Formula Sheet Mini Test FAR

FAR Formula Sheethttp://www.cpa-cfa.org

Chapter 1

Statements of Financial Accounting Concepts (SFAC) -

What are the four most authoritative GAAP

What are the characteristics of accounting information

1.

-

-

-

2.

-

-

-

1a.

2a.

What components are on the income statement?

What component is on the statement of retained earnings?

1


Cumulative effect of change in accounting principleAccounting changes are broadly classified into 3 categories:

Examples

-

-

-

-

-

-

-

Examples

-

Examples

-

-

-Define comprehensive income and its components -

Public companies must report segment information about

-

2


-

-

-

Must report as operating segment if it’s greater than _______ of either:

1.

2.

3.

= Operating profit (loss) for segment

Chapter 2

What is the patent amortization length?

Define technological feasibility –

-

-

How does that affect costs for Computer software development costs, developed to be sold, leased or licensed?

How do you capitalize the software costs:

How does that differ from Computer software developed internally or obtained for internal use only?

3


Are the capitalized costs amortized?

= ending bal prepaid insurance

= end bal rent receivable

= end bal accrued salaries payable

Sales revenue =

Completed contract method

-

Percentage of completion method, When do you use this method?

How is income recognized under % completion method?

-

-

When is the installment method used? And how is revenue recognized

4


Gross profit earned =

Gross profit % =

Gross profit =

Deferred gross profit = B/S A/R =

Define an exchange that has commercial substance

-

-

Record the J/E for exchanges with commercial substance

Exchanges lacking commercial substance or when __________________________

-

-

-

When do you use the exact method in P/S?

New total P/S equity =

New partner contribution amount =

5


When do you use the bonus method for P/S?

Book value =

Bonus =

-

-

When do you use the goodwill method for P/S?

Implied value =

Goodwill =

Then allocate …

In periods of inflation

FX transactions –

FX translation –

Functional currency –

Remeasurement ( ) –

-

-

Translation ( ) –

-

Remeasurement method: _____________________________B/S Monetary =

Non-monetary =

I/S

Non B/S related items (COGS) -

6


B/S related items (Depreciation, Bond Amortization) =

Equity =

Currency gain/loss =

-

Translation method ( ): ____________________________I/S Income =

Expenses =

B/S

Assets =

Liabilities =

Equity =

Retained earnings =

Accumulated Translation adjustment =

-

Chapter 3

Trading Securities –

Unrealized gain/losses -

Available for sale –

Unrealized gain/losses -

Held to Maturity Securities -

-

Reclassification; transfer of security from one group to anotherFrom To Adjustment

7


What happens when you sell of security from any category? What is the J/E?

Cost method ( ) –

Equity Method ( ) –

Consolidate ( ) -

What another name for the cost method -

What are the B/S JE’s under the cost method?

What are the I/S J/E’s under the cost method?

Equity Method -

What are the main B/S entriess under the equity method?

What are the I/S J/E’s under the equity method?

8


Record as good will if -

Record as extraordinary gain if –

Eliminate Sub’s old equity

What are the consolidating workpaper eliminating journal entry’s ___________________

Determining purchased goodwill or extraordinary gain formula

________________________=

__________________________________=

What do you do when inventory has been sold intercompany?

-

-

Chapter 4

Working capital =

Current ratio =

Quick ratio (acid test ratio) =

2/10 n/30 = get discount of 2% if paid within 10 days, or the entire amount is due in 30 daysMake JE under Gross method =

9


Make JE under Net method =

Factoring without recourse – JE

Factoring with recourse –

Adjusted cash balance =

F.O.B. shipping point –

F.O.B. destination –

Market ceiling –

Market floor –

In a period of inflation, how will the inventory method affect NI?

How do you calculate FIFO method -

How do you calculate LIFO method -

How do you calculate Dollar value LIFO?

10


LIFO periodic =

How do you calculate weighted Avg method =

-

Moving Avg method –

-

When can you use Gross Profit method and how do you calculate it?

Conventional Retail method –

FIFO Retail method –

How do you calculate interest capitalization? What are the 2 rules?

1.

-

2.

-

-

What is Sum of years digit and how do you calculate it?

-

-

-

-

-

11


Explain Double declining balance, how do you calculate it?

What is Units of production and how do you calculate it?

-

-

What is Depletion and how do you calculate it?

-

-

-

-

= end accum dep

Chapter 5

Ordinary Annuity –

Annuity Due –

On the present value table: Ordinary annuity =

On the PV table: Annuity due =

Present value of $1 –

Present value of an Ordinary annuity –

Lessee accounting for operating leases– the renter

Lease bonus –

What is a Leasehold improvement and how do you account for it –

12


-

-

-

-

How does lessee account for:Non-refundable security deposit –

Refundable security deposit –

Lessor accounting – the owner

How does the lessor account for:

Non-refundable security –

Refundable security –

Capital Lease – purchase/ownershipWhat is the Lessee capital lease criteria –

What is the difference between a sales type lease and direct financing lease

What is the Lessor (seller) criteria for sales type/direct financing -

The lessee records the capitalized lease amount at the ______________ of:

-

-

13


For the interest rate use the ______________ of:

-

-

What are the depreciation rules for the capitalized lease on the lessee’s books?

-

-

What is the layout to account for lessee’s lease liability and asset amortization? (F5-17)

(1) (2) (3) (4)

Lessor accounting sales type lease (_____ profit streams)

Gross investment =

PV of minimum lease payments =

Net investment =

Unearned interest revenue =

COGS =

What is the associated JE?

Lessor accounting direct financing lease (_______ profit streams)

Gross investment =

Net investment =

Unearned interest revenue =

What is the associated JE?

Calculate excess gains for Sale-leaseback leases under operating and capital leasesOperating Lease

14


= Excess Gain

Capital Lease

= Excess Gain

Define each and when you recognize the gain

"major" sale-leasebacks –

"minor" sale-leasebacks –

In “betweener” sale leasebacks -

Real Economic loss in sales back lease -

Artificial loss in sales back lease -

How do you classify a sub lease -

-

-

-

Stated (nominal) rate =

Discount =

Premium =

Total interest revenue =

15


Nondetachable warrants –

Detachable warrants –

2 methods to bond amortization methods: _____________________ and _____________________________

Define ________________:

Periodic amortization =

Interest expense =

___________________________ – required by GAAP

I/S

Interest expense =

B/S

Interest paid =

Amortization =

Unamortized discount =

-

Bonds book value =

Draw Graph Pg F5-47

How do you account for bonds sold or issued between interest dates requires additional entries for accrued interest at time of sale?Total cash received =

Accrued interest =

Bond sinking fund -

-

Serial bonds

16


2 amortization methods:

-

-

Convertible bonds – nondetachable warrantsThe conversion is recorded under 2 methods:Book value method

Market Value Method

Convertible bonds – detachable warrantsWhat is the JE at issue date?

Recorded under 2 methods:

-

-

-

How do you calculate and account for Extinguishment of debt

Gain or loss =

Give examples of troubled debt restructuring and how you calculate the gain/loss

-

Ordinary gain/loss =

Possible extraordinary gain/loss =

17


= End interest payable

Chapter 6

Define and when they are used Accumulated benefit obligation (ABO) –

Projected benefit obligation (PBO) -

Prior Service Cost (PSC) -

-

-

What is the I/S expense formula and the resulting JE’s

Unfunded accrued pension cost =

Prepaid pension cost =

18


On the B/S, what creates an intangible pension asset?

-

-

How much is recorded as additional pension liability and other comprehensive income?

Total payroll tax liability =

Payroll tax expense =

DTA =

DTL =

Tax chart (F6-32)

Chapter 7

Reporting gains and losses: Define the term and where its reported

Speculative derivatives –

-

Fair value hedge –

19


-

Cash flow hedge –

-

-

Foreign operation currency hedge –

How do you account for Treasury Stock under the Cost method – used 95% of the time

Repurchase

Re-sell at gain

Re-sell at a loss and there is not enough is APIC to cover the loss

How do you account for Treasury Stock under the Legal or par value method -

Repurchase at a gain

Repurchase at a loss

How do you account for Property dividends

20


How do you account for stock dividends –

- Small stock dividend -

- Large stock dividend -

Basic EPS =

Weighted avg # of C/S outstanding =

Diluted EPS =

For options and other similar instruments -

Additional shares outstanding =

Direct method required disclosures are

-

-

-

Indirect method –

Cash received from customers =

= ending balance A/R

Cash paid to suppliers

21


= Ending inventory

= end A/P

When given changes in accounts

Purchases =

Cash paid =

Accrual basis interest expense =

Direct methodInflows (increase cash)

Outflows (decrease cash)

Indirect method – reconciliation

= cash flow from operations

22


Chapter 8

Governmental Funds –

-

-

-

-

-

Governmental fund types include

Proprietary Funds –

-

-

-

-

-

-

Proprietary fund types include

23


Fiduciary Funds –

-

-

-

-

-

Fiduciary fund types include

Chapter 9

What are the required elements in government wide F/S

-

-

What comprises the statement of net assets in the gov’t wide F/S

-

-

-

24


What are the 3 categories in the statement of activities in the gov’t wide F/S)

What are the 3 program revenue categories?

-

-

-

Fund Financial Statements (F9-19)What are the criteria to be considered a major fund? must meet both criteria:

1.

-

2.

-

How do you prepare the reconciliation between gov’t wide and fund F/S?B/S –

Statement of revenues, expenditures and changes in fund balance –

25


Discuss the statement of cash flows differences under governmental accounting. 6 differences:

1.

2.

3.

-

-

4.

5.

6.

What are the required F/S for not-for-profits?

-

-

-

26

Formula Sheet Mini Test FAR

Documents