Financial 1

Front 1

Income statement

Back 1

-Useful in determining profitability, value for investment purposes, and credit worthiness
-Ex: cost of borrowing is lower if profitable

Front 2

Unexpired costs

Back 2

-Costs that will expire in the future and be charged against revenues from future periods
-Ex:Inventory,prepaid expense,net book value of fixed assets, unexpired cost of patents

Front 3

Revenue and Expense

Back 3

-R reported at gross amount less allowance for returns and discounts given
-E reported at gross amounts

Front 4

Gains and Losses

Back 4

-Reported at their net amounts

Front 5

Presentation Order of Major Components of IS (Memorize)

Back 5

A.Income or Loss from Continuing Operations (R/E)
B.Income or Loss from Discontinued Operations (Separate line item)
C. Extraordinary Items - unusual and infrequent
-B&C reported net of tax
-IDEA

Front 6

Presentation Order of Major Components Retained Earnings Statement

Back 6

D.Cumulative Effect of Change in Accounting Principle
-Change from one acceptable GAAP method to another because it presents the financial info more fairly

Front 7

Multistep IS

Back 7

-Begins with sales
-Depreciation, Income from operations, and interest expense separate line item

Front 8

Discontinued Operations

Back 8

-Impairment loss, G/L from actual operations, G/L on disposal
-Included in the period in which they occur
-Two conditions must be met:
-Cash flows or operations of the component has been removed from ongoing operations as a result of the disposal
-No significant continuing involvement

Front 9

Components of an enttity

Back 9

-GAAP-ORRSA
-IFRS- Major line of business or geographic area of operations and a subsidiary acquired exclusively with a view to resale

Front 10

Held for sale

Back 10

-Must meet all criteria:
-Plan to sell
-Available for immediate sale
-Active program to locate a buyer
-Actively marketed
-IFRS difference: Requires measurement of A and L before classification of held for sale

Front 11

Discontinued Operations Calculation

Back 11

-Results of operations
-G/L on disposal of the component
-Impairment- recognize loss and gina (FV-cost to sell) but not in excess of previously recognized loss
-No depreciation or amortization

Front 12

Measuring Held for sale

Back 12

-Lower of carrying amount or FV less cost

Front 13

Disposal activities

Back 13

-GAAP requires a liability for costs associated with an exit or disposal activity
-Criteria (all must be met):
-Obligating event
-Present obligation for future payments
-Little or no discretion to avoid future transfer of assets
-Future operating losses are recognized in the period they are incurred at FV

Front 14

Unusual or Infrequent

Back 14

-Reported as separate line item as part of Income from continuing operations
-No extraordinary items under IFRS

Front 15

Accounting changes

Back 15

-Estimate- Prospective and affects current and future income from continuing operations. Disclose future effects in notes
-Principle- Retrospective. Non-GAAP to GAAP is an error not principle change. Cumulative effect-if comparative apply to RE in first period presented
-Entity- Restate
-Exceptions- LIFO and change in depreciation method prospective