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36 Cards in this Set
- Front
- Back
GAAP Revenue Recognition Criteria |
When realized (or realizable) and earned. (1) Evidence of arrangement exists (2) Delivery has occurred, services rendered basically the transfer of risks and rewards (3) Price is fixed and determinable (4) Collection is reasonably ensured |
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IFRS Revenue Recognition |
"probably that economic benefits from transaction will flow to the entity" EASIER / MORE FLEXIBLE TO RECOGNIZE |
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Deferred Charge |
will become expense in the future but accrued as an asset NOW (ex) Def'd Bond Issue Cost |
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Franchisor Accounting |
(1) Initial Franchise Fee Recognized when conditions of sale are "substantially performed" (usually 1st day of franchisee operation) Non refundable CAN be revenue (2) Continuing Franchise Fees treated similar to royalties |
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Intangible Assets: Capitalize or Expense? |
Purchased - Capitalize and amortize Internally Developed - expense when incurred EXCEPT: legal fees related to successful defense, registration fees, or direct costs to secure the asset |
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Intangible Asset Revaluation Model (IFRS) |
Intangibles initially recognized at cost, then revalued to FMV at later date --> MUST BE REVALUED REGULARLY Reported on B/S @ FMV - Accum Depr Revaluation Losses: Income Stmt Revaluation Gains: OCI (PUFER) **unless prior G/L, then wipe it out first |
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Franchisee Accounting |
(1) Initial Franchise Fee PV of amt paid capitalized and amortized over expected life of franchise (2) Continuing Franchise Fees Expense as incurred |
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Start Up Costs Book vs. Tax |
Book: expensed when incurred Tax: deduct up to $5,000 amortize rest over 180 months (phase out @ 50,000 as well) |
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R&D Expense Treatment |
EXPENSE as incurred unless...... (1) Alternate Future Uses (2) Undertaken under contract for others Not considered R&D: Market research, quality control testing, routine design changes, reformation of chemical compound |
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Computer Software Developed to be Sold, Leased, or Licensed |
EXPENSE until Technological Feasability Then, CAPITALIZE until product released for sale |
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Computer Software For Internal Use Only |
EXPENSE costs for preliminary version and for training & maintenance CAPITALIZE upgrades and enhancements --> Amortize using Straight Line |
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Amortization of Computer Software (to be sold) |
GREATER OF: (1) [Current Gross Revenue for Period] / [Total Projected Gross Revenue for Product] (2) 1 / [Estimate of Economic Life] |
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Impairment of Intangible Assets Finite Lives |
[Step 1] Compare NBV to sum of undiscounted future cash flows... if NBV < FCF then.... [Step 2] Impairment exists! Write down asset to FMV Take impairment loss = NBV - FMV |
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Impairment of Intangible Assets Infinite Lives |
[Step 1] Compare FMV to carrying amount. If less, write down to FMV |
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Goodwill Impairment |
[Step 1] (1) Assign assets/liab to reporting units (2) Determine FMV of those assets/liab (3) If FMV > NBV, POTENTIAL IMPAIRMENT If FMV < NBV, no impairment [Step 2] Calculate implied goodwill of reporting units (NBV reporting unit - FMV assets/liab) (2) Compare implied GW(FV) to BV - goodwill If GWFV < GWBV , take {LOSS = BV - FV} |
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Completed Contract Recognition |
GAAP Only *Only use for lots of small, short term projects Recognize GAINS @ completion Recognize LOSSES @ time discovered |
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Percentage of Completion JE to record Costs Incurred |
DR. Construction in Progress CR. CASH |
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Percentage of Completion JE to record Revenue/Costs |
DR. Construction Expense (costs incurred in period) DR. Construction in Progress (plug) CR. Revenue (sales price x % completed) |
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Percentage of Completion JE to record Billings |
DR. Contracts Receivable CR. Progress Billings |
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Percentage of Completion JE to record Cash Collections |
DR. CASH CR. Contracts Receivable |
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B/S Presentation Construction in Progress |
Construction in Progress (=costs + % profit recognized) <Progress Billings> ================= (A) If positive, Current Asset (B) If negative, Current Liability |
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Cost Recovery Method |
Required under IFRS if outcome of contract cannot be estimated Def'd profit similar to installment sales BUT none recognized until all costs are recovered JE @ sale: DR. Cost Recovery/R CR. Inventory CR. Def'd Gross Profit |
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Installment Sales: Deferred Profit |
Gross Profit <Earned Gross Profit> ================== Def'd Gross Profit OR Gross Profit % x Outstanding A/R (related to sales) |
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Non-Monetary Exchange HAS Commercial Substance |
Recognize ALL gains and losses use FMV of assets given up (not NBV) to determine basis in asset(s) received |
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Non-Monetary Exchange LACKS Commercial Substance (1) NO BOOT is received |
NO GAIN BVnew = NBVold |
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Non-Monetary Exchange LACKS commercial substance (2) BOOT PAID |
NO GAIN BVnew = NBVold + BOOT PAID |
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Non-Monetary Exchange LACKS commercial substance (3) BOOT IS RECEIVED (<25% total consideration) |
PROPORTIONAL GAIN Boot rec'd/Total consideration x Realized G/L ====Recognized G/L===== BVnew = BVold - Boot Rec'd + Gain Recog |
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Non-Monetary Exchange LACKS commercial substance (4) BOOT IS RECEIVED (>25% total consideration) |
RECOGNIZE ALL GAIN BVnew = BVold - Boot Rec'd + Gain Recog |
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Non-Monetary Exchange LACKS commercial substance LOSS TRANSACTION |
Recognize loss despite lacking commercial substance |
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Non-Monetary Exchange IFRS Rules |
Dissimilar Assets Treated like "having commercial substance" Recognize all G/L Similar Assets No revenue generated OR gains recognized Losses recognized in full on all exchanges |
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Foreign Currency Transactions |
transactions with a foreign entity denominated in a foreign currency |
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Functional Currency |
= LOCAL CURRENCY if it is.... Currency of the primary economic environment in which the company operates AND (1) foreign op. self-contained and integrated (2) day to day doesn't depend on parent co (3) NOT highly inflationary |
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Remeasurement Method |
**if domestic currency = functional currency B/S: Monetary Items = YE rate Nonmonetary Items = Historical rate I/S: Non B/S related = Weighted Avg B/S related = Historical rate (Depreciation/PPE, COGS/Inv, Amort/Bonds&Intangibles) Remeasurement G/L plug to get net income to the required amt needed to adjust R/E to balance the B/S |
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Translation Method |
**if local currency = functional currency I/S: ALL items = Weighted Avg ---> Transfer Net Inc to R/E B/S: Assets/Liab = YE rate C/ST, APIC = Historical rate R/E = beg R/E + ^Net Inc - Translated Div'd Translation G/L plug to OCI = difference between debits and credits in translated trial balance |
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Statement of Financial Condition |
PERSONAL FINANCIAL STATEMENT Presents assets and liabilities at estimated current values NOT historical cost Recognized on accrual basis Personal net worth = Assets - Liab |
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Statement of Changes in Net Worth |
OPTIONAL PERSONAL FINANCIAL STATEMENT Shows increases/decreases to net worth distinguished between realized / unrealized |