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Question 1

what are some CA’s and CL’s for the completed contract and % completion contract?

Answer 1

• CIP is CUMULATIVE of the years
• CA: A/R, cost of uncompleted contracts(CIP) in excess of progress billings (only for % completion)
• CL: excess billings, retainer, deposits

Question 2

how do you get GP using the % completion method?

Answer 2

• costs incurred + est costs to complete = total cost

* (contract price - total cost)*(costs incurred/total cost) = GP

Question 3

how do you account for income on the final year of a % completion contract?

Answer 3

we use actual total costs (not est) and income prev’ly recog’d:

[actual cost incurred/total actual cost] * [total actual GP]

Question 4

what are the incremental costs of obtaining a contract?

Answer 4

• costs that would not have been incurred if the contract had not been obtained and are recognized as an asset if the entity expects that it will recover these costs
• (legal fees, commission costs to obtain contract)

Question 5

when can a customer obtain control from a bill and holding arrangement?

Answer 5

all criteria must be met:

• substantive reason for arrangement
• product has been sep’ly ID’d as belonging to customer
• the product rdy for transfer
• the entity cannot use product or direct it to another customer

Question 6

when can you recognize a revenue from a sale w/ ROR?

Answer 6

after the refund period as passed

Question 7

indirect method for statement of CF items:

Answer 7

NI
\+dep/amort
\+losses
- gains/amort. of bond premium
-equity earnings
-(+/-) change in OA
\+(+/-) change in OL
--------------------------------
= CFO

Question 8

how do you recognize revenue from the proceeds upon a death of an officer?

Answer 8

proceeds - cash surrender value = revenue

Question 9

what is the JE for liquidation of a liability (including debt restructuring)?

Answer 9

Dr: N/P
Dr: loss
Cr: transferred asset
Cr: gain-restructure of debt

Question 10

how is the cost recovery method used?

Answer 10

• Initial proceeds are for recovery of cost

* after cost is recovered, subseq. collections provide GP

Question 11

name some diff’s b/w IFRS and GAAP

Answer 11

• IFRS may classify exp’s by either nature (salaries,rent,etc.) or function (COGS,sales,etc.)
• if a company under IFRS uses the functional method, it must disclose expenses by nature in the notes
• IFRS NI/loss is simply “income” or “loss”
• IFRS definition of discontinued op’s is narrower than US GAAP’S

Question 12

when can you include classify R+E as discontinued operations?

Answer 12

• approval of disposal + HFS criteria met
• op. results of the comp. for the period reported on should be sep. from cont. op’s, net tax
• disposal included for whole CY

Question 13

how is IL calculated?

Answer 13

CV - FV = IL

Question 14

how do you report additional pension costs in regards to discontinued operations?

Answer 14

additional pension costs are included in the loss from discont. op’s

Question 15

what is HFS and its criteria?

Answer 15

HFS is the earliest period that a component of an entity can be reported in discontinued operations. its criteria is:

1. mgt commits to a plan to sell the component
2. the comp. is AFS at its current condition
3. an active program to locate a buyer has been initiated
4. the sale of the component is probable and the sale is expected
5. the sale of the component is being actively marketed
6. it is unlikely that sig. change to the plan to sell will be made or that the plan will be withdrawn

Question 16

what is a discontinued operation?

Answer 16

• group of components, a business, or a NFP activity

* the sale must represent a strategic shift and must have sig. effect on its operations and financial results

Question 17

how is a component classified as HFS measured?

Answer 17

lower of BV or NRV (FV-cost to sell)