Term
|
Definition
| Revenues are inflows, enhancements of assets, or reduction of liabilities from delivering goods or services as a part of normal operations. Recognize revenue at the gross amount (Less allowances for returns and discounts given) |
|
|
Term
| When was SEC(Stands for?) established? Who is subject to SEC rules and regulations? |
|
Definition
| Security and exchange commission - 1934. All companies that issue securities in the US are subject to SEC rules and regulations |
|
|
Term
| Committee on Accounting Procedure (CAP) |
|
Definition
| The CAP was part-time committee of the AICPA that promulgated accounting research bulletins (ARB) which determined GAAP from 1939 until 1959 |
|
|
Term
| Accounting Principles Board (APB) |
|
Definition
| The APB was another part time committee of the AICPA. Its issued accounting principles board opinion APBO and APB interpretations, which determined GAAP from 1959 until 1973. |
|
|
Term
| What does FASB Stand for? Talk about it? |
|
Definition
| Financial Accounting Standard Board - In 1973 and independent FT org called FASB was established, and it has determined GAAP since then. Has 7 FT members who serve for 5Y terms and may be reappointed to additional 5y term.The board member must sever connections with firms or institution before joining the board. |
|
|
Term
| FASB Accounting Standards Codification - Why was it formed and what is it. |
|
Definition
| The vast number of standards issued by the Committee on Accounting Procedures, the APB and FASB as well as additional guidance provided by SEC and the AICPA made it difficult for users to access the full body of US GAAP. Eff July 1, 2009, the FASB accounting Standard Codification became the single source of authoritative nongovernmental US GAAP. Accounting and Financial reporting practices not included in this codification are not GAAP. |
|
|
Term
| What is included in the Codification? |
|
Definition
Codification = FEDPRIA
FEDPRI (IFRS&GAAP) A(GAAP only)
1.F - FASB
a. Statement of Financial accounting standards
b.interpretations
c. technical bulletins
d. staff positions
e. staff implementation guides
f. Statement # 138 examples.
2. E - Emerging Issues Task Force (EIFT) Abstracts and Topic D
3. D - Derivative Implementation Grp issues
4. P - Accounting Principles Board Opinions
5.R - Acct Research Bulletins
6.I - Acct. Interpretations
7.A - AICPA
a. Statements of position
b. auditing and accounting guides (incremental accounting guidance only)
c. Practice Bulletins
d. Technical Inquiry Service (for software revenue recognition) |
|
|
Term
| Are SEC Standards included in the Codification? list? |
|
Definition
SEC standards are included in the Codification.
To increase the usefulness of the codification for public companies, relevant portions of the following authoritative pronouncements issued by the SEC were included for reference in the codification:
1. Regulation S-X
2. Financial Reporting Release (FRR)
3. Accounting Series Releases (ASR)
4. Interpretative Releases (IR)
5. Staff Accounting Bulletins (SAB)
6. EIFT Topic D and SEC Staff observer Comments
Note: SEC section of the codification do not contain the entire population of SEC rules and regulations. |
|
|
Term
| Talk about the ongoing standard setting process for the codification? |
|
Definition
| Proposed FASB amendments to the ASC are issued for public comment in the form of exposure drafts. A majority vote of the board members is required to approve an exposure draft for issuance. At the end of the exposure draft public comment period, the FASB staff analyses and studies all comment letters and position papers and then the board re-deliberates on the issue. When the board is satisfied that all reasonable alternatives have been adequately considered, the FASB staff prepares an Accounting Standards Update for the Board Consideration. A majority vote of the board members is required to amend the ASC. |
|
|
Term
|
Definition
The international Accounting standards board was established in 2001 as part of the international financial reporting standards (IFRS) foundation. The IASB replaced its predecessors, the board of the international Accounting Standards Committee, which was created 1973 through agreement of the professional accountancy bodies in Australia, Canada, France, Germany, Japan and Mexico, the Netherlands, the United Kingdom and Ireland and the USA. The purpose of the IASB is to develop a single set of high quality global accounting standards.
15 FT members and 2 part time members who are selected to provide a mix of practical experience among auditors, preparers, users and academics. |
|
|
Term
| In addition to IASB, the IFRS foundation sponsors the _____? |
|
Definition
International Financial Reporting Interpretations Committee (IFRIC)
Established 2002 and replaced the previous interpretation committee, the standing interpretations Comm (SIC). The IFRIC provides guidance on newly identified financial reporting issues not addressed in the IFRSs and assists the IASB in achieving international convergence of accounting standards. |
|
|
Term
| International Financial Reporting Standards |
|
Definition
| When the IASB was created, it adopted the International Accounting Standards (IAS) that had been issued by the board of the international accounting standards and related documents, including the conceptual framework for financial reporting, exposure drafts and other discussion documents. The term IFRS includes IFRSs, IASs and IFRIC and the former SIC. |
|
|
Term
|
Definition
The FASB has created a conceptual framework (set forth in pronouncement called Statement of Financial accounting concepts) that serves a basic for all FASB pronouncements. The SFAC are not GAAP but they provide basic reasoning for financial accounting concept.
A. SFAC No 1 "objectives of financial Reporting by Business Enterprises"
B. SFAC No 2, "Qualitative Characteristics of Acct info"
C. SFAC No. 8 "Conceptual framework for Financial Reporting - Chp 1. The Objective of General Purpose Financial Reporting. Disclose entity's performance.
1. Primary Users - External (existing and potential investors, lenders and other creditors are the primary users of general purpose financial reports.
2. Financial information provided in GPFR - Meet informational needs.
D. SFAC No. 8 "Conceptual Framework for Financial reporting - Chp3 Qualitative characteristics of Useful financial information. |
|
|
Term
SFAC No 8. part D
What are the two fundamental Quantitative Characteristics of useful financial information? |
|
Definition
Relevance and Faithfulness
a. Relevance (Passing Confirms money): Financial information is relevant if it is capable of making difference in the decisions made by users. To be relevant, financial info must have predictive value and or confirming value and must be material.
i. Predictive Value - information has predictive value if it can be used by users to predict future outcomes.
ii. Confirming Value: Info has confirming value if it provides feedback about evaluations previously made by users.
iii. Materiality: Info is material if an omission or misstatement of the info could affect the decisions made by users based on financial info. Materiality is an entity specific aspect of relevance. The FASB/IASB have not specified a uniform qualitative threshold for materiality and have not specified what would be material in specific situations.
B. Faithful Representation- Reliable (Completely neutral is free from error)
To be useful, financial information must faithfully represent the reported economic phenomena. Faithful representation requires completeness, neutrality and freedom from error. Although perfect faithful representation is generally not achievable, these characteristics must be maximized.
i. Completeness: A complete depiction of financial info includes all information ness for the users to understand the reported economic phenomena, including descriptions and explanations. Primary FS and notes.
ii. Neutrality: A neutral depiction of financial info is free from bias in selection or representation.
iii. Freedom from error: means that there are no errors in the selection or application of the process used produce reported financial info and that there are no errors or omissions in the desc of economic phenomena. FFE does not req perfect accuracy b/c for exp it is diff to determine the accuracy of estimates. |
|
|
Term
SFAC No 8. part D
List Steps to apply the fundamental qualitative characteristics |
|
Definition
The most efficient and effective process for applying the fundamental characteristics of useful financial info is:
1. Identify the phenomena that has the potential to be useful to the users of a reporting entity's financial info.
2. Identify the type of information about the pheno that would be most relevant.
3. Determine whether the info is avai and can be faithfully represented.
If the info is available and can be faithfully rep, then the FQC have been satisfied. if not, the process is repeated with the next most relevant type of info. |
|
|
Term
SFAC No 8. part D
Enhancing Qualitative Characteristics - List 4 ways. |
|
Definition
Compare and verify in time to understand - key.
Comparability, verifiability, timeliness and understandability enhance the usefulness of info that is relevant and faithfully represented. These characteristics can be used to determine how a pheno should be depicted if 2 ways are equally relevant and faithfully represented.
A. Comparability: Consistency - C/Y vs. P/Y Apple vs Microsoft.
Info is more useful if it can be compared with similar info about other entities or from other time periods.
B. Verifiability: means that diff knowledgeable and independent observers can reach consensus that a particular depiction is faithfully represented. Verifiability does not require complete agreement.
C. Timeliness: Means that info is available to users in time to be capable of influencing their decisions.
D. Understandability: info is understandable if it is classified, characterized and presented clearly and concisely. However even when well informed and diligent users may need the assistance of advisers to understand complex and diff phenomena. |
|
|
Term
SFAC No 8. part D
The Cost Constraint |
|
Definition
Benefit> cost
The cost constraint is a pervasive constraint on the info provided in financial reporting. The benefits of reporting financial info must be greater than the cost of obtaining and presenting the info. The FASB/IASB considers costs and benefits in a relation to financial reporting in general and not at the individual reporting entity level. |
|
|
Term
| SFAC #5 Recognition and measurement in the financial statements. |
|
Definition
1. Full Set Financial statement:
a. statement of financial position (BS)
b. Statement of Earnings (I/S)
c. Statement of comprehensive income (OCI)
d. Statement of cash flow
e. Statement of changes in owners equity.
2. Fundamental recognition criteria.
recognition is the process of formally recording or incorporating an item in the financial statements of an entity and classifying it as asset, liability, equity, revenue, or expense.
a. definitions
b. measurability
c. Relevance
d. Reliability
3. Measurement attributes for Assets and liabilities - Variety of ways
a. Historical cost - PP&E
b. current cost - inventory
c. net realizable value (A/R)
d. Current Market value - marketable securities
e. Present value of future cash flows - LT debt "bonds"
4. Fundamental Assumptions - US GAAP
a. Entity Assumption - Economic activity can be accounted for when considering an identifiable set of activities (s.e a separate corp, division etc)
b. Going Concern Assumption:
For financial accouting, it is presumed (subject to rebuttal by evidence to the contrary) that the entity will continue to operate in the foreseeable future.
c. Monetary Unit assumption: it is assumed that money is an app basis by which to measure economic activity. The assumption is that the mon unit does not change over time. this the effects in inflation are not reflected in the financial statements.
d. Periodic assumption: Economic activity can be divi into meaningful time periods - YR Quatr, etc
e. Historical Cost principal: As a general rule, financial info is accounted for and based on cost not current market value.
Revenue Recognition principal: as a general rule revenue should be recognized when it is earned and when it is realized or realizable.
1. earned: rev are considered to have been earned when the entity has substantially accomplished what it must do to be entitled to benefits represented by the revenues.
Realized or realizable.
revenue and gains are recognized when products ,merchandise or other assets are exchanged for cash or claims or when related assets received or held are readily convertible to known amounts of cash and claims to cash. |
|
|
Term
| Under IASB framework what are the 2 underlying assumptions of financial statement preparation and presentation |
|
Definition
| Going concern and accrual accounting. |
|
|
Term
|
Definition
| is a prudent reaction to uncertainty to try to ensure that uncertainty and risks inherent in business situations are adequately considered. Recongnition of a contingent loss is the recording of an amount representing uncertainty and risk in a business situation. |
|
|
Term
|
Definition
| Expenses are necessarily incurred to generate revenue. In accordance with the matching principle, all expenses incurred to generate a specific amount of revenue in a period are matched against that revenue. The matching principle does not govern the recognition of losses since they result from unusual events. |
|
|
Term
|
Definition
Record rev. and/or exp. without exchange of cash.
Revenues are recognized when they are earned and expenses are recognized in the same period as the related revenue (matching or using a systematic and rational allocation or expensing in the period in which they expire), not necessarily in the period in which the cash is received or expenses by the company. |
|
|
Term
| full Disclosure Principle |
|
Definition
| Notes completeness - it is important that the user be given information that would make a difference in the decision process but not so much information that the user is impeded in analyzing what is important. |
|
|
Term
| According to the FASB conceptual framework, the objectives of financial reporting for business enterprises are based on |
|
Definition
| The needs of the users of the information |
|
|
Term
| According to FASB conceptual framework |
|
Definition
| assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. |
|
|
Term
| Unrealized losses (or gains)Rule: |
|
Definition
| Unrealized gains or losses resulting from changes in market value of available for sale investment should be reported as a component of other comprehensive income in the shareholders equity. Unrealized gains and losses on investment held for trading would be included in net income. |
|
|
Term
| According to the FASB and IASB conceptual frameworks, the objective of general purpose financial reporting is to: |
|
Definition
| Provide financial information that is useful to primary users. The objective of general purpose financial reporting is to provide financial info about the reporting entity that is useful to the primary users of general purpose reports in making decisions about providing resources to the reporting entity. |
|
|
Term
| The process of recording an item in the financial statement of an entity SFAC 5 para 6 |
|
Definition
|
|
Term
| The joint FASB and IASB conceptual framework is intended to establish |
|
Definition
| a common set of objectives and fundamental concepts to be used as a basis for developing financial accounting and reporting guidance. |
|
|
Term
| Financial information provided in general purpose financial reports should include |
|
Definition
| information about the resources of the entity, the claims against the entity, and how effectively and efficiently the entity's management and governing board have discharged their responsibilities to use the entity's resources. |
|
|
Term
| Revenues and gains are realized when |
|
Definition
| assets are exchanged for cash or claims of cash SFAC 5 para 83 |
|
|
Term
| What characteristics enhance the usefulness of information that is relevant and faithfully represented |
|
Definition
| Timeliness, understandability, comparability and verifiability. |
|
|
Term
| SFAC #7 5 elements of present value measurement used to establish the value of assets or liabilities using cash flow |
|
Definition
UVOTE: The price for bearing Uncertainty
V - Expectations about timing Variations of future cash flows
O-Other factors(e.g liquidity issues and market imperfections). Time Value of money (the risk rate of interest) and e - estimate of future cash flows. |
|
|
Term
|
Definition
| Monetary unit assumption means that money is the common denominator for economic activity and provides an appropriate basis for accounting measurements and analysis. |
|
|
Term
|
Definition
| are costs that will expire in future periods and be charged (allocated in a systematic and rational manner or matched) against revenues from future periods. |
|
|
Term
|
Definition
| Revenues and expenses are reported at their gross amount. |
|
|
Term
|
Definition
| Gains and losses are reported at their net amount. |
|
|
Term
| Presentation order of the major components of an income statement and the statement of retained earnings. |
|
Definition
A. Income from cont. operations(gross of tax then reported net of tax) (i.e revenues, COGS, Selling exp, admin exp), non operating activities (e.g. other revenues and gains and other expenses and losses), and income taxes.
B. Income or losses from discont. operations (net of tax)
C. Extraordinary items (net of taxes) unusual in nature and infrequent in occurrence.
D. Cumulative effect of change in Accounting principle (net of tax) |
|
|
Term
| Multiple step income statement |
|
Definition
| reports operating revenues and expenses separately from non operating revenues and expenses and other gains and losses. benefit: it enhances user information - can calculate various analytical ratios with the available data. |
|
|
Term
| Single step income statement |
|
Definition
| presentation of income from cont. operations, total expenses (including income tax exp) are subtracted from total revenues; benefit: simple design, the presentation types of rev and exp do not appear to the user to be classified as more imp than other. |
|
|
Term
| Define Component of an Entity |
|
Definition
| A component of an entity is a part of an entity (the lowest level) for which operations and cash flows can be clearly distinguished, both operationally and for financial reporting purposes, from the rest of the entity. |
|
|
Term
|
Definition
a component of a business (US GAAP) or a disposal group (IFRS) is classified as "held for sale" in the period in which all of the following criteria are met.
1. management commits to a plan to sell the component.
2. The component is available for immediate sale in its present condition.
3. An active program to locate a buyer has been initiated.
4. The sale of the component is probable and the sale is expected to be complete within a year.
5. The sale of the component is being actively marketed.
6. Actions required to complete the sale make it unlikely that significant changes to the plan will be made or that the plan will be withdrawn, |
|
|
Term
| Held for sale under(IFRS) |
|
Definition
| before a component can be classified as held for sale, the individual assets and liabilities of the component must be measured in accordance with applicable standards and any resulting gains and losses must be recognized. After classification as held for sale the component is reported at the lower of carrying value and fair value less costs to sell. US GAAP does not require remeasurement of individual assets and liabilities before classification as held for sale, but the classification of a component as held for sale does trigger an impairment analysis of the component. |
|
|
Term
| Discont. items Disclose in Face or in Notes |
|
Definition
| Disclose in Face or in Notes: A gain or loss recogn. on the disposal shall be disclosed either on the face of the income statement of in the notes to the financial statement. |
|
|
Term
| Discont. Operations Exit or disposal activities "new" - Exit and disposal cost. |
|
Definition
As part of its convergence with IFRS and US GAAP required the recognition of a liability for the costs associated with an exit or disposal activity.
Exit and disposal costs:
Involuntary employee termination benefits.
Costs to terminate a contract that is not a capital lease.
Other costs associated with exit or disposal activities, including costs to consolidate facilities or relocate employees. |
|
|
Term
| Discont. Operations Exit or disposal activities "new" - criteria for liability recognition. |
|
Definition
An entity's commitment to an exit or disposal plan, by itself is not enough to result in liability recog. A liability associated with an exit or disposal activity should be recog. only when all the following criteria are met.
An obligating event has occurred.
The event results in a present obligation to transfer assets or to provide services in the future.
The entity has little or no discretion to avoid future transfer of assets or providing of services.
Future operating losses expected to be incurred as part of an exit or disposal activity are recognized in the period incurred. |
|
|
Term
| Extraordinary Items define |
|
Definition
Under US GAAP extraordinary items are transactions and other events that are
Material in nature.
of a character significantly diff from the typical or customary business activties
not expected to recur in the foreseeable future and infrequent
not normally considered in evaluating the ordinary operating results of an enterprise.
EO items are usually determined by informed professional judgement, taking into consideration all the facts involved in a particular situation.
EO items must be separately disclosed in the I/S, net of any related tax effects, after discont. operations. |
|
|
Term
| idEa - EO items: Material unusual or infrequent items - non operating |
|
Definition
| Items of Income or loss that are either unusual or infrequent are not extraordinary (e.g gain on the sale of factory building) If material, these items should be reported as a separate line item as part of income from cont operations (and not net of tax). The nature of the item and the financial effects should be disclosed on the face of the I/S or in the footnote. Under IFRS an entity cannot present any item of income or expenses as extraordinary on the statement of comprehensive income or the separate income statement if presented or in the notes to the financial statement. |
|
|
Term
| ideA - Accounting principle change |
|
Definition
Accounting changes are broadly classified as changes in accounting estimate - prospective.
changes in accounting principle and GR: retrospective
Changes in accounting entity "restate" |
|
|
Term
| Changes in Accounting estimates |
|
Definition
estimates - not an error do not restate prior periods.
A change in accounting estimate occurs when it is determined that the estimate previously used by the company is incorrect.
Events resulting in estimate changes
1. changes in the lives of fixed assets
2. adj of year end accrual of officers salary and or bonuses.
3. write downs of obsolete inventory
4. material nonrecurring irs adj.
5. settlement of litigation
6. Changes in acct. principle that are inseparable from a change in estimate. (e.g a change from the installment method to immediate recog method bc uncollectible accounts can now be estimated) Affects current and future income from cont. operations. |
|
|
Term
| changes in accounting principle - retrospective application - GR |
|
Definition
A change in accounting principle is a change in accounting from one accounting principle to another acceptable accounting principle - GAAP to GAAP or IFRS to IFRS.
Rule of preferability - an accounting principle may be changed only if required by GAAP/IFRS or if the alternative principle is preferable and more fairly presents the information.
Nonrecurring changes: an accounting change should not be made for a transaction or event in the past that has been terminated or is nonrecurring.
direct effect of change - in acct principle are adj that would be necessary to restate the financial statement of prior periods.
indirect effects: of a change in acct prin are diff in nondiscretionary items based on earnings (e.g bonuses) that would have occurred if the new principle had been used in prior periods.
cumulative effect: non-comparative F/S=diff btw retained eanings in the period of chng and what the RE would have been if the acct chng had been retrospectively applied to all prior affected periods.
if comparative FS are being presented then the cumulative effect is equal to the diff btw beginning RE in the first period presented and what RE would have been if the new principle had been applied to all prior periods. |
|
|
Term
| reporting chnges in accting principle |
|
Definition
| The general rule is that chgs in accting principle should be recognized by adjusting beg RE in the earliest period presented for the cumulative effect of the chng and if prior period FS are presented they should restate retrospective application. |
|
|
Term
| acct principle chnge disclosure under IFRS |
|
Definition
| when an entity disclosing comparative info applies an acct principle retroactively or makes a retrospective restatement of items in the FS, the entity must at a min present three B/S (end of current period, end of prior period, and beg of prior period) and 2 of each other FS (current and prior period. The cumulatice affect adjustment would be shown as an adjustment of the beg RE on the BS for the beg of the prior period. US GAAP does not have a 3 BS requirement. |
|
|
Term
| Change in accounting principle exception |
|
Definition
| LIFO and change in depr method prospective. as it is impractical to try to rebuild old cost layers |
|
|
Term
| How should the effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate be reported? |
|
Definition
| it is reported prospectively, as a component of income from continuing operations. |
|
|
Term
| Lore Co changed from cash basis of accounting to accrual basis of accounting during the current year. The cumulative effect of this change should be reported in lore's current year financial statement as |
|
Definition
| The cash basis for financial reporting is not a generally accepted accounting basis of accounting (GAAP), therefore, it is an error. Correction of an error from a prior period is a reported as prior period adjustment to Retained Earnings. |
|
|
Term
Interest expense is classified as?
Advertising is classified as |
|
Definition
Interest: separate line item on the Income statement
Advertising : selling expense |
|
|
Term
| Under US GAAP a material loss should be presented separately as a component of income from cont. operating when it is |
|
Definition
| Gains or losses that are unusual nature or occur infrequently but not both, are presented as a component of income from cont. operations. Not unusual in nature but infrequent in occurrence. |
|
|
Term
| The cumulative effect of a change in accounting principle |
|
Definition
| is an adjustment to beginning retained earnings. |
|
|
Term
| how should the effect of a change in accounting estimate be accounted for? |
|
Definition
| in the period of change and future periods if the change affects both - it does not affect prior periods nor retained earnings. |
|
|
Term
|
Definition
F/S of all prior periods should be restated when there is a change in entity such as resulting from
1. changing companies in consolidated financial statement
2. consolidated financial statement vs previous individual financial statements. |
|
|
Term
| Under US GAAP a material transaction that is infrequent in occurrence but not unusual in nature should be presented separately as a component of income from cont operations when the transaction results in |
|
Definition
|
|
Term
| unrealized losses or gains resulting in market value of available for sale investments should be |
|
Definition
| reported as a component of other comprehensive income in shareholders equity. Unrealized gains and losses on investments held for trading would be included in net income. |
|
|
Term
| Corrections of errors of prior period should be reported as an adjustment to |
|
Definition
| beginning retained earnings, not as an item of net income - exception depreciation and LIFO |
|
|
Term
| The cumulative effect of a change in accounting principle equals |
|
Definition
| the diff btw RE at the beg of period of the change and what retained earnings would have been if the change was applied to all affected prior periods |
|
|
Term
| The effective tax rates for operations for the full year should |
|
Definition
| reflect anticipated foreign tax rates and available tax planning alternatives. In addition, the effect of other anticipated tax credits, capital gains rates, and foreign tax credits should be included. |
|
|
Term
|
Definition
| market price declines should be recognized in the interim period in which decline is judged permanent and later, if they turn around are recognized as a gain in subsequent periods only to the extent of previously reported losses. |
|
|
Term
| Quantitative thresholds for reportable segment |
|
Definition
segment revenue is 10% or more of combined revenue of all the company segment.
10% size test
Revenue
profit and loss test or
asset test
Rule: To be significant enough to report on a segment must be at least 10% of:
1. combined revenues (whether intersegment or unaffiliated customers) or
2. operating income
3. identifiable assets. |
|
|
Term
| Reporting sufficiency test |
|
Definition
| 75% - if the total of external consolidated revenue reported by operating segments constitute less than 75% of external consolidated revenue, additional operating seg needs to be identified as reportable segments, even if they do not meet the above 3 tests until at least % of external consolidated segments. The practical limit to the # of segment is 10% which is not a precise limit. |
|
|
Term
| Segment Profit or loss defined |
|
Definition
Formula
Revenue(for that segment - internal and external)
less: reasonably allocated cost (by CFO for that segment)
Less: directly traceable costs
__________________________________
operating PRofit (or loss)
EBIT - earning before earnings and taxes. |
|
|
Term
| ITems normally excluded from segment profit |
|
Definition
General corp rev
Gen. corp expense
interest expense (except for financial institutions)
income taxes
equity in earnings and losses of an unconsolidated subsidiary (under the equity method)
gains or losses from discont operations
extraordinary items
minority interest. |
|
|
Term
| Development stage enterprise |
|
Definition
| presents their FS in accordance with GAAP and make additional disclosures such as cumulative net losses, cumulative deficit, cumulative sales and expenses (part of I/S), cumulative statement of cash flows and supplementary "shareholders equity" |
|
|
Term
| Financial reporting by a development stage enterprise differs from financial reporting for an established operating enterprise in regards to |
|
Definition
| more extensive footnote disclosure only. |
|
|
Term
| Change to Fifo method from LIFO method: effects as of the beg of the year |
|
Definition
| Accounting principle change (retrospective application effect on R/E |
|
|
Term
| Statement of material litigation |
|
Definition
| Income from cont. operations - as it is not unusual in nature. |
|
|
Term
| Prohibition of a product line by the government |
|
Definition
| extraordinary items - as it is certainly unusual in nature and happens infrequently. Note that ifrs prohibits the recognition of gains and losses as extraordinary. |
|
|
Term
| Material gain on the sale of factory building |
|
Definition
| income from cont operations - rather a infrequent event it is not considered unusual in nature - therefore cont. operations. |
|
|
Term
| Change from double declining balance to straight line method of dep in first quarter, current yrs effect |
|
Definition
| income from cont. operations - this type of change is reported prospectively and ll activity is reported through income from cont operations. the change in method is simply implemented and the dep under straight line is reported as exp in income from cont operations for the 1rst quarter. |
|
|
Term
| Dawg Corp. changed its inventory valuation method from FIFO to LIFO to more fairly reflect the cost flow of goods |
|
Definition
| Change in accounting principle - prospective - A change in FIFO to LIFO is a change in accounting principle that is accounted for prospectively, like a change in accounting estimate because it is too difficult to calculate the cumulative effect of the change. |
|
|
Term
| Duck comp. changed from the income tax basis of acct. to full accrual basis of acct. as req by its bank in order to obtain financing. |
|
Definition
| Correction of an accounting error - restate prior periods - the income tax basis of acct. is a non-GAAP Method. A change from a non GAAP method of acct is considered to be an error correction under GAAP. An error correction is accounted for by restating all prior periods presented and adjusting the beg retained earnings of the earliest periods presented. |
|
|
Term
| Duck comp. changed from the income tax basis of acct. to full accrual basis of acct. as req by its bank in order to obtain financing. |
|
Definition
| Correction of an accounting error - restate prior periods - the income tax basis of acct. is a non-GAAP Method. A change from a non GAAP method of acct is considered to be an error correction under GAAP. An error correction is accounted for by restating all prior periods presented and adjusting the beg retained earnings of the earliest periods presented. |
|
|
Term
| Gosling LLC was acq by goose international goose presents consolidated financial statement |
|
Definition
| change in acct entity - retrospective. |
|
|
Term
| a construction company decided to improve shareholders return and stimulate the company's stock price by changing its method of acct for long term contracts from the completed contract method to completion method |
|
Definition
| not an accptable change in acct. not change in acct method. |
|
|
Term
| The final judgement on a lawsuit is decided in the current year against BIG trouble inc. the amount is significantly greater than previously thought |
|
Definition
| type of change: change in acct estimate and method of acct: prospective. |
|
|
Term
| OTher comprehensive income should be closed to |
|
Definition
| accumulated other comprehensive income account, which is a component of stockholders equity. |
|
|
Term
| Comprehensive income definition and parts |
|
Definition
Comprehensive income is the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. it includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.
Net income Per I/S
+other comprehensive income (PUFE R)
= comprehensive income |
|
|
Term
| Comprehensive income - PUFE R: |
|
Definition
Pension adjustments: all gains or losses, prior service costs, and transaction assets or obligations are included in other comprehensive income until recognized as a component of net periodic benefit cost.
Unrealized Gains and losses: following unrealized gains and losses on certain investments in debt and equity securities are reported as components of other comp. income until secuities are sold.
unrealized holdings on gains and losses on available for sale security.
unrealized holding gain and losses that result from debt security being transferred into the available for sale category from held to maturity.
subsequent decrease or increase in the fair value of available for sale securities previously written down as impaired.
Foreign currency items: translation adjustments and gains and losses on foreign currency transactions that are designated as and are effected as economic hedge od a net investment in a foreign entity are reported as a comp f other Comp income. Remain until the sale or liquidation of the investment in the foreign entity.
E - effective portion of cash flow hedge: income until the cash flow associated with the hedge item are realized
R - revaluation surplus: IFRS only. recog when intangible assets and fixed assets are revalued are also included in other comp income. Revaluation surpluses are not reclassifies to net income in subsequent periods but me be transferred directly to RE when the related asset is used or derecog. |
|
|
Term
| Other comp income closure |
|
Definition
| At the end of the accounting period, all components of comprehensive income are closed to the balance sheet. Net income is closed to RE and other comprehensive income is closed to accumulated other comprehensive income. |
|
|
Term
| Other comp income closure |
|
Definition
| At the end of the accounting period, all components of comprehensive income are closed to the balance sheet. Net income is closed to RE and other comprehensive income is closed to accumulated other comprehensive income. |
|
|
Term
| Computer Software Development Costs: IFRS vs GAAP |
|
Definition
| IFRS does not provide separate guidance regarding computer software development costs. Under IFRS, computer software development costs are internally generated intangibles, Research cost must be expensed and development costs may be capitalized if certain criteria are met (see the discussion of intangible assets) |
|
|
Term
| Computer software development to be sold, leased, or licensed: Technology feasibility |
|
Definition
| is established upon completion of: a detailed program design or completion of a working model. |
|
|
Term
| Computer software development to be sold leased or licensed: accounting for costs |
|
Definition
1. Expense cost (planning, design, coding and testing) incurred until technological feasibility has been established for the product.
Capitalize cost (coding, testing, and producing product masters) incurred after technological feasibility has been established up to the point that the product is released for sale. |
|
|
