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18 Cards in this Set
- Front
- Back
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FICA
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Employer FICA tax is an expense and a liability.
FIT and Employee FICA are liabilities until paid. |
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Patent Capitalization
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Amortized over the lessor of economic life or legal life
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Royalties Paid
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Should be expensed in the period incurred
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R&D
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UNDER GAAP:R&D Expense includes
1. R&D contracted to 3rd party 2. preproduction prototypes & models 3. costs for searching for new products or new process alternatives |
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Cash V Accrual
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Compared to the accrual basis, the cash basis understates income by the net decrease during the accounting period of Accrued Expenses. NOT AR.
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goodwill
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only capitalized when incurred in a purchase of another entity.
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Current asset for interest receivable
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is the interest to be received within one year.
(Balance of note x %) |
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Repairs made evenly
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July 1 is average date
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Patents
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Capitalize the entire amount of legal fees and other costs associated with registering the patent UP FRONT. Then Amortize ( reduce) that amount over lessor of legal or economic life.
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Successful defense of patent
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Legal costs of successful defense should be capitalized and amortized over the lesser of legal or economic life
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Cash Pretax income to Acrrual
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Add- Increase in AR & Decrease in AP
Sub-Decrease in AR & Increase in AP |
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Royalty Revenue
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For purposes of net income, royalty revenue is sales times the royalty %.
It is NOT based on collections. Strictly earnings. |
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Royalty EXPENSE
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the larger of minimum royalties or the % of sales
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Patents- Successful/Unseccuesful
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Capitalize successful patents
Expense Unsuccessful Patents |
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IMPROTANT
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BE CAREFUL OF DATES. THEY WILL TRY AND TRICK YOU WITH HALF MONTHS AND FRACTIONS OF YEARS WHEN COMPUTING.
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Rental Revenue- From Cash To Accrual
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If given the Rent Receivable
ADD- End Balance+Write Offs+ Cash Collections Subtract- Beginning Balance to get Billings Accrued (Rental Revenue) |
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Rental Revenue- Rental Receivable/ Unearned Rev
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Asset-Lability= Net Unearned
Receivable-Unearned=Net Unearned Net Unearned+Cash Collections- Rental Rev Earned(SQZ)=End Balance |
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Accrued Expenses
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If unrecorded liability affects WIP inventory, there is no effect on RE.
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