4

Question 1

what is the cumulative effect of the change from cash to accrual basis?

Answer 1

prior period adj. resulting from the correction of an error

Question 2

how do you report a change in the depreciation method on the FS?

Answer 2

it is both a change in method and estimate

Question 3

what are the required FS’s under IFRS when an entity records a change in AP?

Answer 3

Minimum of 3 BS, 2 of each other FS’s, related notes and comparative info

• adj BB RE of the prior period

Question 4

how is an error on O/S of DE reported?

Answer 4

the error should be corrected by restating BB RE for the CY

*DE in the CY is not affected

Question 5

when there is a change in reporting entity, how should the change be reported on FS’s?

Answer 5

retrospectively and include note disclosures and application to all prior period FS’s presented.

*this results from changing companies in consol FS’s and consol’d FSs vs. previous individual FS’s

Question 6

under IFRS, what are the disclosure requirements relating to the correction of a material prior period?

Answer 6

• the amt of the correction at beginning of earliest period presented
• the impact of the correction on basic EPS and diluted for each period presented
• the nature of the error
  (NOT internal controls to prevent error)

Question 7

how do we account for changes to LIFO for inventory?

Answer 7

for US GAAP, change to LIFO is a change in estimate (prospective)

Question 8

what is the cumulative effect of a change in AP?

Answer 8

adj. BB RE by comparing CY and PY if comparative FS’s are not presented.

Question 9

what does CI include?

Answer 9

• includes the change in equity from non-owner trans.

* does not include change in equity from investments by owners and distributions to owners

Question 10

where is OCI and AOCI reported?

Answer 10

• AOCI = SE section on BS

* OCI = sep. statement of CI or combined statement

Question 11

what is PUFER? (OCI)

Answer 11

• pension changes in funded status
• “un” G/L on AFS debt securities
• foreign (or cumulative) currency translation G/L
• effective portion of CF hedges
• reval SURPLUS (IFRS)

Question 12

why are reclass’n adj’s necessary in the FS’s that disclose CI?

Answer 12

to avoid double counting CI items, which are currently displayed in NI

Question 13

what is the purpose of reporting CI?

Answer 13

to summarize changes in equity from nonowner trans.

Question 14

how do we record PSC not recog’d in net periodic pension cost in OCI?

Answer 14

we subtract from OCI balance

Question 15

how do we account for royalty expense?

Answer 15

greater of: minimum royalties or % of sales

Question 16

how do you find EB of an escrow liability?

Answer 16

BB + deposits - cash pmt = EB

Question 17

is NI affected by WIP inventory?

Answer 17

no, but it is affected by sales and RE

Question 18

how do we find accrued salaries payable EB?

Answer 18

BB + salaries exp CY - salaries paid CY = EB

Question 19

what FS’s do advances affect?

Answer 19

they affect CF’s but do NOT affect accrual basis expense