2011 Financial 2 Text Updates - This first page gives a...

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This first page gives a listing of the corrected lecture text pages that follow. Print these corrected pages and insert in the lecture text. FINANCIAL Date Added Lecture Page Number Description 03/17/2011 F-2 9 Text change 03/17/2011 F-2 16 Add text 03/17/2011 F-2 26 Correction of numbers in table 03/17/2011 F-2 32 Correction of numbers in table 03/17/2011 F-2 39 Correction of number in journal entry 03/17/2011 F-2 51 Correction of number in table 03/17/2011 F-2 70 Add missing Topic from list 03/24/2011 F-2 5 Correct misspelling; Delete text 03/24/2011 F-2 15 Delete text 03/24/2011 F-2 33 Text change 03/24/2011 F-2 38 Add text 03/24/2011 F-2 39 Add text 03/2402011 F-2 60 Add text 03/24/2011 F-2 61 Delete lines from chart
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Becker Professional Education | CPA Exam Review Financial 2 © 2010 DeVry/Becker Educational Development Corp. All rights reserved. F2- 9 EXAMPLE – ROYALTIES RECEIVED IN ADVANCE TAG Company receives royalties on its patents in two ways. In some cases, advance royalties are received and in other cases royalties are remitted within sixty days after year end. These data are included in TAG Company's December 31 balance sheets: Year 1 Year 2 Difference Royalties receivable $100,000 $95,000 ($5,000) Unearned royalties 70,000 45,000 25,000 During Year 2, TAG Company received royalty remittances of $180,000. In its income statement for the year ended December 31, Year 2, what should TAG Company's royalty income be? Cash receipts $ 180,000 Receipts in Year 2 applied to 12/31/Year 1 receivables (100,000 ) Cash remaining 80,000 Unearned royalties, 12/31/Year 2 (45,000 ) Preliminary Year 2 royalty income 35,000 Unearned royalties, 12/31/Year 1 70,000 Receivables balance, 12/31/Year 2 95,000 Royalty income, Year 2 $ 200,000 The net method way to calculate royalty income would be: Royalty collections $ 180,000 Plus: Reduction in unearned royalties ($70,000 - $45,000) 25,000 Less: Reduction in royalties receivable ($100,000 - $95,000) (5,000 ) Year 2 royalty income $ 200,000 PASS KEY The examiners frequently test journal entry concepts. The correct journal entries for the collection and recognizing of earned royalties are: Cash $XXX Unearned royalty $XXX Unearned royalty $XXX Earned royalty $XXX
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Financial 2 Becker Professional Education | CPA Exam Review F2- 16 © 2010 DeVry/Becker Educational Development Corp. All rights reserved. EXAMPLE – IFRS INTANGIBLE ASSET REVALUATION On December 31, Year 2 an entity that had adopted the IFRS revaluation model in Year 1 adjusted its patents to fair value. On that date, the patents had the following carrying value and fair value: Carrying Value Fair Value Patents $8,200,000 $9,100,000 The entity had recorded a revaluation loss of $500,000 in Year 1. Compute the revaluation gains to be reported in Year 2 net income and other comprehensive income. Total revaluation gain = $9,100,000 - $8,200,000 = $900,000
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2011 Financial 2 Text Updates - This first page gives a...

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