(Financial Accounting & Reporting) Flashcards
7 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 (Financial Accounting & Reporting) flashcards as text
Under ASC 360, an asset group is tested for impairment when events indicate the carrying amount may not be recoverable. The impairment loss equals:
Answer: Carrying amount minus fair value
Once it is determined that carrying amount exceeds undiscounted future cash flows, the impairment loss is measured as carrying amount minus fair value.
Which of the following is reported as a component of other comprehensive income (OCI)?
Answer: Unrealized gain on available-for-sale debt securities
Unrealized gains and losses on available-for-sale debt securities are recorded in OCI until the securities are sold or impaired.
A company declares a 10% stock dividend when it has 200,000 shares outstanding at $5 par and a market price of $18. The credit to paid-in capital in excess of par is:
Answer: $260,000
Stock dividend shares = 20,000; market value = $360,000; par credited = $100,000; excess = $360,000 − $100,000 = $260,000.
Under ASC 606, the core principle requires revenue to be recognized:
Answer: To depict the transfer of promised goods or services in an amount that reflects the consideration the entity expects to receive
ASC 606's core principle is to recognize revenue in a manner that depicts the transfer of goods or services for the consideration the entity expects to be entitled to.
When a company changes from LIFO to FIFO inventory costing, the change is reported as:
Answer: A prior period adjustment net of tax to retained earnings
A change in inventory method is an accounting principle change that requires retrospective application, with a cumulative catch-up adjustment to opening retained earnings.
The straight-line method of amortizing bond discount results in:
Answer: Equal interest expense in each period
Under the straight-line method, a constant dollar amount of discount is amortized each period, producing equal interest expense in every period.
Deferred tax liabilities arise when:
Answer: Tax expense exceeds taxes currently payable
A deferred tax liability exists when taxable income is less than book income in the current period, meaning taxes will be higher in future periods.