Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
42 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
What type of inventory do retailers typically have? |
Merchandise Inventory |
Ch 8 Inventory |
|
|
What type of inventory do manufacturers typically have? |
Raw Materials, Work in Process, and Finished Goods |
Ch 8 Inventory |
|
|
When are Goods in Transit recognized? |
Depending on the terms of the agreement, either when it is shipped (FOB Shipping point) or when it reaches the buyer (FOB Destination) |
Ch 8 Inventory |
|
|
Is the decrease in inventory recorded in a Sale with a Buyback agreement? |
Only if the risks and rewards have also been transferred in the sale. |
Ch 8 Inventory |
|
|
What is a onerous contract? |
If the market value drops below the committed price, a loss provision is recorded.
|
Ch 8 Inventory |
|
|
What is recorded when there is a decrease in market value after commitment to a onerous contract? |
Dr. Loss on purchase contract Cr. Liability for onerous contract |
Ch 8 Inventory |
|
|
How is a rebate (for inventory) recorded? |
A rebate is a reduction in the cost of inventory. |
Ch 8 Inventory |
|
|
Where is the cost of purchases and the cost of items sold recorded in a perpetual inventory system? |
directly into the inventory account (as the transaction happens) |
Ch 8 Inventory |
|
|
What is the formula for Cost of goods available for sale (Periodic inventory system)? |
The Purchases Account + beginningInventory = Cost of Goods Available for Sale
|
Ch 8 Inventory |
|
|
what is the formula for the cost of goods sold (Periodic inventory system)? |
Cost of Goods Available for Sale– ending Inventory = Cost of Goods sold |
Ch 8 Inventory |
|
|
What are the three cost formulas for inventory? |
Specific Identification, Weighted Average Cost, and FIFO |
Ch 8 Inventory |
|
|
When does there need to be an adjustment made to the inventory accounts? |
When the net realizable value is lower than the cost recorded. |
Ch 8 Inventory |
|
|
When must capitalization of PPE assets stop under IFRS and ASPE? |
Under IFRS,stop when the asset is ready to be used as intended, even ifit has not reached normal capacity levels. Under ASPE, when the asset is substantially complete and ready for productive use asdetermined by management in advance |
Ch 10 PPE |
|
|
If a cash discount is not taken on a PPE asset, how is it recorded? |
Asset cost should be reduced and the foregone discount is recognized as a financing or interest expense.
(unless discount wasn't in company's best interest) |
Ch 10 PPE |
|
|
How is the cost to be recorded in a non-monetary exchange (for shares) measured under IFRS and ASPE? |
Under IFRS, the cost is based on the fair value of the asset acquired. Under ASPE, its the value or either asset or shares. |
Ch 10 PPE |
|
|
What is the diminishing balance method of depreciation? |
2* (100/ estimated useful life)* carrying amount |
Ch 11 Depreciation, Impairment, Disposition |
|
|
What is the unit of production method of cost allocation? |
(cost less residual value/useful life in units)= dep exp/hr * usage
|
Ch 11 Depreciation, Impairment, Disposition |
|
|
What are the two models used for measuring capital asset impairment? |
Cost Recovery Impairment model (ASPE) and Rational Entity model (IFRS)
|
Ch 11 Depreciation, Impairment, Disposition |
|
|
Cost Recovery Impairment Model |
asset is impaired only if an entity cannot recover the asset’s carrying amount from using it;recoverability test is performed |
Ch 11 Depreciation, Impairment, Disposition |
|
|
Cost Recovery Impairment Model, incl. recoverability test |
If the undiscounted future cashflows are less than the carrying amount, the asset is said to be impaired. The impairment loss is the amountby which the assets carrying amount exceeds its fair value |
Ch 11 Depreciation, Impairment, Disposition |
|
|
What is the journal entry for an asset impairment loss? |
Dr. Loss on Impairment Cr. Acc Impairment loss |
Ch 11 Depreciation, Impairment, Disposition , slide 79 |
|
|
What is the rational entity model? |
carrying amount is compared directly with the assets “recoverable value”– If the recoverable amount isgreater than the carrying amount, then no impairment loss exists |
Ch 11 Depreciation, Impairment, Disposition , slide 88 |
|
|
What is the recoverable value in the rational entity model? |
The higher of the assets value in use and fair value less disposal costs |
Ch 11 Depreciation, Impairment, Disposition |
|
|
What are 3 characteristics of intangible assets? |
Lack physical substance, non monetary, idenitfiable |
Ch 12 Intangible Assets |
|
|
When is goodwill established? |
When the purchase price exceeds the bookvalue of the assets and liabilities |
Ch 12 Intangible Assets |
|
|
Under the FV-NI method, realized gains andlosses are reported in which section of the multi-step income statement? |
Non operating revenues and expenses |
Quiz #5 |
|
|
The rational entity model can only be usedunder which accounting standard? |
IFRS |
Quiz #5 |
|
|
If an expense extends the life ofan asset or improves its productive capacity, it is considered what kind ofexpense? |
|
Quiz #5 |
|
|
Under whichaccounting standard do investment properties not exist? |
|
Quiz #5 |
|
|
Proportional Method of PPE Valuation? |
Find the % increase in value of the asset and apply that % to the original cost |
Ch 10 PPE |
|
|
How is depreciation calculated under the revaluation model? |
carrying amount divided by remaining life. |
Ch 10 PPE |
|
|
Under the revaluation model , where are the gains above carrying amount recorded? |
revaluation gains are recorded in OCI |
CH 10 PPE |
|
|
What is the gross method of revaluation? |
Accumulated depreciation is removed with a credit upon revaluation |
Ch 10 PPE |
|
|
What is the proportional method of revaluation? |
The % increase in value is applied to both the asset and the accumulated depreciation |
Ch 10 PPE |
|
|
Effective interest method |
used to calculate interest rev; where int rev= PV(ammorized bond)*market rate when bought* portion of yr since last int pmt |
Ch 9 |
|
|
how do you calculate the interest/ cost of a bond when it is bought between pmt periods? |
use fractional N |
Ch 9 |
|
|
FV- NI Methods: What is it and where are adjustments recorded? |
adjustment to investment to directly reflect fair value. Unrealized Gains/ Losses are recorded in the other revenues and expenses. |
Ch 9 |
|
|
FV- OCI |
identical to FV- NI but gains/losses are recorded in OCI, and commissions are not expensed separately. |
Ch 9 |
|
|
Equity Method |
Adjusting the investment account with a debit for the net income x % ownership, and credit with % ownership x dividends |
Ch 9 |
|
|
What happens if there is Inflation when using the FIFO method when accounting for inventory? |
inventory costs up, COGS down, maximize revenue and retained earnings |
Ch 8 |
|
|
What is the gross profit method of inventory cost |
find gross profit to calculate COGS, and find ending inventory. |
Ch 8 |
|
|
What is the inventory method of inventory cost |
calculate COGAFS and divide by retail value of COGAFS to get a cost ratio. Calculate COGS by multiplying the ratio with sales, to find ending inventory. |
Ch 8 |
