CPA Review - My Gaps

Record loss on disposal based on excess of previously recorded impairment loss. Gains on disposal do not reverse impairment losses.

When a component is classified as discontinued operations, all losses from that component for the the year are reported as discontued operations, not just the date from classification

Balance Sheet: Current Q-end, End of Prior YE, Optional: Same Q if seasonal effects
Income Statement: Current Q, YTD (current fiscal year), Same periods prior year
Cash Flows: YTD, Prior YTD, Optional: Trailing 12 months
Statement of Equity: Not required, but material changes must be disclosed in notes, Optional: Trailing 12 months if there's seasonality

P: Prior Service Costs
U: Unrealized Gains on AFS Securities and Cash Flow Hedges
F: Foreign Currency Translation
I: Instrument-specific Credit risk

When an OCI item becomes realized, it is reclassified into net income and must be disclosed.

Cost Method: Record at cost
Par: reverse original APIC-C/S upon purchase and upon reissuance credit the APIC-C/S and issue like normal C/S except crediting T/S instead of C/S

Used when issuing multiple classes of stock (e.g., common and preferred) for a lump-sum.

Multiply # of shares × FV per share for each class to get relative fair value

Allocate total proceeds based on each class’s proportion of total fair value

Last Year's Ending inventory amounts are cumulative. So you take the reporting year's BB or last year's EB (same thing) to get the change you need to apply retrospectively. The difference is what you apply for the retrospective change in Retained Earnings.

Gains on sales of assets or investments should be allocated immediately, recognized in full in the period they occur

ROA: Net Income/ Avg Assets
ROE: Net Income/ Avg Equity
ROS: EBIT/ Sales

- Make sure to add back after tax interst expense because NI is already after tax
- Calculate dilutive effect indiviudally for each potentially dilutive option

If depreciation estimate or method changes on or before YE, we use the new method for that reporting year's depreciation

- Amortization is pro-rated based on remaining useful life.
- If legal defense costs are capitalized later, amortize separately over remaining life of the patent.
- Do not retroactively adjust original amortization.

- Finite-life intangibles: Test when triggering event occurs; compare carrying amount vs. recoverability (undiscounted CFs)
- Indefinite-life intangibles: Test at least annually; compare carrying amount vs. fair value

- If a sale contract exists, subtract the residual (agreed sale) value from purchase price
- Amortizable cost = Purchase price – Residual value
- Amortize over the useful life or benefit period

ARO = PV = Face Amount/ (1+ r)^n

Accretion Expense = Current ARO x Rate
Accretion Expense is added to the ARO liablity every period
Total Accretion Expense = Face Amount - BB ARO

Credit risk: Disclosure required if material

Market risk: Disclosure is encouraged but not required

HTM: Amortized cost > Present value (PV) of expected cash flows

AFS: Amortized cost > FV

They are recorded in Other Comprehensive Income (OCI) and accumulated in Accumulated Other Comprehensive Income (AOCI) in equity.
Credit-related losses are recognized in Net Income, not OCI.

Yes — unless realized or reclassified, they remain in AOCI in Year 2.

When the fair value > PV of expected cash flows, the entire difference between amortized cost and PV is considered credit loss and recorded in net income, not OCI.

The total recognized credit loss is capped at the difference between amortized cost and fair value. The excess goes to OCI unless FV is > PV of Expected Cash Flows

It is reported as an unrealized loss in OCI, unless fair value > PV of expected CFs — in that case, the investor has the option to sell at fair value, which limits the credit loss.

Impairment = Amortized Cost – Present Value of Expected Future Cash Flows
Impairment Triggers differ

Fair value changes: Adjust investment to FV; unrealized gains/losses go to net income

Dividends received: Record as dividend income, not as investment income (no equity method used)

A 30% payout ratio means the company pays 30% of net income as dividends, and retains the remaining 70% for reinvestment or other uses.

They represent the cumulative temporary differences that will reverse in future periods.
➤ Ending DTA/DTL = Future deductible/taxable amounts × applicable tax rate
➤ Do not base ending balances on just current-year changes — use total future reversals.

DTAs and DTLs are reported net if they relate to the same tax jurisdiction and the entity has the legal right to offset.

- Post-2017 NOLs (from 2018 onward): Limited to 80% of taxable income starting in 2021
- Pre-2018 NOLs: Can still offset 100% of taxable income (no 80% limit)

FASB (Financial Accounting Standards Board) Sets GAAP for not-for-profit and private sector entities

GASB (Government Accounting Standards Board) Sets GAAP for state and local governments

When a restriction is satisfied (e.g., purpose fulfilled), funds are reclassified from net assets with donor restrictions to without donor restrictions

At the same time, the related expense is incurred, reducing net assets without donor restrictions

➤ Net effect = zero on net assets without donor restrictions

- Unrestricted contributions → Operating activities
- Cash received to finance long-lived assets (e.g., building) → Financing activities

Recipient: Organization that directly receives the funds

Beneficiary: Entity or group that ultimately benefits from the funds

C/S holders receive the same percentage as preferred on their par value

Fully Participating: Remaining dividends split pro rata based on par value of all shares

Partially Participating: C/S gets any excess only up to a fixed limit

Preferred shareholders get only their fixed dividend

Common shareholders receive all remaining dividends

Forward or Call Option (Seller retains control). Seller has right to purchase asset or seller has no obligation.

--> treat as a lease.

Treat as a financing arrangement (seller retains control and receives financing from customer).

Treat as a lease (customer is likely to return the asset; seller retains control).

Treat as a sale with a right of return.

Treat as a financing arrangement (customer will likely return asset at above-market value).

Treat as a sale with a right of return.

CAR IN BIG in consolidation accounting stands for:

C: Common Stock (subsidiary)
A: Additional Paid-In Capital (subsidiary)
R: Retained Earnings (subsidiary)
I: Investment in Subsidiary (parent’s investment account)
----> Make sure to make the proper adj (income, dividends) before eliminating
N: Non-controlling Interest
B: Balance Sheet Fair Value Adjustments
I: Identifiable Intangible Assets not previously recorded on sub's books
G: Goodwill (or Gain on Bargain Purchase)

A conditional promise (e.g., a donor promises to give only if others contribute) is not recognized as revenue until the condition is substantially met.

Donor contributions where the NFP shares benefits with other beneficiaries (e.g., individual income beneficiaries).

The NFP receives benefits over time or at the end of the arrangement.

Example: Charitable remainder trust – donor gives assets; non-charitable beneficiary receives income; NFP receives remaining assets later.

Accounts Receivable

Temporary differences of $100,000 resulted in taxable income of $200,000 for Year 2. At December 31, Year 2, Quinn had cumulative taxable differences of $70,000. The temporary differences for the current year at 100k should be used to calculate this year's deferred tax expense. The cumulative 70k includes prior differences which were netted to that number.

Should include changes in stockholders' equity and details on significant asset and liability accounts.

Equity Method: Dividends reduce the investment account (they're a return of investment).

Fair Value Method: Dividends are recorded as dividend income; no impact on the investment account. Debit to Cash

If short-term debt is refinanced using cash proceeds from equity issuance, it is classified as long-term.

This is because the debt is settled using a long-term form of financing (equity).

When fair value exceeds book value of the investee’s net assets, the parent must allocate the excess to specific assets (e.g., depreciable or amortizable).

This results in the parent recording additional expense (e.g., depreciation or amortization), which reduces equity method income.

Depletion Base = Acquisition Cost + Development Costs + Restoration Costs - Residual Value

The total tax rate on taxable income, including federal, state, foreign, and other applicable taxes.

Reflects the blended rate after considering all jurisdictions and tax arrangements.

Use 12 as the denominator when applying an annual interest rate.

The numerator is the number of months the expenditure was outstanding up to the current date

Total Interest revenue (or expense) = Total payments over the life of the note minus the present value (principal) at issuance.

Reflects the time value of money on discounted notes.

Functional classification (on the statement of activities): Groups expenses by purpose — e.g., program services, fundraising, management & general.

Natural classification (in the notes): Groups expenses by type — e.g., salaries, rent, utilities.

When a partnership incorporates, assets and liabilities are contributed at fair value.

The difference between net assets contributed (at FV) and the par value of stock issued is recorded as Additional Paid-In Capital (APIC).

Present Value of Note Payable = Annuity Purchase Price

Because the note represents what the company owes today, in value, for the future payments it will make.

Payments due after year-end within a year remain current liabilities as of the balance sheet date.

However, if any portion is refinanced on a long-term basis after year-end but before financial statements are issued, it may be reclassified as a long-term liability under GAAP.

Not all costs should be classified as program or support expenses.

Some items (e.g., upgrades or renovations) are capitalized, not expensed, similar to commercial accounting.

These costs improve or extend the life of an asset and should be recorded as assets, not functional expenses.

Retained earnings is never credited in equity transactions. It’s only debited when there’s a loss on stock reacquisition or retirement. Gains from those transactions are credited to APIC, not retained earnings.

Current maturity refers to the portion of long-term debt due within the next 12 months. It’s the principal portion of the payment (i.e., the amortized amount), calculated as the lease payment minus the interest expense.

Recognized subsequent event: The condition existed as of the balance sheet date → adjust the financial statements.

Nonrecognized subsequent event: The condition arose after the balance sheet date → disclose only, no adjustment.

Interim reports are meant to provide timely updates, so they are prepared using less due diligence and estimation precision than annual reports.

A split-interest agreement is when a donor contributes assets to a not-for-profit, but the benefits are shared between the NFP and other beneficiaries.
The NFP recognizes contribution revenue equal to the net amount it expects to control:
→ Fair value of the contribution - Present value of estimated payments to other beneficiaries.

Stock dividends impact components of stockholders' equity but result in no net change to total SHE.

Retained earnings decreases, and common stock + APIC increase by the same amount.

Small stock dividend (<20–25%): Record at fair value.

Large stock dividend (≥20–25%): Record at par value.

RE is always reduced by stock dividends.

Stock splits do not affect any equity accounts — just increases in shares and decreases in par value per share

Gains and losses are reported as increases or decreases in net assets without donor restrictions, unless restricted.

Reclassification: When a donor restriction is met, reclassify from net assets with donor restrictions to without donor restrictions.

Expense recognition: When the related cost is incurred (e.g., cash paid), reduce net assets without donor restrictions to reflect the resource outflow.

There are separate EPS calculations for:

Continuing operations

Discontinued operations

Both are shown on the income statement, and used to compute total EPS.

Pretax income refers to pretax financial statement income

Life insurance premiums are not a deductible expense and the proceeds are not taxable income (permanent differences)

When a change in accounting principle is inseparable from a change in estimate, the entire change is treated as a change in estimate.

Therefore, it is handled prospectively, not retrospectively.

If an asset has no alternative use or is not suitable for its typical purpose, it should not be recorded as if it were in typical use.

If fair value cannot be determined, the asset cannot be recognized at fair value in the financial statements.

Total expense in a year for an Asset Retirement Obligation (ARO) includes:

Depreciation expense on the asset

Accretion expense on the ARO liability

Add both to get total ARO-related expense for the period.

For major ongoing fundraising activities that are central to the mission, the NFP reports:

The gross amount received as contribution revenue

The fair value of the premium (e.g., flowerpot given to donor) as a fundraising expense

Under U.S. GAAP, significant non-cash investing and financing activities (e.g., issuing common stock for land) must be disclosed in the footnotes or a separate schedule, even though they don’t appear on the face of the cash flow statement.

Remember to record depreciation before you dispose the asest

When an asset is disposed of with no proceeds, remove its original cost and accumulated depreciation from the books.
The loss equals the net book value (cost – accumulated depreciation), since no value was received. loss fills the gap as the plug in the journal entry

Nonrecognized subsequent events only need disclosure if excluding it would make the financial statements misleading

Finance Lease: Interest = Operating cash outflow, principal = financing cash outlfow
Operating Lease: Entire payment = operating cash outflow

Bank Adjustments ("DO"):
D = Deposits in Transit (add)
O = Outstanding Checks (subtract)


Book Adjustments ("BINS"):
B = Bank Collections (add)
I = Interest Income (add)
N = NSF Checks (subtract)
S = Service Charges (subtract)

No. If the check is still physically held and hasn’t been mailed or delivered, it should not be deducted from the book balance

100% of the subsidiary’s assets and liabilities are included in the consolidated balance sheet regardless of the ownership percentage, as long as the parent has control (usually >50%)

For the income statement, 100% of the subsidiary’s revenues and expenses earned after the acquisition date are included in consolidation.

The subsidiary’s equity accounts (including retained earnings at acquisition) are eliminated in consolidation. Only the parent’s equity and the NCI are reported in the consolidated equity section.

For revenues and expenses of the subsidiary, the consolidated financial statements include only the amounts earned from the acquisition date onward.
The eliminated balances remain on each respective's company's accounts just eliminated for consolidation.

Book Value Per Share = Common Shareholders' Equity/ Common Shares Outstanding
Where:
Common Shareholders’ Equity = Total Equity − Preferred Stock (at the greater of liquidation value, call price, or par value)−Cumulative Preferred Dividends in Arrears

Loss = Guarantee - actual quantity purchased

Accrued expenses are expenses incurred but not paid so they are classified as a current liability

A financial instrument is defined as cash, foreign currency, demand deposits, ownership interests (like stocks), or contracts that create rights or obligations to receive or deliver cash or other financial assets.

A disclosure of change in estimate is only required if
1. It is reasonably possible the estimate will change in the near future
2. The effect of the change would be material.

We recognize the expense at the present value of the obligation in the year it is incurred.

The discount rate is essentially the interest rate used to convert future cash flows or earnings into their present value.

Undiscounted cash flows is a total sum of future payments without considering when they will be paid. So like the face amount.

Discounted cash flows refers to the present value of future payments

Interest earned is basically free money, so it’s credited to the account.
Service charges reduce the balance and should be debited.

Intercompany sales and COGS are always eliminated in consolidation.

If inventory with intercompany profit is still on hand at period-end, the unrealized profit is eliminated from ending inventory by eliminating it from ending inventory.

When that inventory is sold to a third party, the intercompany profit is realized and removed from the purchasing company’s COGS.

Let's say Company P sells to S. S sells 60% of that inventory to another party while 40% still remains in their ending inventory. 40% of the intercompany profit is reduced from S's ending inv. 60% of the intercompany, the realized portion is deducted from COGS. Multiply the eprcentages by the interocmapny profit not S's Sales or cogs.

In consolidated financial statements, intercompany transactions are treated as if they never occurred, so only third-party sales and COGS are recognized.

Settlement before first issuance → accrue/adjust liability
Settlement after issuance and before reissuance→ no accrual, possible disclosure only

When the loss is probable and estimable, the expected loss must be recorded in full. We don’t prorate the loss, accrue it the period it becomes probable and estimable.

Cash Overdrafts decrease cash

Checks not mailed yet and still in our physical posession it should be addd back to cash.

The original capitalization of that patent and the legal fees associated should all be expensed.

The shares should still be weighted when multiplying it by the stock split. So for shares issued in April still weight those shares from april to december regardless if we are calculating wasco for the year 2.

Interest paid and received --> Operating
Dividends received --> Operating

If NBV > Undiscounted Cash Flows --> Impairment Exists
Impairment = FV - CV

Programming revenue is generated through fees

Support is through donations or pledges

Assets and liabilities are measured at fair value on the acquisition date. If a better fair value estimate is determined within the one year measurement period, adjustments can be made during the measurement period.

Must account for extra depreciation in consolidation entries

Stock dividends are to all stockholders.

No, stock splits do not change % of ownership

Investments themselves are board-designated unless stated otherwise, so income from them goes to net assets without restrictions

If a change in entity (e.g., acquisition) occurs after Year 4 (in Year 5) but before Year 4 financials are issued, it is disclosed in Year 4 F/S but prior periods (Years 3 and 4) are not restated until Year 5 financials are released.
So yes change in entity results in restrospective restatement but only when the year of change's statements are released.

There should be an adjustment to beginning retained earnings of the earliest period presented is a one-time cumulative catchups.

EARLIEST PERIOD PRESENTED

Accounting errors should restate the accounts impacted themselves if prior years are presented.
Prior years not presented: Adjust beginning retained earnings of the earliest year presented.

Retiring Treasury shares means removing the stock entirely
- Remove the original Common Stock and APIC - CS
- Then remove T/S at what it was recorded originally
- APIC-T/S or RE is a plug

Dr. Common Stock
Dr. APIC - C/S
Cr. Treasury Stock

Plug :Dr or Cr. APIC-T/S
Plug :Dr. RE

The estimated amount of warranty repairs is the warranty expense. The warranty expense is not an adjustment. Actual repairs made are a debit to the warranty liablity account

- Issuance costs reduce the intial carrying value of a bond.
- Issuance costs are combined with the discount or premium.
- The total amount (discount + issuance costs or premium - issuance costs) is amortized over the bond's term.
- Amortization increases interest expense (for discount + issuance costs) or reduces it (for premium - issuance costs).
- Cash debited in intial bond entry should be net of issuance costs

Average Accumulated Expenditures = Costs Incurred/2 <-- This gives a simplified average to use to calculate interest based on the provided rates

When calculating dollar-value LIFO over multiple years, you use the previous year’s base layer to determine any new layers. The total inventory is the original base layer plus all the new layers added over the years.

If future payments are expected to be collected or paid, unearned revenue and expenses are recorded at their present value.

The entire intercompany gain must be eliminated in consolidation, regardless of the parent’s ownership percentage. Ownership percentage does not affect the elimination of intercompany gains because the consolidated financial statements treat the parent and subsidiary as a single economic entity.

Percentage is really only relevant for income and dividend distribution. And excess of FV for depreciation.

It is the current periods temporary differences x the future enacted tax rate.

when there is another party that benefits from the money received, there is a recipeient beneeficary relationship

Financing

They are contributions with donor restrictions.

No it is not. Purpose of statement of cash flows is to provide information about a customer cash payments and receipts, not it's income abilities.

ISSUED SHARES do not take into account treasury stock. Issued shars are simply the common shares issued.

Cr. Contracts Receivable when cash is collected in excess of billings.
Debit Contracts Receivable when you bill the customer (amount billed but not yet collected).

Level 2 Fair value

True!

1. List each expenditure and the date it was made.
2. Determine the number of months (or fraction of the year) each expenditure was outstanding during the year.
For example, if $200,000 was spent in January, it was outstanding for 12 months. Denominator is always 12 regardless of when you're capitalizing interest. Even if project starts in April and calculating interest on June 30, still use 12. 3. Multiply each expenditure by the fraction of the year it was outstanding. Weighted Amount = Expenditure x Month Oustanding/12 4. Add all the weighted amounts together this is your AAE

Digging hole for new building --> Capitalize Building
Razing an old building --> Capitalize Land
Deferred maintainence --> Capitalized to Building, not expensed.

NO. R&D costs are always expensed

Residual Value exists --> Amortization Expense = (Intangible Cost - Residual Sale Value)/Lower of legal life or useful life
The intangible capitalization does not deduct the residual value, it's capitalized at its full cost.

Present Value = Future Amount x PV Factor
Future Amt = Present Value/PV Factor

Detachable stock warrants are a separate instrument recorded as APIC - Warrant that is found by subtracting from the B/P using FV's. The Discount on the B/P is equal to the APIC - Warrant

Nondetachable warrants are grouped with Bonds Payable

Minority's interst in subsidiary income is added back in operating cash flow

Change in inventory, not purchases, affects cash flow

It is a contraasset account. Decreases to the acount increase the net book value of the security. Therefore in cash flow,s decreases to the account should be subtracted back while increases are added back.

DTA's and DTL's are netted on the balance sheet

Yes, interst incurred from special order goods held for sale can be capitalized.

We record the service expense or the asset at the FV of the stock received. If that FV is not available we use the FV of the services or the asset.

- Capitalizing/depreciating fixed assets instead of expensing them in cash basis
- Accruing income taxes instead of only expensing if cash paid
- Recording loans and interest instead of only recording if cash paid
- Capitalizing inventory instead of only recording if cash paid for inventory (record an asset)
- Reporting investments at fair value

Only the contributing partner's account is affected with the asset netted with the liability in their account

All depreciation methods, excluding double declining balance, use salvage value to find the depreciation base.

Yes, for long-term liabilities like notes payable or bonds, the interest expense typically changes each year because the outstanding balance (also called the carrying amount) changes over time

It includes broad, consistence accounting methods and principles a company uses to prepare its F/S. This includes measurement bases, depreciation methods, amortization of intangibles, revenue recognition policies, etc.

It does not include composition (breakdown of types of fixed assets owned)

Recognize income for the full year using the new percentage. Dividends received unless recieved before % change, should be recorded using the new %.

The restructuring gain/loss is only the difference between the carrying amount of the liablity and the FV of asset trasferred.

Any adjustments to FV of the asset are separate gains/losses.

Cash Disbursements per Books=(Bank Statement Disbursements)−(Outstanding Checks from Previous Month)+(Outstanding Checks from Current Month)

You can use the PV factor of an ordinary annuity for 9 periods at the same rate.

If interest payments are reduced (e.g., from $10k to $7k), use the lower amount ($7k) to calculate present value.

The price that would be received when selling an asset or paid when transferring a liability in an orderly transaction between market participants.

Goodwill method is used when the implied value of the partnership is greater than its book value. This leads to an increase in the remainign partner's capital accounts.

Goodwill method never decreases a partner's account.

In retirement method using goodwill, calculate implied goodwill by dividing amount paid to retiring partner by implied percentage. The difference between this and total capital is implied goodwill. The goodwill is then allocated to all partners, including the one withdrawing, using P&L ratios. The withdrawing partner's capital should equal the payout.

No restricted cash is not a cash eequivalnet and should be reclassified out of accounts that hold cash and cash equivalents

Goods in transit from vendor - not on the book balance or the physical count (bc no mention invoice being received)

Goods billed & in transit to customers - Must be removed added back on book balance and the physical count (billed means inventory removed)

Adjust the equipment to what it was orginally on P's books, including A/D. Remove the gain. Adjust depreciation to match what it should be.

3 Conditions that all must be met making it an exception are:
1. The donated artifacts are intended to be used in ways that benefit the public, such as being displayed in galleries, used for educational programs.
2. The collection is cared for, preserved, and protected by the organization.
3. The organization has a policy that requires any proceeds from the sale of donated items to be reinvested in other collection items or used to support the direct care of existing collections.
Org does not donated item as an asset or contribution revenue, but discloses it notes.

Incremental costs of obtaining a contract are costs that the company would not have incurred if the contract had not been obtained. These costs are capitalized and amortized over the life of the contract. For ex. commission related to obtaining a contract

Total Interest Revenue = Total Payments - PV of Note

Company should recort interest from jan to march 31st year 3 because it's a calendar year company so it already accrued interest from april 1 to dec year 2.

For revenues and expenses of the subsidiary, the consolidated financial statements include only the amounts earned from the acquisition date onward.

For equity, consolidated RE earnings includes the subsidiary's income excluding the NCI's interest.

Overstated, Overstated

Journel entry would be:

Dr. Interest Expense 10k
Cr. Cash 10k

Instead of

Dr. Interest Expense 9500
Dr. Premium 500
Cr. Cash 10k

Stock options are never included.

Contingent shares if all conditions are met are included in Basic EPS bc they are considered oustanding.

Dollar Value LIFO because inventory is in layers, so we are able to know the ending layer using price indexes.

Issuing rights is just granting the opportunity to buy stock in the future. It’s like giving a coupon or option.

Even if deferred tax asset is expected to reverse, if there is not taxable income it can't technically be applied so we need to acocunt for that by increasing income tax expense and increasing the valuation allowance. Whenever DTA is not expected to be realized, you must increase tax expense and the valuation allowance.

Effective Interest Rate = Interest Paid (including fees)/ Net proceeds (amount actually received)

The purchaser will pay for the bond purchase price and the accrued interest upfront on the purchase date.
The seller receives the interest but records it to Interst Payable. The seller will then give this interest back along with the newly accrued interest on the next interest payment date
Journal Entry:
Dr. Cash 209.5k
Cr. B/P 200k
Cr. Prem on B/P 2k
Cr. Interest Payable 7.5k

Total Temporary Difference

Allowance for Credit Loss: Use ending allowance

Depreciation - Use difference between A/D on Tax books vs GAAP Books

Permanent difference of how much of a dividend received is deducted
Ownership - Exclusion
0% to 19% - 50%
20% to 80% - 65%
80% to 100% - 100%

Yes up to 5000 of initial are tax deductible. Amount in excess of 5000 is amortized and creates a temporary difference.

Remote losses are disclosed when:

- Debt of others guaranteed
- Obligations under standby letters of credit
- Guarantees to repurchase receivables that have been sold

The excess amount is recognized in OCI unless FV > PV of cash flows to which 0 would be recognized in OCI. D not recognize FVA adj on top of the loss?

Stock dividends and stock splits are treated as if they occurred at the very beginning of the year

Capitalized Interest is the lower of

- Total actual interests costs incurred (including construction loan)
- Avoidable interest: based on weighted average of accumulated expenditures (AAE). AAE to the extent of construction loan x rate + remaining amount x weighted average rate from OTHER borrowings

A liquidating dividend is a return on capital which decreases APIC and not a distribution of RE. Regular dividends reduce RE. But liquidating happens when we used up RE.

General Fund: Ordinary operations; financed from taxes and general revenues (parks and rec, police and fire)

Special Revenue Fund: Revenues restricted/committed for specific activities (earnings and principal can be used), (ex. Road and Bridge fund)

Debt Service Fund: Accumulate resources and pay principal & interest on general obligation debt

Capital Projects Fund: Acquisition/construction of major capital assets

Permanent Fund: Earnings (not principal) used to support public programs

Internal Service Fund: Provides goods/services to internal departments (e.g., maintenance department for the government, printing dept.)

Enterprise Fund: Provides goods/services to external users (e.g., water, electric, sewer services); self-supported by user fees

Pension (and OPEB) Trust Fund: Pension and employee benefit plans

Investment Trust Fund: External investment pools, assets do not belong to government itself but to external participants like other local municipalities

Private Purpose Trust Fund: Assets legally restricted for individuals/private organizations

Custodial Fund (Agency Fund): Government has temporary custody of resources (e.g., taxes collected for other gov's like school district); holds resources temporarily and is not responsible for the debt

If there's a loss, no bonus is distributed. The loss is distributed based on P&L ratio.

Appropriation of dividends (or retained earnings) means setting aside part of retained earnings for a specific purpose by reclassifying it, but it’s optional. Because it's optional, it's not required.

It's reported separately from the revenues in the incomes statement and is reporting in discontinued operations.

We apply changes in estimates like depreciation from the point that you learn about the change

Only use individual pv factors when the interest payments vary or when calculating prinicpal amount to pay

Use PV of annuity factors for equal periodic interest payments.

Donated Treasury Stock @ FMV
APIC @ FMV

0 net change to SHE

The current liability portion of a lease liability is the amount of principal that is due to be paid within the next 12 months (the next year).

The cash payment includes both the interest expense and principal amount. Therefore, the principal amount is found by deducting the interest expense from the cash payment due in the next 12 months.

**Adjustments only made for operating**
- Add back depreciation/amoritzation expense
-Add/subtract unrealized gains and losses (including equity earnings)
- Add/subtract changes in operating assets/liabilities (including inventory)

For operating leases, especially when the lease payments are fixed and made regularly, the lessee typically records lease expense on a straight-line basis over the lease term. In this case, the expense is simply the monthly payment multiplied by the number of months in the period (e.g., 6 months × $115,000 = $690,000 for Year 1).

Lease Expense = Cash payment for lease
Amort on ROU = Amort on Lease Liab which is the difference between the cash payment and "interest expense"

Dr. Lease Expense
Dr. Lease Liab
Cr. Amort on ROU
Cr. Cash

sale of assets that were received in prior periods and whose sale proceeds were donor‑restricted to investment in long-lived assets are displayed

Entire proceeds would be an operating inflow

Tuition Revenue (including scholarships)
Less: Canceled Classes
Less: Tuition Refunds

**Scholarships represent tuition amounts that the university has effectively billed but that students do not pay out of pocket

Add: Gross Revenue
Less: Scholarships
Less: Tuition Waivers
Less: Other Allowances

Gross Healthcare Revenue = Total charges at established billing rates (including charity care)

Net Patient Service Revenue =
Gross Healthcare Revenue
Less: Charity Care
Less: Contractual Adjustments

Take parent's purchase price and divide by 80% to get total FV. Then NCI = FV * 20%
This represents NCI's investment. Add and reduce investment account based on income and dividends. Then you get your total noncontrolling interest equity which is added to parent's RE to get total SHE.

Consolidated RE includes only the parent's share of RE + parent’s share of the subsidiary’s net income after acquisition based on their ownership

The consolidated NI includes 100% of parent's subsidiary's revenues and expenses. However, this includes only the parent’s retained earnings plus the parent’s share of the subsidiary’s net income after acquisition (accumulated over time).

Equity securities can be classified as current or noncurrent on the balance sheet?

A sinking fund is special fund that a company or government sets up to accumulate money over time to repay a debt.

Cash set aside in one would be classified as restricted cash

Not classified as revenue at all. The NFP is acting as an agency

Intercompany Bonds
Sub:
Inv in Bonds
Cr. Cash

Parent:
Dr. B/P
Dr. or Cr. Premium or Discount
Cr. Inv in Bonds
Plug for gain or loss

No for operating, it records amortization on ROU
Yes for finance, it records the amortization differently and can call it depreciation expense

They wouldn't record anything

Proceeds from sale of T/S go to operating

T/S is a current asset
HTM and AFS are current or noncurrent assets.

Disclosure of Functional Expenses on the Statement of Activities along with the 3 F/S are required

Exchange revenue refers to revenue earned by a not-for-profit organization when it provides goods or services in an exchange transaction, rather than receiving a donation or contribution. Exchange revenue is always classified in revenue without donor restrictions

1. Patient Service Revenue = Gross Revenue - Charity Care - Contractual Adjustments
2. Other Operating Revenue: tuition from educational programs, cafeteria or gift shops, parking fees, donation of supplies
3. Non-operating revenues, gains, and losses - revenues and gains not related to hospital's primary operations; includes investment income

In consolidated statement of cash flows, when reconciling net income to net cash total consolidated income (including NCI) should be used.

No, dividends to a parent company are not reported in consolidated cash flow statement

The receivable from S is eliminated because it's a subsidiary. The receivable from is reported as receivable from an affiliate

Initial franchise fees are recorded at their PV and amortized over the life of the franchise agreement.

Proceeds from sale of assets that were received in prior periods (including marketable security) entirely go to investing cash inflow.

Stocks are always equity securities. Sometimes afs security. but if they a a stock afs security, unrealized gains always go to NI.

Assets held for sale are measured at the lower of their book value or NRV