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13 Cards in this Set

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Can you be required to record a contingent liability on the books but not disclose it in notes?
No. Any contingent loss that is probable or reasonably possible should be disclosed in notes. To be recorded on books, the loss must be probable.
Is federal income tax witheld a payroll related tax?
No - FICA is considered a payroll tax, whereas federal income tax is not. Federal income tax is not part of the employer's "wage expense".
Does a donation of common stock affect total SE?
No.
In an exchange of similiar assets where cash is received, you value the new asset at...
CV of the old asset, less cash received, plus recognized gain.
A deductible tax difference results in a deferred tax (asset or liability)?
A deductible tax difference results in a deferred tax asset. Deductible -> asset; Taxable -> liability.
If a non-governmental unit gives property to a business, how should the business record the property?
The firm should record the gift of property at FMV as revenue in the period of receipt.
Is an annuity in arrears an annuity due or an ordinary annuity?
Annuity in arrears is an ordinary annuity.
If a governmental unit gives property to a business, how should the business record the property?
The firm should record the donated property at FMV as "APIC - Donated Assets."
When debt that is due one month after the end of period not considered a short-term liability on the balance sheet?
A debt isn't ST-liability even if due in a few weeks if the firm intends to pay off the debt with a LT-liability. Officially, "The portion of long-term debt due within the next fiscal period is classified as a current liability if payment is expected to require the use of current assets or the creation of other current liabilities."
How are initial direct costs handled in the three lease types?
Operating: allocated over the lease term in proportion to the recognization of rental income (usually straight line).

Sales-type: expensed in year of occurance.

Direct financing: added to the net investment in the lease and amortized over the life of the lease as a yield adjustment (interest rate would be slightly lower than the initial rate of return).
What are the criteria for establishing the valid recognition of a liability for compensated absences and post-employment benefits?
Must be PROVen: four tests: liability must be Probable, must be a Reasonably estimated amount, for Only past services (never future services), employees rights have Vested [employee is entitled to it whether employment continues or not] or accumulated [rights carried forward].
What component of compensated absences must be vested, not just accumulated, to be shown as a liability?
Sick pay.
A taxable tax difference results in a deferred tax (asset or liability)?
A taxable tax difference results in a deferred tax liability. Deductible -> asset; taxable -> liability.