Question 3 under current us gaap asu points a what is

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Question 3 : Under current US GAAP (ASU 2011-05): (10 POINTS) a) What is meant by Comprehensive Income? The change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. b) How should Comprehensive Income be presented in the financial statements? Separate categories for disclosure of Operating business activities Financing activities Investing activities Tax payments Subtotal for each category All income and expense items to be classified into operating, investing, and financing Disaggregate line items by function
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Function: the primary activities in which an entity is engaged Further disaggregate line items by nature Nature: the economic characteristics or attributes that distinguish assets, liabilities, and income and expense items that do not respond equally to similar economic events Questions 4 : How is fair value defined in SFAS No. 157 (5 POINTS) Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This is used for assets whose carrying value is based on mark-to-market valuations; for assets carried at historical cost , the fair value of the asset is not used. Questions 5 : Statement of Cash Flows: (10 POINTS) a) What are the purposes of the Statement of Cash Flows? The purpose of the Statement of Cash Flows is to provide relevant information about cash receipts and cash payments of an enterprise b) Define and discuss the three major sections of the statement of cash flows . Net cash flows from operations o Cash effect from transactions that enter into the determination of net income Investing transactions o Making and collecting loans o Acquiring and disposing of debt or equity securities of other companies o Acquiring and disposing of property, plant, and equipment and other productive resources Financing transactions o Obtaining resources from owners o Providing owners with a return of and a return on their investment o Borrowing money and repaying the amount borrowed o Obtaining and paying for other resources from long-term creditors Questions 6: Define and discuss the two GAAP methods of estimating bad debts on receivables. (5 POINTS)
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1. Percentage-of-sales method: The percentage-of-sales method estimates uncollectible accounts from the credit sales of a given period. In theory, the method is based on a percentage of prior years’ actual uncollectible accounts to prior years’ credit sales. When cash sales are small or make up a fairly constant percentage of total sales, firms base the calculation on total net sales. Since at least one of these conditions is usually met, companies commonly use total net sales rather than credit sales.
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