F6 Flashcards

Question

Fair value hedge accounting

Answer 1

Changes in FV from hedged item included in current earnings to offset gain or loss

Answer 2

Effective portion: included in other comprehensive income until hedged transaction effects earnings Ineffective portion: included in earnings

Answer 3

FV hedge: included in current earnings Cash flow hedge: effective is in comprehensive income and ineffective is in earnings Net investment hedge: included in other comprehensive income and cumulative translation adjustment

Answer 4

Assets, liabilities, and forecasted transactions; but not firm commitments

Answer 5

If there is a strike price(locked price) the buyer would purchase the put option if he thinks the market price will drop so that the seller would have to buy back the stock at the strike price

Answer 6

Assets and liabilities denominated in dollars like payables and receivables

Answer 7

Shit that fluctuates in value like PP&E, inventory, and stocks

Answer 8

The foreign subsidiary's functional currency is the reporting currency of the parent and the subsidiary is dependent on the parent Balance Sheet: monetary items use current rate and nonmentary use historical Income Statement: non-balance sheet items use weighted average and balance sheet items like COGS and depreciation use historical rate Remeasurement gains and losses are reported on the income statement

Answer 9

Subsidiary's currency is its functional currency and it is independent of its parent Income statement: weighted average Balance sheet: assets and liabilities uses current rate, common stock uses historical, and retained earnings is a rollforward Translation gain or loss is reported in comprehensive income

Answer 10

Allocation that occurs within the current income statement

Answer 11

"Income Statement Items" Income from continuing operations Discontinued operations Accounting principle change(retrospective ``` "Other Comprehensive Income Items" Pension funded status Unrealized gain or loss available for sale debt security Foreign translation adjustment Instrument specific credit risk Effective portion of cash flow hedge ```

Answer 12

Owe now + owe later = expense on income statement Dr. Tax expense Cr. Owe now liability Cr. Owe later liability

Answer 13

Tax exempt interest from tax or state Life insurance proceeds on officer's key man policy Life insurance premiums when corporation is the beneficiary Certain penalties, bribes, fines, kickbacks, etc. Nondeductible portion of meal and entertainment expense Dividend-received deductions Excess percentage depletion over cost depletion

Answer 14

Income: $160,000 Municipal interest: $50,000 (Life insurance premium expense): ($10,000) Pretax Financial Income: $200,000 $160,000 multiplied by tax rate equals income tax expense Dr. income tax expense Cr. income tax payable

Answer 15

Tax income later = future tax liability Instalment sales Contractor accounting % of completion Equity method income

Answer 16

Tax income first = prepaid tax benefit (asset) Prepaids

Answer 17

Tax deduct later = future tax benefit (asset) Bad debt expense Estimated liability/warranty expense Start up expenses

Answer 18

Tax deduct first = future tax liability Depreciation and amortization Cash basis prepaid

Answer 19

Add increase in deferred tax liability and deduct decrease in deferred tax liability Deduct increase in deferred tax asset in add decrease in deferred tax asset

Answer 20

Tax expense in increased Dr. Tax expense Cr. Other liabilities

Answer 21

- back into taxable income and multiply by that year's rate - multiply difference by enacted rate for future years Dr. Current income tax expense - 1st step Dr. Deferred income tax expense - 2nd step Cr. Deferred tax liability - 2nd Cr. Income tax payable - 1st

Answer 22

- Carrybacks only go back 5 years 2018,2019,2019 - they offset the income from prior years and multiply the carried back amount by the enacted rate Dr. Tax refund receivable Cr. Tax benefit - any remainder is a carry forward and you multiply by enacted rate Dr. Deferred tax asset Cr. Tax benefit - also income in the next year reduces the carry forward then multiply by enacted rate to get deferred tax asset valuation allowance Dr. Tax refund receivable Dr. Deferred tax asset Cr. Deferred tax asset valuation allowance Cr. Tax benefit

Answer 23

Ownership 0-19% - 50% exclusion Ownership 20-80% - 65% exclusion Ownership Over 80% - 100% exclusion

Answer 24

- Dividends received is what is taxable - The difference between equity method and dividends is multiplied by 1 minus exclusion rate and you multiply that by enacted rate to get deferred income tax expense - taxable income is dividends received multiplied by exclusion rate and you multiply that by enacted rate to get current income tax expense

Answer 25

If they decrease taxable income then they are a noncurrent asset & if they increase taxable income then they are considered noncurrent liabilities

Answer 26

The economic life, not the term of the lease since title is being transferred when the lease term ends

Answer 27

Don't include the purchase option in the depreciable base, just deduct any salvage value

Answer 28

You multiply it by PV factor and add to value of lease liability

Answer 29

It is a liability when financial statement income is greater than tax and an asset when financial statement income is less

F6 Flashcards

(53 cards)