Under IFRS, income includes increases in economic benefits from:
A. increases in liabilities not related to owners’ contributions.
B. enhancements of assets not related to owners’ contributions.
C. increases in owners’ equity related to owners’ contributions.
Ni idea.
No está en mis apuntes
Es la B
Fairplay reported the information shown in Exhibit 1 related to the sale of its products during 2009, which was its first year of business:
Exhibit 1
Fairplay
Revenue USD1,000,000
Returns of goods sold USD100,000
Cash collected USD800,000
Cost of goods sold USD700,000
Under the accrual basis of accounting, how much net revenue would be reported on Fairplay’s 2009 income statement?
A. USD200,000
B. USD900,000
C. USD1,000,000
Es la B
Puse la C
Net revenue is revenue for goods sold during the period less any returns and allowances, or USD1,000,000 minus USD100,000 = USD900,000.
pex Consignment sells items over the internet for individuals on a consignment basis. Apex receives the items from the owner, lists them for sale on the internet, and receives a 25 percent commission for any items sold. Apex collects the full amount from the buyer and pays the net amount after commission to the owner. Unsold items are returned to the owner after 90 days. During 2009, Apex had the following information:
Total sales price of items sold during 2009 on consignment was EUR2,000,000.
Total commissions retained by Apex during 2009 for these items was EUR500,000.
How much revenue should Apex report on its 2009 income statement?
A. EUR500,000
B. EUR2,000,000
C. EUR1,500,000
Puse la B porque creai queestaba actuando como principal y no como agente ya que recibe todo mecano en la puta
Apex is an agent (consignment seller), not the principal. Under IFRS 15 / ASC 606, agents recognize net revenue equal to their fee/commission, not the gross sales price.
Even though Apex collects EUR 2,000,000 in cash, EUR 1,500,000 is a pass-through owed to the owners (consignors). Apex’s revenue is the 25% commission it retains: €500,000.
(Indicators of agent: no inventory risk, sells on behalf of another party, revenue is a commission.)
Under IFRS, a loss from the destruction of property in a fire would most likely be classified as:
A. continuing operations.
B. discontinued operations.
C. other comprehensive income.
A is correct,
A fire may be infrequent, but it would still be part of continuing operations and reported in the profit and loss statement. Discontinued operations relate to a decision to dispose of an operating division.
NO tenia nidea, no en mis primeros apuntes coño
A company with no debt or convertible securities issued publicly traded common stock three times during the current fiscal year. Under both IFRS and US GAAP, the company’s:
A. basic EPS equals its diluted EPS.
B. capital structure is considered complex at year-end.
C. basic EPS is calculated by using a simple average number of shares outstanding.
A is correct. Basic and diluted EPS are equal for a company with a simple capital structure. A company that issues only common stock, with no financial instruments that are potentially convertible into common stock has a simple capital structure. Basic EPS is calculated using the weighted average number of shares outstanding.
For its fiscal year-end, Sublyme Corporation reported net income of USD200 million and a weighted average of 50,000,000 common shares outstanding. There are 2,000,000 convertible preferred shares outstanding that paid an annual dividend of USD5. Each preferred share is convertible into two shares of the common stock. The diluted EPS is closest to:
A. USD3.52
B. USD3.65
C. USD3.70
Es la c
puse la a
añadí los preferred dividends
pero to el sentido si ya no son preferred sin o common
En el Diluted EPS
Usamos el método “if-converted”, que significa:
“¿Qué pasaría si las acciones preferentes se hubieran convertido en comunes?”
Si se convierten:
Ya no se pagan dividendos preferentes, porque dejan de existir esas acciones preferentes.
Se emiten más acciones comunes.
Por tanto, al simular esa conversión:
Añadimos de nuevo los dividendos preferentes al numerador (porque ya no se restan).
Añadimos las acciones nuevas al denominador.
The following information is available about a company for the current year:
Net income of $32 million
Weighted average number of common shares outstanding of 4.5 million
$15 million of 12% convertible bonds, convertible into 50,000 shares
200,000 options with an exercise price of $50 per share
Average market price of $80 per share during the year
Tax rate of 30%
The company’s diluted EPS is closest to:
A. $6.81.
B. $6.99.
C. $7.19.
Soy tonto, era la b
me dio un diluted eps mayor que el basic eps por lo que tenia que haber quitado lo de losbondís. no me fijé
The following financial information is available at the end of the year.
Share Information
Security Authorized Issued and Outstanding Other Features
Common stock 500,000 250,000 Currently pays a dividend of $1 per share.
Preferred stock, Series A 50,000 12,000 Nonconvertible, cumulative; pays a dividend of $4 per share.
Preferred stock, Series B 50,000 30,000 Convertible; pays a dividend of $7.50 per share. Each share is convertible into 2.5 common shares.
Additional information:
Reported income for the year $1,000,000
The diluted EPS (earnings per share) is closest to:
A. $2.91.
, Not Selected
Incorrect answer:
B. $2.93.
Correct Answer:
A. $2.91.
C. $3.08.
, Not Selected
Oceanaqua Apparel (OA) is a manufacturer of swimwear. Abbreviated common-size income statements and relevant industry data are presented below.
OA Common-Size Income Statement 2015 2014 2013
Net Revenues 100.0% 100.0% 100.0%
Cost of Sales 64.3 62.5 59.5
Gross Profit 35.7 37.5 40.5
Selling, General & Admin 23.5 23.2 25.5
Advertising 0.5 2.9 3.1
Operating Income 11.7 11.4 11.9
Interest Expense 1.8 2.2 3.8
Earnings Before Taxes 9.9 9.2 8.1
Taxes 2.0 2.0 1.9
Net Income 7.9 7.2 6.2
Swimwear Industry
Gross Profit Margin 38.4% 39.1% 40.7%
Net Profit Margin 7.1 6.8 6.1
Which statement about OA’s three-year financial performance is most accurate? OA’s:
A. effective tax rate has been holding steady at approximately 2%.
B. revenues per dollar of sales costs are falling over the time period.
C. profit margins indicate performance superior to the industry average.
Puse la a, es la b
Feedback
Based on your answer
Incorrect because the effective tax rate did not average 2% over the period. In the case of taxes, it is more meaningful to compare the amount of taxes paid with the amount of pre-tax income, then examine the causes for any differences in effective tax rates. Although taxes as a percent of sales has held steady at roughly 2%, OA’s corporate tax rate exceeded 20% each year.
Tax rate = Taxes/Earnings before taxes
2013: 1.9%/8.1% = 23.5%
2014: 2.0%/9.2% = 21.7%
2015: 2.0%/9.9% = 20.2%
soy gilipollsa. literalmente no lo leí
According to the converged accounting standards for revenue recognition, which of the following is the first of five steps in recognizing revenue?
A. Determine the transaction price
B. Identify the contract with the customer
C. Identify the distinct performance obligations in the contract
Answer Feedback: Correct because this is the first of five steps in recognizing revenue according to the converged accounting standard for revenue recognition. The converged accounting standard for revenue recognition describes the application of five steps in recognizing revenue:1. Identify the contract(s) with a customer2. Identify the separate or distinct performance obligations in the contract3. Determine the transaction price4. Allocate the transaction price to the performance obligations in the contract5. Recognize revenue when (or as) the entity satisfies a performance obligation.
Incorrect answer:
According to the converged standards for revenue recognition, which of the following might indicate that a seller has transferred control of an asset to a buyer at a point in time? The seller has:
A. legal title of the asset.
B. a present right to payment for the asset.
C. significant risks and rewards of ownership related to the asset.
Puse la c, es la B
Answer Feedback: Correct because the entity (seller) will recognize revenue when it is able to satisfy the performance obligation by transferring control to the customer. Factor to consider when assessing whether the customer has obtained control of an asset at a point in time: Entity has a present right to payment.
Incorrect answer:
A company entered into a 5-year construction contract with a total sales price of £3,000,000. The estimated total costs are £2,000,000 and the company incurred £500,000 actual costs in the first year. The company has extensive experience with similar types of contracts. Costs incurred provide an appropriate measure of progress toward completing the contract. Assuming it is highly probable that revenue will not be subsequently reversed, revenue recognized under the contract in Year 1 is most likely:
A. £500,000.
B. £600,000.
C. £750,000.
es la c
Answer Feedback: Correct because the standard states that for performance obligations satisfied over time (e.g., where there is a long-term contract), revenue is recognized over time by measuring progress toward satisfying the obligation. The standard refers to performance obligations satisfied over time and requires that progress toward complete satisfaction of the performance obligation be measured based on input method such as the one illustrated here (recognizing revenue based on the proportion of total costs that have been incurred in the period) or an output method (recognizing revenue based on units produced or milestones achieved). Accordingly, the company has incurred 25% of the total expected costs (£0.5m / £2.0m); and will thus recognize £0.75m (25% × £3.0m) in revenue in Year 1.
An analyst gathers the following information about a company for its fiscal year ended 31 December:
Net income $1,250,000
Preferred dividends declared and paid $120,000
Par value of 8% convertible bonds $750,000
Weighted average common shares outstanding 500,000
Income tax rate 30%
If the bonds are convertible into 30,000 common shares and there are no other potentially dilutive securities outstanding, reported diluted EPS is closest to:
A. $2.21.
B. $2.25.
C. $2.34.
es la A
Answer Feedback: Correct because when a company has convertible debt outstanding, the diluted EPS calculation also uses the if-converted method. Diluted EPS is calculated as if the convertible debt had been converted at the beginning of the period. Diluted EPS = (Net Income + After-tax interest on convertible debt – Preferred Dividends) / (Weighted average number of shares outstanding + Additional common shares that would have been issued at conversion); or = [$1,250,000 + ($750,000 × 8% × (1 – 0.30)) – $120,000] / (500,000 + 30,000); or = [$1,250,000 + $42,000 – $120,000] / (500,000 + 30,000); or = $1,172,000 / 530,000 = $2.21. In addition, it is possible that some potentially convertible securities are antidilutive (i.e., their inclusion in the computation would result in an EPS higher than the company’s basic EPS). Under IFRS and US GAAP, antidilutive securities are not included in the calculation of diluted EPS. Basic EPS = (Net income – Preferred dividends) / Weighted average number of shares outstanding = ($1,250,000 – $120,000) / 500,000 = $2.26. Because the diluted EPS is less than basic EPS, the securities (options) are not antidilutive and are included in the calculation of diluted EPS. Accordingly, reported diluted EPS is $2.21.
Incorrect answer:
Stock options issued by a company must be antidilutive when the:
A. options are outstanding for the entire fiscal year.
B. options’ exercise price is less than the average market price of the stock during the period.
C. options’ exercise proceeds could purchase more shares than would be issued through option exercise.
es la C
Answer Feedback: Correct because for stock options, diluted EPS = (Net income – Preferred dividends) / [Weighted average number of shares outstanding + (New shares that would have been issued at option exercise – Shares that could have been repurchased upon exercise) × (Proportion of the year during which the financial instruments were outstanding)]. If option proceeds purchase more shares in the market than what were issued by stock options, it indicates the exercise price is greater than the market price. As a result, the denominator decreases, increasing calculated diluted EPS to be above basic EPS.
A company’s diluted EPS calculation including a potentially dilutive security outstanding equals $2.53. Assuming basic EPS of $2.50, the company should report in its financial statements:
A. basic EPS of $2.53.
B. basic EPS and diluted EPS of $2.50.
C. basic EPS of $2.50 and diluted EPS of $2.53.
es la B
Answer Feedback: Correct because companies are required to report both basic and diluted EPS. Under IFRS and US GAAP, antidilutive securities are not included in the calculation of diluted EPS. Diluted EPS should reflect the maximum potential dilution from conversion or exercise of potentially dilutive financial instruments. Diluted EPS will always be less than or equal to basic EPS. Using the if-converted method resulted in diluted EPS of 2.53, which is greater than basic EPS of 2.50, therefore the securities are anti-dilutive and the effect of their conversion would not be included in diluted EPS. Therefore basic and diluted EPS is 2.50.
