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Definitions |
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Must have
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Ending Inventory; CoGS
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medical costs, life insurance
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OPEBs
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Intrinsic ValueFair Value
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123(R); Fair Value;
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Pension expense = 43
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Final J/E?
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6000 paid after the discount period.Net Method? Gross Method?
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GrossNet
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______ consignments, are not technically consignments, but qualify... Examples:- no date set for payment. - date set, but excused until resale. - obligation excused upon theft or damage- seller has significant obligations to bring about resale.- demonstra
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In substance
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OPEB Expense =
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Service Cost+Interest Cost-Expected return on plan assets+Amortization of net loss+Amortization of PSC
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ownership; goods
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bill and holdFOB shipping pointFOB destinationconsignment.
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Property Dividend
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NON-RECIPROCAL transfer b/w corp. and shareholders. When Declared, _____________, _________.
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increases; decreases;
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does not change; increases; changes the composition;
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For a pension to meet this "qualification" requirement for tax benefits, it must:1. _____________2. _____________3. _____________4. _____________5. _____________
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25;
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Nonpayment Determined:Bad Debt Expense, A/R
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Subsequent Collection of Account:Cash, Revenue from Uncollectables
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The new standard set by FASB _____ requires all firms to use ____.
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warrant;
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Depreciation recorded by Lessee. Normally, the lessee should depreciate over the ________, but if there is a ______ or a ______ then it should be depreciated over _________.
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manufacturer / dealer; leasing;
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Net Realizable Value; controlled market quoted price applicable; costs of disposal; difficult to obtain
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reclassified as a noncurrent asset.
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Asset Turnover?
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1. basis for reporting PPE can be either historical cost or revalued amounts2. Impairment loss always recorded when NBV exceeds fair value3. Reversal of impairment loss required (only to original cost).
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Calc. Basic EPS:
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Need to use _____________. This finds the equivalent number of shares outstanding for the year:1. Use a ________ to find shares outstanding at each transaction point.2. If stock dividends or stock splits are exercised throughout the year, one must _______ as if the ______________. This makes all shares "______."3. Multiply shares outstanding by fractions of year.
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= Pension Expense
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*These amounts are NOT amortized if they are over OR under 10% (the "______") of the ____ balance of the ________ of PBO or Plan assets, because they are supposed to eventually _______. However, if they are OVER OR UNDER 10% (not in the "_______" ), the net gain / loss amortized to pension expense is the ___________ divided by the ____________.
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Fixed Assets / PP&E
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Should be recorded at cost. If building is internally produced, all costs associated with building. (______ can be capitalized during ________).
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Ex: R/E 55APIC 15, Dividend Payable
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Stock DividendsThese _______ earnings. The net effect __________ and _________. Two types:1. ________ (___). Transfer of RE is based on ___ of stock issued at declaration date. 2. _________ (___). Transfer of RE is based on ___ of stock issued at declaration date. (This has _______ on ______ and is very similar to a ______). Treasury stock _________ dividends ______. 5000 outstanding shares; Par Value = $1; BV = $32; FMV = $40; J/E's for 10% stock dvidend? J/E's for a 50% stock dividend?
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** The attribution period _________ years of service beyond full eligibility date, even if employee work beyond this date.
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EPBO (Earned Post-Retirement Benefit Obligation); PBO; Plan Assets; Plan Assets;
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There are exceptions where GAAP allows inventory to be recorded at ______ (even if it writes Inv. up) when:1. there is a ________ with a ________ and also no significant ___________. 2. __________ cost figures (meatpacking).
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Excess Inventories shouldn't be written down unless required by LCM. Need to be _______________.
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A/R is recorded at ___ - net amount of cash expected.
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Uncollectable A/R:
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(NI - Preferred Div.) / Shares Outstanding
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intermediate; income; EPS; each component;- G/Ls from discontinued operations;- Extraordinary items- Effects of Accounting changes.
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volume1. Ease of Mgmt Transfer2. Limited Liability3. Separate Legal Entity4. Ability to raise substantial capital through debt AND (cheaper) equity (therefore higher returns)
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1. Double taxation. 2. Gov't regulation, filing/ disclosure costs
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2 main types of pensions:
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Defined ______ ______. This is where the employer promises to pay a fixed annual amount to an employee directed pension fund. Then the _______ bears the risk of the fund performance. This type of pension has simplistic accounting. Ex - 3% contribution amount. 110,000 salary. J/E?
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For market value, ______ _______, ___________ ("_____") and _______ less __________ ("_____") are used.
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Market Value is calculated as the middle value between the three.
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have standalone value; evidence of fair value; price; package; vendor specific objective evidence; residual; package price; fair values of undelivered items; 'reverse residual'
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Percentage of Completion - used for __________ like _______. Recognizes revenue as ______ progresses (use when it is estimable).
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Write back up an impairment.
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Held for sale: L-T asset classify as this if:- commits to sell- asset available immediately- expected to sell within a year- reasonable price
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Many stock exchanges require ownership controls for the _______ and _______ of stock, therefore many corps use ______ and ________.
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1. Profits / Losses (Dividends and Price appreciation)2. Election of Board of Directors3. Residual claimholders upon liquidation4. Preemptive right to maintain % of ownership. (many corps. have eliminated this right...)...
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1. Banks2. Captive Leasing companies3. Independents
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- 100% financing at fixed rates- Protection against obsolescence- Flexibility; operating lease; capital lease; - Off balance sheet financing - operating
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Beginning of year (inception of lease):Lesse J/Es? (receiving asset / payment)Lessor J/Es? (giving asset / payment)
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End of year J/Es? (depreciation and payment)
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Ex: Purchase of 10,000, terms 2/10 net 30. Gross Method? Net Method?
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4000 paid within discount period.Net Method? Gross Method?
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- might not always be reliable b/c it uses past percentages.
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Retail Inventory Method (widely used)Three versions (need to know):1. _____ (use cost-retail ratio on total goods available with _________.)2. ______/ ______ (use cost-retail ratio on total goods available with _________.)3. ______ (use cost-retail ratio on ______ and _______ with _________.)
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cumulative; accrues; before C/S holders; non-participating; Participating; plus an additional dividend if the C/S dividend exceeds a specified value.
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Why do companies keep some $ is RE, rather than distributing it through dividends?a. _______ b. _______ c. ______ d. _________
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Includes ________, _______ and legal services. *this is after RETIREMENT. If covered by medical insurance NOW (while employed) counts as compensation expense. Medical Benefits to retirees of company is what we are talking about.
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SFAS 106Expected costs of OPEBs are to be incurred as employee earns benefits.
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To determine the liability / expense, co must:1. Estimate the total OPEB cost to pool of employees2. _____________3. _____________ (after age ___).
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Actuarial Estimates can be similar to pensions:-Discount rate-Expected return on plan assets-Employee turnover-Life expectency
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3 Major Lessors:1. _____ - lowest cost of capital2. ____________ - subsidiary companies who exist primarily to serve their parent company. 3. _______ - dying out
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Advantages of leasing:- ____________ - helps conserve cash, good for young companies- ___________ - firms that lease often have a clause that allows them to trade in for latest technology- __________ - financial as well as tax advatages (can record as ________ in GAAP world, but also and _______ in IRS, allowing for depreciation. - ___________ - _____ leases do not add debt to the firms capital structure
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A/R Turnover:Net Sale / Avg. Net Receivables.
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Measures # of times on average a company collects receivables.
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"net assets"; invested; earned by the corporation
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1. Nature and location of business2. # and classes of shares authorized.3. Composition of BOD.
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1. Proportional - FMV; each class; known2. Incremental - one class's FMV is known
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Ex: CS = 6000/15000 = 40%PS = 9000/15000 = 60%CS = (40%) (14200) = 5680PS = (60%) (14200) = 8520CS = 5680 - 3000 (Par) = 2680 = APIC CSPS = 8520 - 5000 = 3520 = APIC PS. Cash 14200, CS 3000, CS APIC 2680, PS 5000, PS 3520
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Capital Lease - __________ and risks of property ownership, provided it is _______; essentially a sale made with debt.
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Operating lease - a lease that does not _________________ and risks of ownership.
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If there are high ______ and low ____ and ____, this could indicate increased production.
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assets held for sale; ordinary course of business; 1. Retailer2. Manufacturer (Raw Materials, Work-In-Process, Finished Goods).
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These decrease the share price in a certain way. It ____ shares oustanding and _____ the par value. It does not require a J/E only a disclosure. Companies might want to split to make their stock seems more attractive to the average layman.
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A Large stock dividend is almost the same as a stock split.
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Unrealized G/L 30, Est. Liability on PC. 30
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Inventory 70Est. L on PC 30, Cash 100
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Share buybacks - why would a corporation do this?1. ________2. ________3. ________4. ________5. ________
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FMV of stock issued or FMV of non cash consideration.
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If the Lessor retains title and it is guaranteed by the Lessee, the lesse must pay cash for any diff. b/w FMV and promised value. Lesse sees the RV as a final payment.
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If the Lessor retains title and it is NOT guaranteed by the Lessee, Lessee not obligated to make any payments other than PV of asset - PV of RV. Lessor still expects to receive, so includes PV of RV in receivable.
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A/P 3920, Cash 3920
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A/P 5880Pur. D. Lost 120, Cash 6000
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