Wiley CPAexcel Exam Review April 2017 Study Guide: Financial Accounting and Reporting

The Wiley CPAexcel Study Guide: Financial Accounting and Reporting arms CPA test-takers with detailed text and skill-building problems to help identify, focus on, and master the specific topics that may need additional reinforcement to pass the FAR section of the CPA Exam. This essential study guide: Covers the complete AICPA content blueprint in FAR Explains every topic tested with 1,299 pages of study text, 752 multiple-choice questions, and 73 task-based simulations in FAR Organized in Bite-Sized Lesson format with 217 lessons in FAR Maps perfectly to the Wiley CPAexcel online course; may be used to complement the course or as a stand-alone study tool

Table of Contents:
About the Authors xi About the Financial Accounting Professors xiii Welcome to Financial Accounting and Reporting xv Conceptual Framework and Financial Reporting 1 Financial Accounting Standards Board (FASB) 2 Role and Standard-Setting Process 2 FASB and Standard Setting 2 Accrual Accounting 6 Financial Statements 12 Financial Accounting Standards Codification 17 Conceptual Framework of Financial Reporting by Business Enterprises 21 Objectives and Qualitative Characteristics 21 Assumptions and Accounting Principles 24 Constraints and Present Value 28 Fair Value Framework 31 Fair Value Framework—Introduction and Definitions 31 Recognition and Measurement 35 Inputs and Hierarchy 38 Disclosure Requirements 40 International Financial Reporting Standards (IFRS) 44 IASB Accounting Standards 44 IASB Framework 49 IFRS for SMEs 52 IFRS—General-Purpose Financial Statements 55 General-Purpose Financial Statements 62 Balance Sheet/Statement of Financial Position 62 Income Statement 70 Statement of Comprehensive Income 76 Statement of Changes in Equity 80 Statement of Cash Flows 83 Sources and Uses of Cash 83 Operating, Investing, and Financing Activities 86 Operating Cash Flows—Indirect Method 90 Notes to Financial Statements 105 Notes to Financial Statements 105 Risks and Uncertainties 111 Subsequent Events 116 Evaluating Financial Statements 119 Ratios—Liquidity/Solvency and Operational 119 Ratios—Profitability and Equity 123 Consolidated Financial Statements 126 Introduction to Consolidated Financial Statements 126 Consolidating Process 130 Consolidation at Acquisition 130 Consolidation Subsequent to Acquisition 137 Consolidation Less than 100% Ownership 142 Intercompany (I/C) Transactions and Balances 147 Intercompany I/C Transactions and Balances—Introduction 147 Intercompany (I/C) Inventory Transactions 150 Intercompany (I/C) Fixed Asset Transactions 159 Intercompany (I/C) Bond Transactions 170 IFRS—Consolidations 178 Combined Financial Statements 183 Variable Interest Entities (VIEs) 185 Exit or Disposal Activities and Discontinued Operations 187 Public Company Reporting Topics (SEC, EPS, Interim, and Segment) 192 U.S. Securities and Exchange Commission (SEC) 192 SEC—Role and Standard-Setting Process 192 SEC Reporting Requirements 195 Earnings per Share 200 Introduction to Earnings per Share 200 Basic Earnings per Share 204 Diluted Earnings per Share 208 Earnings per Share and IFRS 218 Segment Reporting 219 Interim Financial Reporting 224 Interim Reporting Principles 224 Interim Reporting—Details and IFRS 228 Special Purpose Frameworks 233 Cash, Modified Cash, Income Tax 233 Private Company Council 237 Select Financial Statement Accounts 241 Cash and Cash Equivalents 242 Cash 242 Bank Reconciliations 244 Receivables 247 Accounts Receivable—Accounting and Reporting 247 Uncollectible—Direct Write-Off and Allowance 250 Allowance—Income Statement and Balance Sheet Approach 252 Notes Receivable 256 Criteria for Sale of Receivables 260 Factoring, Assignment, and Pledging 263 Notes Receivable—Impairment 266 Inventory 268 Introduction to Inventory 268 Periodic Inventory System and Cost-Flow Assumption 272 Perpetual Inventory System and Cost-Flow Assumption 279 Evaluation of FIFO and LIFO 283 Dollar-Value LIFO 286 Subsequent Measurement of Inventory 290 Gross Margin and Relative Sales Value Method 294 Retail Inventory Method 297 Dollar-Value LIFO Retail 301 Inventory Errors 303 Losses on Purchase Commitments 305 Inventory and IFRS 307 Property, Plant, and Equipment 309 Categories and Presentation 309 Capitalized Costs 310 Valuation 312 Interest Capitalization Basics 315 Interest Capitalization Limits 318 Post-Acquisition Expenditures 323 Non-Accelerated Depreciation Methods 325 Accelerated Depreciation Methods 328 Natural Resources 332 Impairment—Assets for Use and Held-for-Sale 336 Impairment and IFRS 341 PPE and IFRS 343 Nonmonetary Exchange 346 Commercial Substance 346 No Commercial Substance 350 Nonmonetary Exchanges and IFRS 353 Investments 354 Introduction—Equity and Debt Investments 354 No Significant Influence 361 No Significant Influence 361 Cost Method and Transfers Between Classifications 367 IFRS—Investments 370 Significant Influence—Equity Method 374 Equity Method 374 IFRS—Equity Method 380 Investor Stock Dividends, Splits, and Rights 382 Impairment of Debt and Equity Securities 385 Intangible Assets—Goodwill and Other 387 Introduction to Intangible Assets 387 Goodwill 392 Research and Development Costs 399 Software Costs 402 Intangibles and IFRS 406 Payables and Accrued Liabilities 409 Current Liabilities 409 Specific Current Liabilities 413 Costs and Expenses 416 Costs and Expenses 416 Compensated Absences 420 Contingencies, Commitments, and Guarantees (Provisions) 422 Contingent Liability Principles 422 Examples of Contingent Liabilities and Additional Aspects 425 IFRS—Contingencies 428 Long-Term Debt (Financial Liabilities) 430 Notes Payable 430 Bonds Payable 436 Bond Accounting Principles 436 Bond Complications 440 Bond Fair Value Option, International 443 Modification and Debt Retirement 446 Refinancing Short-Term Obligations 446 Debt Retirement 448 Troubled Debt 450 Debt Covenant Compliance 457 Distinguishing Liabilities from Equity 462 Equity 466 Owners’ Equity Basics 466 Stock Issuance 475 Preferred Stock 480 Treasury Stock 483 Dividends 488 Stock Dividends and Splits 492 Dividend Allocation 495 Stock Rights, Retained Earnings 499 Book Value per Share 503 Select Transactions 507 Revenue Recognition 508 Point of Sale and Installment Method 508 Cost Recovery and Franchise Fees 513 Contract Accounting 517 Deferred Revenue 524 Deferred Revenue Principles 524 Specific Deferred Revenues 529 Deferred Compensation Arrangements 533 Pension Principles, Reporting 533 Pension Expense Basics 538 Pension Expense, Delayed Recognition 541 Pension Plan Reporting, International 550 Postretirement Benefits 553 Stock Compensation (Share-Based Payments) 559 Stock Options 559 Stock Awards 566 Stock Appreciation Rights 570 Income Taxes 573 Income Tax Basics 573 Permanent Differences 576 Temporary Differences 578 Tax Accrual Entry 584 Tax Allocation Process 588 Valuation Allowance for Deferred Tax Assets 593 Uncertain Tax Positions 596 Net Operating Losses 599 Accounting Changes and Error Corrections 606 Types of Changes and Accounting Approaches 606 Retrospective Application 610 Prospective Application 613 Accounting Errors—Restatement 616 Business Combinations 620 Introduction to Business Combinations 620 Acquisition Method of Accounting 625 Introduction to Acquisition Method of Accounting 625 Determining the Cost of the Business Acquired 629 Recognizing/Measuring Assets, Liabilities, and Noncontrolling Interest 633 Recognizing/Measuring Goodwill or Bargain Purchase Amount 638 Post-Acquisition Issues 641 Disclosure Requirements—Acquisition Method 645 Recording Business Combinations 647 IFRS—Business Combinations 658 Financial Instruments 661 Financial Instruments Introduction 661 IFRS—Financial Instruments 664 Financial Instruments Disclosures 669 Derivatives and Hedging 672 Derivatives Introduction 672 Hedging Introduction 677 Fair Value Hedges 682 Cash-Flow Hedges 685 Foreign Currency Hedges 690 Effectiveness and Disclosure 692 IFRS—Hedging 697 Foreign Currency Denominated Transactions 700 Introduction and Definitions 700 Import Transactions 705 Export Transactions 708 Foreign Currency Hedges 711 Introduction to Forward and Option Contracts 711 Natural (Economic) Hedge 716 Hedging Forecasted Transactions and Firm Commitment 720 Hedging Asset/Liability, Available for Sale, and Foreign Operations 724 Speculation and Summary 727 Conversion of Foreign Financial Statements 729 Introduction to Conversion of Foreign Financial Statements 729 Conversion Using Translation 731 Conversion Using Remeasurement 734 Remeasurement, Translation, and IFRS 738 Leases 740 Background, Operating Leases 740 Capital Lease Basics 743 Direct Financing Leases 748 Sales-Type Leases, International 752 Additional Aspects of Capital Leases 757 Depreciation, BPO, and Residuals 759 Capital Lease Examples 763 Sale Leasebacks and Disclosures 774 State and Local Governments 781 Not-for-Profit Accounting and Reporting 782 Introduction to Types of Not-for-Profit Entities and Standard Setting 782 Financial Reporting 784 Donations, Pledges, Contributions, and Net Assets 792 Special Issues—Recent Developments 799 State and Local Government Concepts 802 Introduction to Governmental Organizations 802 GASB Concepts Statements 805 Fund Accounting 811 Measurement Focus Basis of Accounting 817 Budgetary Accounting 822 Encumbrance Accounting 825 Deferred Outflows and Deferred Inflows of Resources 830 Net Position and Fund Balance 835 Governmental Funds 839 Proprietary Funds 856 Fiduciary Funds 861 Format and Content of Comprehensive Annual Financial Report (CAFR) 881 The Comprehensive Annual Financial Report 881 Determining the Financial Reporting Entity 896 Major Funds and Fund-Level Reporting 900 Deriving Government-Wide Financial Statements from Fund-Level Financial Statements 902 Typical Items and Specific Types of Transactions and Events 908 Interfund Transactions, Construction Projects, and Infrastructure 908 Long-Term Liabilities Other Than Bonded Debt 914 Terminology and Nonexchange Transactions 918 Special Items—Recent Developments 928 Special Industries: Healthcare and Colleges 935 Healthcare Organizations 935 Colleges and Universities 941 Multiple Choice Questions 945 Task-Based Simulations 1183 Index 1287

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