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Chapter 1 Statements of Financial Accounting Concepts (SFAC) -

What are the four most authoritative GAAP • • • • What are the characteristics of accounting information • • • • 1. 2. 1a. 2a. What components are on the income statement? • • • What component is on the statement of retained earnings? • 1

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Cumulative effect of change in accounting principle Accounting changes are broadly classified into 3 categories: • Examples •

Examples • Examples Define comprehensive income and its components • • • • Public companies must report segment information about 2

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Must report as operating segment if it’s greater than _______ of either: 1. 2. 3.

= Operating profit (loss) for segment Chapter 2 What is the patent amortization length? Define technological feasibility – How does that affect costs for Computer software development costs, developed to be sold, leased or licensed? • • How do you capitalize the software costs: • • How does that differ from Computer software developed internally or obtained for internal use only? 3

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• •

Are the capitalized costs amortized? = ending bal prepaid insurance = end bal rent receivable = end bal accrued salaries payable Sales revenue = Completed contract method • • • • Percentage of completion method, When do you use this method? • • How is income recognized under % completion method? When is the installment method used? And how is revenue recognized • • 4

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Gross profit earned = Gross profit % = Gross profit = Deferred gross profit = B/S A/R = Define an exchange that has commercial substance Record the J/E for exchanges with commercial substance

Exchanges lacking commercial substance or when __________________________ • • • When do you use the exact method in P/S? New total P/S equity = New partner contribution amount = 5

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When do you use the bonus method for P/S? Book value = Bonus = When do you use the goodwill method for P/S? Implied value = Goodwill = Then allocate …

In periods of inflation • • • FX transactions – FX translation – Functional currency – Remeasurement ( Translation ( Remeasurement method: _____________________________ B/S • Monetary = • Non-monetary = • I/S 6 )– )–

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• Non B/S related items (COGS) • B/S related items (Depreciation, Bond Amortization) = • Equity = • Currency gain/loss = Translation method ( I/S • Income = • Expenses = • B/S • Assets = • Liabilities = • Equity = • Retained earnings = • Accumulated Translation adjustment = Chapter 3 Trading Securities – Unrealized gain/losses ): ____________________________

Available for sale – Unrealized gain/losses -

Held to Maturity Securities Reclassification; transfer of security from one group to another From To Adjustment • 7

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• • • What happens when you sell of security from any category? What is the J/E?

Cost method ( Equity Method ( Consolidate ( )-

)– )–

What another name for the cost method What are the B/S JE’s under the cost method? • • • What are the I/S J/E’s under the cost method? • • Equity Method What are the main B/S entriess under the equity method? • • • What are the I/S J/E’s under the equity method? • 8

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•

Record as good will if Record as extraordinary gain if – Eliminate Sub’s old equity What are the consolidating workpaper eliminating journal entry’s ___________________

Determining purchased goodwill or extraordinary gain formula ________________________ =

__________________________________ = What do you do when inventory has been sold intercompany? Chapter 4 Working capital = Current ratio = Quick ratio (acid test ratio) = 2/10 n/30 = get discount of 2% if paid within 10 days, or the entire amount is due in 30 days Make JE under Gross method =

9

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•

Make JE under Net method =

•

Factoring without recourse – JE Factoring with recourse – Adjusted cash balance = F.O.B. shipping point – F.O.B. destination – Market ceiling – Market floor – In a period of inflation, how will the inventory method affect NI?

How do you calculate FIFO method -

How do you calculate LIFO method -

How do you calculate Dollar value LIFO? 10

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LIFO periodic = How do you calculate weighted Avg method = Moving Avg method – -

When can you use Gross Profit method and how do you calculate it?

Conventional Retail method – FIFO Retail method –

How do you calculate interest capitalization? What are the 2 rules?

1. 2. What is Sum of years digit and how do you calculate it? 11

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Explain Double declining balance, how do you calculate it? • • • •

What is Units of production and how do you calculate it? What is Depletion and how do you calculate it? -

= end accum dep Chapter 5 Ordinary Annuity – Annuity Due – On the present value table: Ordinary annuity = On the PV table: Annuity due = Present value of $1 – Present value of an Ordinary annuity – Lessee accounting for operating leases– the renter 12

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Lease bonus – What is a Leasehold improvement and how do you account for it – How does lessee account for: Non-refundable security deposit – Refundable security deposit – Lessor accounting – the owner How does the lessor account for: Non-refundable security – Refundable security – Capital Lease – purchase/ownership What is the Lessee capital lease criteria – • • • • What is the difference between a sales type lease and direct financing lease

What is the Lessor (seller) criteria for sales type/direct financing • • • 13

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The lessee records the capitalized lease amount at the ______________ of: For the interest rate use the ______________ of: What are the depreciation rules for the capitalized lease on the lessee’s books? What is the layout to account for lessee’s lease liability and asset amortization? (F5-17) (1) (2) (3) (4)

Lessor accounting sales type lease (_____ profit streams) • Gross investment = • PV of minimum lease payments = • Net investment = • Unearned interest revenue = • COGS = What is the associated JE?

Lessor accounting direct financing lease (_______ profit streams) • Gross investment = • Net investment = • Unearned interest revenue = What is the associated JE? 14

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Calculate excess gains for Sale-leaseback leases under operating and capital leases Operating Lease

= Excess Gain Capital Lease

= Excess Gain Define each and when you recognize the gain "major" sale-leasebacks – "minor" sale-leasebacks – In “betweener” sale leasebacks -

Real Economic loss in sales back lease -

Artificial loss in sales back lease -

How do you classify a sub lease 15

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Stated (nominal) rate = Discount = Premium = Total interest revenue = Nondetachable warrants – Detachable warrants – 2 methods to bond amortization methods: _____________________ and _____________________________ Define ________________: Periodic amortization = Interest expense = ___________________________ – required by GAAP I/S Interest expense = B/S Interest paid = Amortization = Unamortized discount = Bonds book value = Draw Graph Pg F5-47

How do you account for bonds sold or issued between interest dates requires additional entries for accrued interest at time of sale? Total cash received = Accrued interest = 16

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Bond sinking fund Serial bonds 2 amortization methods: -

Convertible bonds – nondetachable warrants The conversion is recorded under 2 methods: Book value method • • Market Value Method • • Convertible bonds – detachable warrants What is the JE at issue date?

Recorded under 2 methods: • • -

How do you calculate and account for Extinguishment of debt Gain or loss = 17

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Give examples of troubled debt restructuring and how you calculate the gain/loss Ordinary gain/loss = Possible extraordinary gain/loss = = End interest payable Chapter 6 Define and when they are used • Accumulated benefit obligation (ABO) – • Projected benefit obligation (PBO) • Prior Service Cost (PSC) What is the I/S expense formula and the resulting JE’s

18

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Unfunded accrued pension cost = Prepaid pension cost =

On the B/S, what creates an intangible pension asset? How much is recorded as additional pension liability and other comprehensive income?

Total payroll tax liability = Payroll tax expense = DTA = DTL = Tax chart (F6-32)

Chapter 7 Reporting gains and losses: Define the term and where its reported 19

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Speculative derivatives – Fair value hedge – Cash flow hedge – Foreign operation currency hedge – How do you account for Treasury Stock under the Cost method – used 95% of the time • Repurchase • Re-sell at gain

• Re-sell at a loss and there is not enough is APIC to cover the loss

How do you account for Treasury Stock under the Legal or par value method • Repurchase at a gain

• Repurchase at a loss

20

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How do you account for Property dividends

How do you account for stock dividends – - Small stock dividend - Large stock dividend -

Basic EPS = Weighted avg # of C/S outstanding =

Diluted EPS =

For options and other similar instruments Additional shares outstanding =

Direct method required disclosures are Indirect method –

21

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Cash received from customers = = ending balance A/R Cash paid to suppliers = Ending inventory = end A/P When given changes in accounts Purchases = Cash paid = Accrual basis interest expense = Direct method Inflows (increase cash) • • • • Outflows (decrease cash) • • • • Indirect method – reconciliation

22

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= cash flow from operations

Chapter 8 Governmental Funds – • • Governmental fund types include

Proprietary Funds – • 23

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• Proprietary fund types include

Fiduciary Funds – • • Fiduciary fund types include

Chapter 9 What are the required elements in government wide F/S • • • • •

24

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What comprises the statement of net assets in the gov’t wide F/S -

What are the 3 categories in the statement of activities in the gov’t wide F/S) • • • What are the 3 program revenue categories? • • •

Fund Financial Statements (F9-19) What are the criteria to be considered a major fund? must meet both criteria: 1. 2. How do you prepare the reconciliation between gov’t wide and fund F/S? B/S –

Statement of revenues, expenditures and changes in fund balance – 25

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Discuss the statement of cash flows differences under governmental accounting. 6 differences: 1. 2. 3. 4. 5. 6.

What are the required F/S for not-for-profits? • • • •

26

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