Term
| Gains and Losses on Marketable Securities: Balance sheet - Held-to-Maturity securities |
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Definition
| Reported at cost or amortized cost |
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Term
| Gains and Losses on Marketable Securities: Balance sheet - Available-for-sale Securities |
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Definition
| Reported at fair value. Unrealized gains or losses due to changes in market values are reported in other comprehensive income within owners' equity |
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Term
| Gains and Losses on Marketable Securities: Balance sheet - Trading Securities |
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Definition
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Term
| Gains and Losses on Marketable Securities: Income Statement - Held-to-Maturity Securities |
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Definition
Interest Income.
Realized gains and losses |
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Term
| Gains and Losses on Marketable Securities: Income Statement - Available-for-sale Securities |
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Definition
Dividend Income.
Interest Income.
Realized gains and losses. |
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Term
| Gains and Losses on Marketable Securities: Income Statement - Trading Securities |
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Definition
Dividend Income.
Interest Income.
Realized gains and losses.
Unrealized gains and losses due to change in market values |
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Term
| Cash Flow from Operations: Inflows |
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Definition
Cash collected from customers
Interest and dividends received
Proceeds from sale of securities held for trading |
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Term
| Cash Flow from Operations: Outflows |
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Definition
Cash paid to employees
Cash paid to suppliers
Cash paid for other expenses
Cash used to purchase trading securities
Interest paid
Taxes paid |
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Term
| Cash Flow from Investment: Inflows |
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Definition
Sale proceeds from fixed assets
Sale proceeds from long-term invetments |
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Term
| Cash Flow from Investment: Outflows |
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Definition
Purchase of fixed assets
Cash used to acquire LT investment securities |
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Term
| Cash Flow from Financing: Inflows |
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Definition
Proceeds from debt issuance
Proceeds from issuance of equity instruments |
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Term
| Cash Flow from Financing: Outflows |
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Definition
Repayment of LT Debt
Payments made to repurchase stock
Dividends payments |
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Term
Cash Flow Classification under IFRS and GAAP:
Interest and dividends recieved |
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Definition
IFRS - CFO or CFI
US GAAP - CFO |
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Term
Cash Flow Classification under IFRS and GAAP:
Interest Paid |
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Definition
IFRS - CFO or CFF
US GAAP - CFO |
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Term
Cash Flow Classification under IFRS and GAAP:
Dividends paid |
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Definition
IFRS - CFO or CFF
US GAAP - CFF |
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Term
Cash Flow Classification under IFRS and GAAP:
Dividends Received |
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Definition
IFRS - CFO or CFI
US GAAP - CFO |
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Term
Cash Flow Classification under IFRS and GAAP:
Taxes paid |
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Definition
IFRS - CFO, but part of the tax can be categorized as CFI or CFF if it is clear that the tax arose from investing or financing activities
US GAAP - CFO |
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Term
Cash Flow Classification under IFRS and GAAP:
Bank overdrafts |
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Definition
IFRS - Included as a part of cash equivalents
GAAP - not considered a part of cash equivalents and included in CFF |
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Term
| CFO Presentation format under IFRS and US GAAP |
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Definition
IFRS - Direct or indirect. The former is preferred.
US GAAP - Direct or indirect. The former is preferred. However, if the direct method is used, a reconciliation of net income and CFO must be included |
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Term
| Disclosures on CF Statements under IFRS |
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Definition
| Taxes paid should be presented separately on the cash flow statement |
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Term
| Disclosures on CF Statments under US GAAP |
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Definition
| If taxes and interest paid are not explicitly stated on the cash flow statement, details can be provided in footnotes |
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Term
LIFO vs FIFO when Prices are Rising:
COGS |
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Definition
LIFO - higher
FIFO - Lower |
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Term
LIFO vs FIFO when Prices are Rising:
Income before taxes |
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Definition
LIFO - lower
FIFO - Higher |
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Term
LIFO vs FIFO when Prices are Rising:
Income taxes |
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Definition
LIFO - Lower
FIFO - Higher |
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Term
LIFO vs FIFO when Prices are Rising:
Net Income |
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Definition
LIFO - Lower
FIFO - Higher |
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Term
LIFO vs FIFO when Prices are Rising:
Cash Flow |
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Definition
LIFO - Higher
FIFO - Lower |
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Term
LIFO vs FIFO when Prices are Rising:
EI |
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Definition
LIFO - Lower
FIFO - Higher |
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Term
LIFO vs FIFO when Prices are Rising:
Working Capital |
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Definition
LIFO - Lower
FIFO - Higher |
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Term
LIFO vs FIFO when Prices are Rising, Effect on Ratio:
Profitablility Ratios, NP and GP Margin |
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Definition
Numberator - Income is lower unde rLIFO b/c COGS is higher
Denominator - Sales are the same under both
Effect on Ratio - Lower under lifo |
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Term
LIFO vs FIFO when Prices are Rising, Effect on Ratio:
Debt to Equity |
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Definition
Numerator - same debt levels
Denominator - Lower equity number under LIFO
Effect on Ratio - Higher under LIFO |
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Term
LIFO vs FIFO when Prices are Rising, Effect on Ratio:
Current Ratio |
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Definition
Numerator - current assets are lower under LIFO because EI is lower
Denominator - Current liabilities are the same
Effect on Ratio - Lower under LIFO |
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Term
LIFO vs FIFO when Prices are Rising, Effect on Ratio:
Quick Ratio |
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Definition
Numerator - Assets are higher as a result of lower taxes paid
Denominator - Current liabilities are the same
Effect on ratio - Higher under LIFO |
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Term
LIFO vs FIFO when Prices are Rising, Effect on Ratio:
Inventory Turnover |
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Definition
Numerator - COGS is higher under LIFO
Denominator - Average inventory is lower under LIFO
Effect on Ratio - Higher under LIFO |
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Term
LIFO vs FIFO when Prices are Rising, Effect on Ratio:
Total Asset Turnover |
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Definition
Numerator - Sales are the same
Denominator - Lower total assets under LIFO
Effect on Ratio - Higher under LIFO |
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Term
| Initial effect on statements when a cost is capitalized |
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Definition
Noncurrent assets increase
Cash flow from investing activities decreases |
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Term
| Future period effect on statements when a cost is capitalized |
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Definition
The asset is depreciated or amortized:
Noncurrent assets decrease
Net Income decreases
Retained earnings decrease
Equity decreases |
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Term
| Effect on financial statements when a cost is expensed |
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Definition
Net Income decreases by the entire after-tax amount of the cost
No related asset is recorded on the BS and therefore, no depreciation or amortization expense is charged in future periods
Operating cash flow decreases
Expensed costs have no financial statements impact in future years |
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Term
Capitalizing vs Expensing Costs:
Net Income (First Year) |
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Definition
Capitalizing - Higher
Expensing - Lower |
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Term
Capitalizing vs Expensing Costs:
Net Income (Future years) |
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Definition
Capitalizing - Lower
Expensing - Higher |
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Term
Capitalizing vs Expensing Costs:
Total Assets |
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Definition
Capitalizing - Higher
Expensing - Lower |
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Term
Capitalizing vs Expensing Costs:
Shareholders' Equity |
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Definition
Capitalizing - Higher
Expensing - Lower |
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Term
Capitalizing vs Expensing Costs:
CF Operations |
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Definition
Capitalizing - Higher
Expensing - Lower |
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Term
Capitalizing vs Expensing Costs:
CF Investing |
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Definition
Capitalizing - Lower
Expensing - Higher |
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Term
Capitalizing vs Expensing Costs:
Income Variabliity |
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Definition
Capitalizing - Lower
Expensing - Higher |
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Term
Capitalizing vs Expensing Costs:
Debt to Equity |
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Definition
Capitalizing - Lower
Expensing - Higher |
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Term
| Depreciation Expense under Straight Line |
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Definition
| [Original Cost - Salvage Value] / Depreciable Life |
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Term
| Depreciation Expense under Accelerated |
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Definition
| Dep in Year X = [2 / Depreciable Life] * Bok value at the beginning of Year X |
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Term
| Carrying amount greater than tax base for Asset and Liability |
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Definition
Asset - Results in Deferred Tax Liability
Liability - Results in Deferred Tax Asset |
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Term
| Tax base greater than carrying amount for Asset and Liability |
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Definition
Asset - Results in Deferred Tax Asset
Liability - Results in Deferred Tax Liability |
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Term
Income Tax Accounting under IFRS vs GAAP:
Revaluation of Fixed Assets and Intangible Assets |
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Definition
IFRS - Recognized in equity as deferred taxes
GAAP - Revaluation is prohibited |
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Term
Income Tax Accounting under IFRS vs GAAP:
Treatment of undistributed profit from investment in subsidiaries |
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Definition
IFRS - Recognized as deferred taxes except when the company is able to control the distribution of profits and it is probable that temporary differences will not reverse in future
GAAP - No recognition of deferred taxes for foreign subsidiaries that fulfill indefinite reversal criteria. No recognition of deferred taxes for domestic subsidiaries when amounts are tax-free |
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Term
Income Tax Accounting under IFRS vs GAAP:
Treatment of undistributed profit from investments in joint venture |
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Definition
IFRS - Recognized as deferred taxes except when the investor controls the sharing of profits and it is probable that there will be no reversal of temporary differences in future
GAAP - No recognition of deferred taxes for foreign corporate joint ventures that fulfill indefinite reversal criteria |
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Term
Income Tax Accounting under IFRS vs GAAP:
Treatment of Undistributed Profit from Investment in Associates |
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Definition
IFRS - Recognized as deferred taxes except when the investor controls the sharing of profits and it is probable that there will be no reversal of temporary differences in future
GAAP - Deferred taxes are recognized from temporary differences |
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Term
Income Tax Accounting under IFRS vs GAAP: Deferred Tax Measurement:
Tax Rates |
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Definition
IFRS - Tax rates and tax laws enacted or substantively enacted
GAAP - Only enacted tax rates and tax laws are used |
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Term
Income Tax Accounting under IFRS vs GAAP: Deferred Tax Measurement:
Deferred tax asset recognition |
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Definition
IFRS - Recognized if it is probable that sufficient taxable profit will be available in the future
GAAP - Deferred tax assets are recognized in full and then reduced by a valuation allowance if it is likely that they will not be realized |
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Term
Income Tax Accounting under IFRS vs GAAP: Deferred Tax Presentation:
Offsetting of Deferred Tax Assets and Liabilities |
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Definition
IFRS - Offsetting allowed only if the entity has right to legally enforce it and the balance is related to a tax levied by the same authority
GAAP - Same as in IFRS |
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Term
Income Tax Accounting under IFRS vs GAAP: Deferred Tax Presentation:
Balance Sheet Classification |
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Definition
IFRS - Classified on balance sheet as net noncurrent with supplementary disclosures
GAAP - Classified as either current or noncurrent based on classification of underlying asset and liability |
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Term
Income Statement Effects of Lease Classification:
Operating Expenses |
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Definition
Finance Lease - Lower
Operating Lease - Higher |
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Term
Income Statement Effects of Lease Classification:
Nonoperating Expenses |
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Definition
Finance Lease - Higher
Operating Lease - Lower |
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Term
Income Statement Effects of Lease Classification:
EBIT (Operating Income) |
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Definition
Finance Lease - Higher
Operating Lease - Lower |
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Term
Income Statement Effects of Lease Classification:
Total Expenses - early years |
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Definition
Finance Lease - Higher
Operating Lease - Lower |
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Term
Income Statement Effects of Lease Classification:
Total Expenses - later years |
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Definition
Finance Lease - Lower
Operating Lease - Higher |
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Term
Income Statement Effects of Lease Classification:
Net Income - early years |
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Definition
Finance Lease - Lower
Operating Lease - Higher |
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Term
Income Statement Effects of Lease Classification:
Net Income - later years |
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Definition
Finance Lease - Higher
Operating Lease - Lower |
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Term
Balance Sheet Effects of Lease Classification:
Assets |
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Definition
Capital Lease - Higher
Operating Lease - Lower |
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Term
Balance Sheet Effects of Lease Classification:
Current Labilities |
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Definition
Capital Lease - Higher
Operating Lease - Lower |
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Term
Balance Sheet Effects of Lease Classification:
Long Term Liabilities |
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Definition
Capital Lease - Higher
Operating Lease - Lower |
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Term
Balance Sheet Effects of Lease Classification:
Total Cash |
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Definition
Capital Lease - Same
Operating Lease - Same |
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Term
Cash Flow Effects of Lease Classification:
Cash Flow from Operations |
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Definition
Capital Lease - Higher
Operating Lease - Lower |
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Term
Cash Flow Effects of Lease Classification:
Cash Flow from Finance |
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Definition
Capital Lease - Lower
Operating Lease - Higher |
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Term
Cash Flow Effects of Lease Classification:
Total Cash Flow |
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Definition
Capital Lease - Same
Operating Lease - Same |
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Term
Impact of Lease Classification on Financial Ratio:
Asset Turnover |
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Definition
Numerator - Sales - same
Denominator - Assets - higher
Effect on Ratio - Lower
Ratio is worse under finance lease |
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Term
Impact of Lease Classification on Financial Ratio:
Return on Assets (in early years) |
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Definition
Numerator - NI lower in early years
Denominator - Assets - Higher
Effect on Ratio - Lower
Ratio is worse under finance lease |
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Term
Impact of Lease Classification on Financial Ratio:
Current Ratio |
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Definition
Numerator - Current Assets - same
Denominator - Current Liabilities - higher
Effect on Ratio - Lower
Ratio is worse under finance lease |
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Term
Impact of Lease Classification on Financial Ratio:
Leverage Ratios (D/E and D/A) |
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Definition
Numerator - Debt - Higher
Denominator - Equity - Same; Assets - Higher
Effect on Ratio - Higher
Ratio is worse under finance lease |
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Term
Impact of Lease Classification on Financial Ratio:
Return on Equity (in early years) |
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Definition
Numerator - NI lower in early years
Denominator - Equity- same
Effect on Ratio - Lower
Ratio is worse under finance lease |
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Term
Financial Statement Effects of Lease Classification from Lessor's Perspective:
Total Net Income |
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Definition
Financing Lease - Same
Operating Lease - Same |
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Term
Financial Statement Effects of Lease Classification from Lessor's Perspective:
Net Income (early years) |
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Definition
Financing Lease - Higher
Operating Lease - Lower |
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Term
Financial Statement Effects of Lease Classification from Lessor's Perspective:
Taxes (early years) |
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Definition
Financing Lease - Higher
Operating Lease - Lower |
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Term
Financial Statement Effects of Lease Classification from Lessor's Perspective:
Total CFO |
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Definition
Financing Lease - Lower
Operating Lease - Higher |
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Term
Financial Statement Effects of Lease Classification from Lessor's Perspective:
Total CFI |
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Definition
Financing Lease - Higher
Operating Lease - Lower |
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Term
Financial Statement Effects of Lease Classification from Lessor's Perspective:
Total CF |
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Definition
Financing Lease - Same
Operating Lease - Same |
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Term
| Net Income Tax under FIFO will be greater than LIFO net income after tax by: |
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Definition
| Change in LIFO Reserve * (1 - Tax Rate) |
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Term
When Converting from LIFO to FIFO Assuming Rising Prices:
Equity (retained earnings) change by: |
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Definition
Increase:
LIFO Reserve * (1 - Tax Rate) |
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Term
When Converting from LIFO to FIFO Assuming Rising Prices:
Liabilities (deferred taxes) change by: |
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Definition
Increase:
LIFO Reserve * Tax Rate |
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Term
When Converting from LIFO to FIFO Assuming Rising Prices:
Current Assets (inventory) change by: |
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Definition
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Term
| Adjustments Related to Property, Plant, and Equipment |
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Definition
Gross Investment in fixed assets / Annual Deprediation Expense= [Accumulated depreciation expense / Annual Depreciation expense] + [Net Investment in Fixed Assets / Annual Depreciation Expense
Estimated Useful or Depreciable Live = Average age of asset + Remaining Useful Life |
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Term
Categories of Marketable Securities and Accounting Treatment:
Held-to-maturity |
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Definition
Balance Sheet Value - Amortized cost (Par value +/- unamortized premium/discount)
Gains and Losses:
Unrealized - Not reported
Realized - Recognized on income statement
Income (Interest and Dividends) - Recognized on Income Statement |
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Term
Categories of Marketable Securities and Accounting Treatment:
Held-for-trading |
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Definition
Balance Sheet Value - Fair Value
Gains and Losses:
Unrealized - Recognized on income statement
Realized - Recognized on income Statement
Income (Interest & Dividends) - Recognized on Income statement |
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Term
Categories of Marketable Securities and Accounting Treatment:
Available-for-sale |
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Definition
Balance Sheet Value - Fair Value
Gains and Losses:
Unrealized - recognized in other comprehensive income
Realized - Recognized on Income Statment
Income (Interest & Dividends) - recognized on income statement |
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Term
Property Plant and Equipment:
US GAAP |
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Definition
Balance Sheet - Cost minus accumulated depreciation
Changes in BS Value - Does not permit upward revaluation
Effects of changes in BS Value - No effect |
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Term
Property Plant and Equipment:
IFRS |
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Definition
Balance Sheet - Cost minus accumulated Deprecation
Changes in BS Value - Permits upward revaluation. Asset is reported at fair value at the revaluation date less accumulated depreciation following the revaluation
Effects of Changes in BS Value - Increase in asset's value from revaluation is reported as a part of equity unless it is reversing a previously-recognized decrease in the value of the asset. Decrease is reported on IS unless it is a reversal |
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Term
Treatment of Identifiable Intangible Assets:
GAAP |
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Definition
BS - Only purchased may be recognized as assets. Developed cannot. Reported at cost - accumulated amort for assets with finite useful lives, cost - impairment for assets with infinite useful lives
Changes in BS Value - Does not purmit upward revaluation
Effects of Changes in BS Value - No effect |
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Term
Treatment of Identifiable Intangible Assets:
IFRS |
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Definition
BS - Only purchsed may be recognized as assets, internally developed may not. Finite useful lives - reported at cost - accum amort. Infinite useful lives - reported at cost - impairment
Changes in BS Value - Permits upward revaluation. Reported at fair value as of reval date less subsequent accum amort.
Effects of Changes in BS Value - Increase - part of equity (unless a reversal) Decrease - on IS unless it is a reversal |
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Term
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Definition
Outcome can be reliably estimated - percentage-of-completion method
Outcome cannot be reliably estimated - completed contract method |
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Term
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Definition
Outcome can be reliably estimated - percentage-of-completion method
Outcome cannot be reliably estimated - revenue is recognized to the extent that is is probable to recover contract costs. Profit is only recognized at project completion |
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