disclosed? | 1. Recognize if they have existed at the BS Date 2. JE and Disclosure if they occur before the BS Date, Disclosure only if afterwards |
| OCBOA: Presentation Guidelines: (2) | -Don't use GAAP terms -Statement of CF not required |
| OCBOA: Cash Basis vs Modified Cash Basis | Modified cash basis has expenses and revenues, but does not have receivables or payables |
| OCBOA: How should non-taxable revenues and expenses be reported on an Income Tax Basis F/S? | As separate line items, additions/deductions to NI, or a disclosure |
| Cash to Accrual Basis: | For AR and Unearned Revenue: - Add Good (Increase in A or Decrease in L) - Subtract Bad (Decrease in A or Increase in L) For Everything Else: - Subtract Good (Increase in A or Decrease in L) - Add Bad (Decrease in A or Increase in L) |
| How should contingency Gains/Losses be accounted for if they are: 1) Probable 2) Reasonably Possible 3) Remote | 1) Gains = Disclose; Loss = JE and Disclose 2) G/L = Disclose Only 3) G/L = Ignore (Unless guarantee of indebtedness to others, then disclose) |
| How should contingencies be accounted for if a range of potential losses is given? | Choose the lowest amount |
| Direct Method for Operating Activities | Inflows less Outflows = Cash Basis |
| InDirect Method for Operating Activities | NI + Depr - Gains (Prem. Amort) + Losses - Equity (in excess of recc $) - Change in OA + Change in OL |
| What is included in Operating Assets? | ALL Current Assets EXCLUDING CASH AND CASH EQUIVALENTS |
| What is included in Operating Liabilities? | ALL NON-INTEREST bearing Liabilities (including DTL) |
| Investing Activities | Changes in Non-Current Assets, Payments related to Principal ONLY, AFS, HTM |
| Financing Activities | Changes in Debt and Equity, Dividends Paid, Repayment/Issuance of Debt, Treasury Stock |
| Supplemental Portion of Stmt of Cash Flows | If Direct: Indirect reconciliation required; If Indirect: Interest and Taxes Paid; Both: Non-cash Investing/Financing Activities |
| Market Cap Calculation | CSO x Price Market |
| Size of Market Cap | Large Accel = 700m+ Accel = 75-700m Small = <75m |
| 10-K Purpose and Filing Days | Annual, 60 (lg) -75-90(sm) |
| 10-Q Purpose and Filing Days | Quarterly, 40 (lg)-40-45(sm) |
| 8-K Purpose | Major Event |
| S-X Reporting Requirements (# of each financial stmt) | GAAP: 2 BS, 3 ELSE, IFRS: 3 ALL |
| Basic EPS Equation | (NI - *Preferred Dividends)/WACSO |
| Non-cumulative Dividends | Focus on the declared dividends ONLY |
| Cumulative Dividends | All accumulated dividends (regardless of if declared) |
| How are dividends and stock splits treated in calculation for WACSO? | Treat them as if they occurred at the beginning of the earliest period presented. |
| How are convertible bonds treated when calculating Diluted EPS? | "If-Converted" Method: Only affects EPS if dilutive. Numerator changes to NI + Int Earned (Net of Tax) Denominator adds # CS convertable |
| How are options and warrants treated when calculating Diluted EPS? | "Treasury Stock" Method: If Avg Price > Excersize Price = Dilutive Only Affects denominator # Options - ((# options*excersize price)/avg price) |
| 4 Tests to determine if a segment must be reported separately | 10% Internal/External Revenue 10% of sum P/L 10% of Assets Reported segments >75% of external revenue |
| How to calculate ending balance of Allowance of Doubtful Accounts (2 ways) | % of Ending AR Aging Schedule of AR |
| If pledging AR, what account should be credited? | Note Payable |
| Selling AR without recourse | True Sale, take AR off books |
| Selling AR with recourse | Sale (if met by all three) or Loan 1) Seller's Obligation reasonably estimated 2) Transferer surrenders control 3) Transferer not required to repurchase AR |
| What is the direct write-off method used for, and can it be used for GAAP? | It's used for tax purposes, and no it cannot be used for GAAP. Bad Debt is our plug figure in Allowance for Doubtful Accounts |
| Freight-In vs Freight Out | Freight-In: INcluded in INventory Freight Out: Selling Expense |
| FOB Destination | Transfers to BUYER @ DESTINATION |
| FOB Shipping Point | Transfers to BUYER @ SHIPPING POINT |
| Equation for Periodic Inventory Cost | BI + Purchases = COGA - EI = COGS |
| Inventory Valuation: US GAAP | Lower of Cost or Market |
| Inventory Valuation: IFRS | Lower of Cost or NRV |
| Equation for Net Realizable Value (NRV) | NRV = Selling Price - Costs to Sell |
| Market Value Calculation | Middle of: - Replacement Cost - NRV (SP - Cost to Sell) - NRV - Profit |
| Inventory Costing: Periodic Weighted Average Formula | (COGA/# of units) = Cost/unit |
| Inventory Costing: Perpetual Moving Average Formula | (COGA/# of units) = Cost/Unit Changes after every purchase |
| Inventory Costing: Dollar Value LIFO | Price Index = EI Current/EI Base Price Index * Layer Base Increase |
| Conventional Retail Formula: | Markups NOT included in COGA for Cost AFS (Retail AFS - Sales - Markdowns) * (Cost AFS/Retail AFS) = EI @ LCM |
| U.S. GAAP PP&E NBV Equation | NBV= Cost - A/D - Impairment |
| IFRS PP&E Valuations (2) | 1. NBV (same as US GAAP) 2. Revaluation = FV on Revaluation - Subsequent A/D - Subsequent Impairment |
| U.S. GAAP PP&E NBV Equation | NBV= Cost - A/D - Impairment |
| IFRS PP&E Valuations (2) | 1. NBV (same as US GAAP) 2. Revaluation = FV on Revaluation - Subsequent A/D - Subsequent Impairment |
| If there is an initial GAIN on IFRS Revaluation of a fixed asset, where does the GAIN get recorded? | Other Comprehensive Income (pufieR) |
| If there is an initial LOSS on IFRS Revaluation of a fixed asset, where does the LOSS get recorded? | Income Statement |
| Ordinary Repairs are ??? Extraordinary Repairs are ??? | Ordinary = Expensed Extraordinary = Capitalize by reducing A/D |
| Equation for capitalization of construction interest | Lesser of: - Weighted Avg Expenditures * Weighted Avg Rate - Actual Interest |
| Depreciation: Units of Production | ((Cost - SV)/Hours)= Rate per Unit * Units or Hours |
| Depreciation: Sum of Year's Digits | Rate: (Remaining Life / SYD) SYD if 3 yr life = 1+2+3 |
| Depreciation: Declining (200/150) | IGNORE SALVAGE VALUE Rate: (200 or 150/Number of Years) = % |
| If the exchange HAS commercial substance, what amount of G/L are recognized? | All G/L recognized if they have commercial substance. |
| If the exchange does NOT have commercial substance, what amount of G/L are recognized? | ALL LOSSES RECOGNIZED IMMEDIATELY. No Boot= No Gain, FV<25% Paid= No Gain, FV<25% Rec= Proportional Gain, FV>25%= ALL Gain |
| General rule regarding FV of Non-monetary exchange transactions | FV Given = FV Received |
| If two dissimilar assets are exchanged, what amount of G/L is recognized under IFRS? | All G/L is recognized on exchange of dissimilar assets. |
| Trading Debt Security: Current or Noncurrent? Measurement? Unrealized G/L? Realized G/L? Credit Loss Treatment? | Current, FV @ BS Date (Mark 2 Mkt), IS, IS, N/A |
| Involuntary Conversion Calculation | Payment Received - Carrying Value |
| Available-for-Sale Debt Security: Current or Noncurrent? Measurement? Unrealized G/L? Realized G/L? Credit Loss Treatment? | Current, FV @ BS Date (Compared to Cost), OCI, IS, Amortized Cost-PV=Credit Loss on IS (excess is OCI) |
| Held-to-Maturity Debt Security: Current or Noncurrent? Measurement? Unrealized G/L? Realized G/L? Credit Loss Treatment? | Both, Amortized Cost, N/A, N/A, Amortized Cost - PV on IS |
| Trading Debt Security: Current or Not Current? Measurement? Unrealized G/L? Realized G/L? Credit Loss Treatment? | Current, FV@BS Date (Mark 2 Mkt), IS, IS, N/A |
| Available-for-Sale (AFS) Debt Security: Current or Not Current? Measurement? Unrealized G/L? Realized G/L? Credit Loss Treatment? | Current, FV@BS Date (Compared to Cost), OCI, IS, Amortized Cost - PV = Credit Loss on IS (excess over FV goes to OCI) |
| Held-to-Maturity (HTM) Debt Security: Current or Not Current? Measurement? Unrealized G/L? Realized G/L? Credit Loss Treatment? | Both, Amortized Cost, N/A, N/A, Amortized Cost - PV = Credit Loss on IS |
| When is the FV Method used in Investments? | Ownership of 0-20% (Not Significant) |
| When is the Equity Method used in Investments? | Ownership of 20-50% (Significant Influence) |
| Equity Method: How does each influence "Investment"? 1) Initial 2) Net Income 3) Dividends 4) FV Adjustment | 1) Initial: Full Investment = Increase 2) Net Income: % Owned = Increase 3) Dividends: % Owned = Decrease 4) FV Adjust: % Owned = Increase/Decrease |
| Equity Method: How does each influence "Equity"? 1) Initial 2) Net Income 3) Dividends 4) FV Adjustment | 1) Initial: N/A 2) Net Income: % Owned = Increase 3) Dividends: N/A 4) FV Adjust: % Owned = Increase/Decrease |
| Dividend Income is only found using the ??? Method of Investments | Fair Value Method |
| How do you calculate goodwill? | Implied FV (Initial Investment / %) - Fair Value = GW |
| GAAP vs IFRS: R&D Expense | Research: (Both Same) Research Expensed; Production, Alternative Use, and Successful Legal Capitalized, Development: (GAAP) Capitalize for Software ONLY after feasibility, (IFRS) Capitalize |
| How should Intangible Assets be amortized? | Finite = Amortize Infinite = Don't Amortize IN BOTH CASES CHECK FOR IMPAIRMENT |
| When does amortization of computer software begin and end? | It begins at release date and ends when sold |
| US GAAP Impairment Test: 1) General Rule 2) Exceptions and Rules | 1) Sum of Undiscounted CFs > CV = Impaired; Impairment = FV - CV 2) Intangible Assets with Indefinite Lives; FV - CV if negative is impairment/amount impaired If assets are held for sale, then add disposal costs to impairment loss |
| IFRS Impairment Test: 1) General Rule 2) Exceptions and Rules | 1) Higher of NRV or PVFCF = Recoverable Amt; RA - CV = Impairment Loss if Negative 2) No exceptions |
| Are reversals of impairment allowed? | US GAAP: No (except if classified as a FA Held for Sale/Disposal) IFRS: Yes (except for Goodwill) |
| Evaluation of Goodwill for Impairment (GAAP and IFRS) | IN BOTH CASES GW CANNOT BE NEGATIVE US= Reporting Unit (Operating Segment) IFRS= Cash-bearing Unit Level (Smallest Identifiable) |
| Franchisee Accounting: Initial and Continuing Fees | 1) Initial Fees: Capitalize and Amortize 2) Continuing Fees: Expense |
| Start-up Costs | Expense as incurred |
| Research and Development Expense DOES NOT INCLUDE (2) | 1. Items that have alternative future uses 2. Tasks undertaken on behalf of others |
| When does capitalization of costs start for software development? | After technological feasibility has been established |