Financial Reporting And Analysis

Front 1

Cashflow from a capital lease

Back 1

Interest expense = CFO
Principal = CFF

Front 2

Direct Financing lease

Back 2

Lessor recognize profit as interest revenue over life of lease

Front 3

Sales type lease

Back 3

Record profit at lease inception (PV of min lease pymt - cost of asset)

Front 4

When is a SPE considered a VIE and when is a VIE consolidated?

Back 4

A SPE is considered a VIE when insufficient equity to finance its activities and need support and the equity investors lack one of the following: decision making, obligation to absorb losses, right to receive residual returns.
If the SPE is a VIE then need to be consolidated by beneficiary who absorbs majority of risks or received majorty of rewards.

Front 5

Average age of fixed assets

Back 5

Age = Accumulated depreciation / depreciation

Front 6

Average remaining useful life of fixed assets

Back 6

Remaining life = Net PPE / depreciation

Front 7

Cost method

Back 7

Cost method used when no significant influence and less than 20%

Front 8

How to consolidate

Back 8

Combine accounts but reduce cash/current assets by cash paid.
No investment account. Common stock remains the same. Combine revenue . NI combined but reduced by minority interest.

Front 9

Which method has highest assets

Back 9

Equity lowest, then proportionate, then acquition

Front 10

Which method has highest net income

Back 10

All the same

Front 11

Which method has highest revenue

Back 11

Equity lowest, then proportionate, then acquition

Front 12

Which method has highest equity

Back 12

Equity method is the same as the proportionate consolidation. Consolidation will have higher equity by the amount of the minority interest.

Front 13

Net monetary assets versus net monetary liabilities (temporal)
Net asset versus net liabilities (current method)

Back 13

If NMA and FX appreciate, recognize gain on IS and hence higher NI (under temporal method).
NMA & L = cash, receivables, payables, ST and LT debt.

Front 14

Cashflow impact of temporal versus current method

Back 14

Same regardless of method

Front 15

Contribution formula

Back 15

'= pension expense + change in accrued pension asset (liability)

Front 16

Benefits paid formula

Back 16

'= PY MV of plan asset + actual return on plan assets + contributions - CY MV of plan assets

Front 17

Expected rate of return

Back 17

CY actual return on assets - amount deferred / PY plan asset at MV

Front 18

Amount of prior service costs due to plan amendments

Back 18

'= amortization of prior service costs + change in unamortized of prior service cost

Front 19

Calculate PBO

Back 19

Begining PBO
+ Service
+ Interest
+ Past service cost (amendments)
+/- Actuarial losses / gains
- benefits paid
= Ending PBO

Front 20

Calculate plan assets (ABC)

Back 20

Beginning assets
+ actual return
- benefits paid
+ contributions
= Ending assets

Front 21

Calculate funded status

Back 21

Ending PBO - Ending plan assets

Front 22

Which rates to use for which accounts when using the Current Rate Method

Back 22

IS = average rate
BS = current rate
Dividend = at paid date
Translation G/L recorded in SE as part of CTA

Front 23

Which rates to use for which accounts when using the Temporal Method

Back 23

Monetary assets/liabilities = current rate
All other assets/liabilites = historical / actual rate
Dividend = date paid
Expenses related to non-monetary = historical
Revenue / Other expenses = average rate

Front 24

Which method to use:
1. All current
2. Temporal

Back 24

1. if functional currency not equal reporting currency. Also if self-contained, independent subsidiary
2. If functional = reporting. Also used in highly integrated subsidiaries

Front 25

Accrual ratio:
1. BS based
2. CF based

Back 25

1. NOAend - NOAbeg / Average NOA
2. NI - CFO - CFI

Front 26

Total period pension cost (not the same as pension expense on the IS)

Back 26

'=contributions - change in funded status
(same under US GAAP and IFRS)

Front 27

Pension expense calculation under US GAAP (on IS)

Back 27

Service cost + Interest cost - Expected return on assets +/- Amortization of Actuarial G/L + Amortization of prior service costs = pension expense on income statement
Unamortized prior service cost and actuarial G/L in OCI

Front 28

Discount rate and expected rate of return under US GAAP versus IFRS

Back 28

Under US GAAP, discount rate to discount PBO and expected rate of return may be different.
Under IFRS, rates are the same

Front 29

Pension expense calculation under US IFRS (on IS)

Back 29

Service cost +/- Net interest expense/(income) + Prior service cost = Pension expense on income statement
Actuarial G/L (called remeasurements) are reflected in OCI and not amortized.

Front 30

Inventory valuation

Back 30

Lower of cost and NRV.
NRV = estimated selling price - estimated costs to sell and get inventory to a condition where it can be sold

Front 31

Held to maturity

Back 31

Dividend and interest on income statement
Change in FV in equity

Front 32

Held for trading

Back 32

Dividend and interest on income statement
Change in FV on income statement

Front 33

Available for sale

Back 33

Dividend and interest on income statement
Realized gains/losses on income statement
Unrealized gains/losses in equity

Front 34

Reclassifications of investments

Back 34

IFRS usually dont allow reclassification into or out of trading.
AFS can be relassed to Held2Mat and the other way around. Differences in value amortized in OCI.
US GAAP allows relass into or out of trading. Unrealized gains/losses to income statement

Front 35

Investments in associates (equity)

Back 35

Proportionate share of earings increase the investment account and on the income statement (not part of operating income).
Dividend reduces investment account and NOT on income statement.

Front 36

Acquisition method (replaced pooling and purchase method)

Back 36

1. all assets, liabilties, reveues and expenses combined with parent, minus intercompany. Acquired company's equity is ignored.
2. If own less than 100%, then create minority interest in both equity and income statement.

Front 37

Prior service costs (amendments) and Actuarial gains and losses under US GAAP versus IFRS

Back 37

Past service cost: US GAAP OCI and amortized. IFRS: expensed
Actuarial gains/losses: US GAAP OCI and amortized. IFRS: OCI and not amortized.

Front 38

Share based compensation expense

Back 38

Value of options over the vesting period = the expense.
The expense reduced net income and retained earings but increases APIC so no change to equity.