FAR2

Question 1

what is Good Will categorized

Answer 1

Non current asset

Question 2

how to calculate good will

Answer 2

Purchase price - (total asset + total liability )

Asset/ Liability at FV

Question 3

when consolidation, what does “Company X purchased 100% stock of Company Y in exchange for 20,000 shares”?

Answer 3

the company x NEWLY issued 20,000 shares

Question 4

4 significant acocunting policies

Answer 4

revenue recognition
inventory costing system
depreciation method
criteria for classification of investments
basis for consolidation

Question 5

what are integral parts to FS

Answer 5

BS, IS, CF, stockholder, note disclosure

Question 6

what does optional stuffs (not included in Disclosure) go?

Answer 6

supplementary note

Question 7

a risk of measurement uncertianty

Answer 7

unable to estimate uncollectible accounts with reasonable degree of accuracy

Question 8

risk and uncertainties disclosure

Answer 8

nature of operation
use of estimate
certain significant estimate
current vulnerability associated with CERTAIN CONCENTRATION

Question 9

non-monetary and monetary items explained

Answer 9

non: PPE, intangible, inventory
mon: cash, stock, bond, ar, ap,

Question 10

for liability, when inflation occurs, purchasing power _____ if the item is ______

Answer 10

gain/ monetary libality

Question 11

what are included in gen and admin fee

Answer 11

insurance
accounting./ legal fee
office salary

Question 12

what are included in selling exp

Answer 12

sales commision
ads
freight out

Question 13

how to calculate NI

Answer 13

sales revenue
- expense
- income tax

Question 14

equation to think about when solving inventory problems

Answer 14

BG + COGM (or purchased) -ED = COGS

Question 15

treatment of estimated loss/ gain on discontinued operation

Answer 15

loss = immediately recognized
gain = recognized the year of disposal

Question 16

treatment of employee payroll deduction in charitable contribution

Answer 16

removed from charitable contribution

Question 17

multi-step income statement

Answer 17

SR
-COGS
= GP
- Op exp
= OP income

+- non-op
= income before tax

• tax
  = income from continuing

+- discontinued op (net)
= Net Income

+- net OCI
= Comprehensive Income

Question 18

warranty obligation is monetary or non monetaru

Answer 18

non manetory

Question 19

Revenue = 500,000
Research exp = 100,000
Research grand = 150,000

How much balance for without restriction
How much balance for with restriction

Answer 19

without 500,000
with 50,000

Question 20

split interest arrangement

Answer 20

= benefits of donation are split btw chariable org and nonchariatble beneficiaries

Question 21

direct bequest

Answer 21

= gift nade thru donor’s will, transferring assets directly to the charity after the donor’s death

Question 22

how is Contributed Service is recorded ( in any situation?)

Answer 22

only jobs required specialized skill
mng/admin exp or program exp
contribution revenue

Question 23

difference btw management exp and program exp

Answer 23

management = back office cost
program = cost directly related to carrying out biz

Question 24

pledge is recognized as revenue at the inception of asset

Answer 24

false, disclosed but not recognized
recognized when conditions are satisfied

Question 25

variance power

Answer 25

recipient has the authority to decide how donation will be used

Question 26

2 things to consider to decide if the donation goes to contribution revenue or not

Answer 26

1) recipient has varience power 2) the beneficially directly related to recipient? if either 1 or 2 is met, contribution revcenue

Question 27

Flow of transfered asset to NFP

Answer 27

1) is recipient or beneficient is specified? if no, it will be treated as contribution revenu if yes,,, 2) NPO and beneficiary financially related?? yes = contribution revenue no = liablity

Question 28

investment has to re-evaluated to ___ (journal entry too)

Answer 28

FV investment net unrealized gain on investment

Question 29

100,000 earned in Scholarship endowment, but scholarship is not paid yet. how to journal entry

Answer 29

Dr. Net Assets Released from Restriction out = amount leaving from WITH Rist Cr. Net Assets with Donor Restriction in = amount entering WITHOUT rist

Question 30

earnigns from investments is increase in

Answer 30

net asset

Question 31

gift is NOT treated as contribution revenue when,,,1,2,3

Answer 31

1, exhibition 2, preserved 3, used to sell to get new collection

Question 32

where do we add "Gain or Loss on sale of long term asset" in IS

Answer 32

income before tac ( non operating)

Question 33

do loss from foreign currency transaction on Bonds (principle + interest accrued) should be reported at the year end?

Answer 33

yes transaction G/L on both principal and accrued interest should be reported

Question 34

what accounting is used under FASB and GASB

Answer 34

FASB: full accrual GASB: modified accrual

Question 35

how does equity is classified under GASB and FASB

Answer 35

GASB: net investment incapital, restricted, unrestricted FASB: with/ without donor restriction

Question 36

Can internal designation increase net asset with donor restriction

Answer 36

no, internal designation cannot affect any donor related account

Question 37

2 ways to classify expense

Answer 37

1) functional vs natural (by program and by kinds of exp) 2) program vs supporting (main biz vs mng, fundraise expense)

Question 38

how should unconditional pledge received by non gov NFP that will be collected over more than one year?

Answer 38

pledge receivable, at PV cf, follow FASB, full accrual

Question 39

Investment earnings on endowment with restriction can classfied as

Answer 39

investment income WITHOUT donor restrictino

Question 40

when conditions for pledge are satisfied but cash yet to be paid, journal entry

Answer 40

contribution receivable contribution revenue with donor restriction

Question 41

Endowment received at $1,000,000 investment appreciatino 200,000 investment income 50,000 enowment spent -200,000 net asset at Year End

Answer 41

1mil + 200k + 50k - 200 k = 1,050,000

Question 42

Donation received to invest in a property is classed as what in CF

Answer 42

Financing

Question 43

Borrowed 500, which is spent to buy a truck. CF?

Answer 43

in flow as Fin, out flow as Inv