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13 Cards in this Set
- Front
- Back
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Can you be required to record a contingent liability on the books but not disclose it in notes?
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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.
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Is federal income tax witheld a payroll related tax?
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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".
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Does a donation of common stock affect total SE?
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No.
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In an exchange of similiar assets where cash is received, you value the new asset at...
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CV of the old asset, less cash received, plus recognized gain.
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A deductible tax difference results in a deferred tax (asset or liability)?
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A deductible tax difference results in a deferred tax asset. Deductible -> asset; Taxable -> liability.
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If a non-governmental unit gives property to a business, how should the business record the property?
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The firm should record the gift of property at FMV as revenue in the period of receipt.
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Is an annuity in arrears an annuity due or an ordinary annuity?
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Annuity in arrears is an ordinary annuity.
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If a governmental unit gives property to a business, how should the business record the property?
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The firm should record the donated property at FMV as "APIC - Donated Assets."
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When debt that is due one month after the end of period not considered a short-term liability on the balance sheet?
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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."
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How are initial direct costs handled in the three lease types?
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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). |
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What are the criteria for establishing the valid recognition of a liability for compensated absences and post-employment benefits?
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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].
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What component of compensated absences must be vested, not just accumulated, to be shown as a liability?
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Sick pay.
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A taxable tax difference results in a deferred tax (asset or liability)?
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A taxable tax difference results in a deferred tax liability. Deductible -> asset; taxable -> liability.
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