Wiley CPAexcel Exam Review 2019 Study Guide: Financial Accounting and Reporting

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 Financial Accounting Standards Board (FASB) 2 Overview of U.S. GAAP 2 FASB and Standard Setting 2 Accrual Accounting 7 Financial Accounting Standards Codification 13 Conceptual Framework of Financial Reporting by Business Enterprises 17 Objectives and Qualitative Characteristics 17 Assumptions and Principles 20 Constraints and Present Value 24 Fair Value Framework 27 Fair Value Framework—Introduction and Definitions 27 Recognition and Measurement 31 Inputs and Hierarchy 34 Disclosure Requirements 36 International Financial Reporting Standards (IFRS) 40 IASB Accounting Standards 40 IASB Framework 45 IFRS for SMEs 48 IFRS—General-Purpose Financial Statements 51 Income Statement 58 Balance Sheet/Statement of Financial Position 64 Statement of Comprehensive Income 72 Statement of Changes in Equity 76 Statement of Cash Flows 79 Sources and Uses of Cash 79 Operating, Investing, and Financing Activities 82 Operating Cash Flows—Indirect Method 90 Notes to Financial Statements 98 Notes to Financial Statements 98 Risks and Uncertainties 104 Subsequent Events 109 Exit or Disposal Activities and Discontinued Operations 112 Evaluating Financial Statements 117 Ratios—Liquidity/Solvency and Operational 117 Ratios—Profitability and Equity 121 Consolidated Financial Statements 124 Introduction to Consolidated Financial Statements 124 Consolidating Process 128 Consolidation at Acquisition 128 Consolidation Subsequent to Acquisition 135 Consolidation Less than 100% Ownership 140 Intercompany (I/C) Transactions and Balances 145 Intercompany I/C Transactions and Balances—Introduction 145 Intercompany (I/C) Inventory Transactions 148 Intercompany (I/C) Fixed Asset Transactions 157 Intercompany (I/C) Bond Transactions 168 IFRS—Consolidations 176 Combined Financial Statements 181 Variable Interest Entities (VIEs) 183 Public Company Reporting Topics (SEC, EPS, Interim, and Segment) 185 U.S. Securities and Exchange Commission (SEC) 185 SEC—Role and Standard-Setting Process 185 SEC Reporting Requirements 188 Earnings Per Share 193 Introduction to Earnings per Share 193 Basic Earnings per Share 197 Diluted Earnings per Share 201 Earnings per Share and IFRS 211 Segment Reporting 212 Interim Financial Reporting 216 Interim Reporting Principles 216 Interim Reporting—Details and IFRS 220 Special Purpose Frameworks 225 Cash, Modified Cash, Income Tax 225 Private Company Council 229 Select Financial Statement Accounts 233 Cash and Cash Equivalents 234 Cash 234 Bank Reconciliations 237 Receivables 240 Accounts Receivable—Accounting and Reporting 240 Uncollectible—Direct Write-Off and Allowance 243 Allowance—Income Statement and Balance Sheet Approach 245 Notes Receivable 249 Criteria for Sale of Receivables 253 Factoring, Assignment, and Pledging 256 Notes Receivable—Impairment 259 Inventory 261 Introduction to Inventory 261 Periodic Inventory System and Cost-Flow Assumption 265 Perpetual Inventory System and Cost-Flow Assumption 272 Comparison: FIFO, LIFO, and Weighted Average 276 Dollar-Value LIFO 279 Gross Margin and Relative Sales ValueMethod 283 Retail Inventory Method 286 Dollar-Value LIFO Retail 290 Subsequent Measurement of Inventory 292 Inventory Errors 296 Losses on Purchase Commitments 298 Inventory and IFRS 300 Property, Plant, and Equipment 302 Categories and Presentation 302 Capitalized Costs 303 Valuation 305 Interest Capitalization Basics 308 Interest Capitalization Limits 311 Post-Acquisition Expenditures 316 Non-Accelerated Depreciation Methods 318 Accelerated Depreciation Methods 321 Natural Resources 325 Impairment—Assets and Assets Held-for-Sale 329 Impairment and IFRS 333 PPE and IFRS 335 Nonmonetary Exchange 338 Commercial Substance 338 No Commercial Substance 341 Nonmonetary Exchanges and IFRS 344 Investments 345 Introduction—Investments in Equity and Debt Securities 345 Investments in Equity Securities 350 Equity Investments at Fair Value 350 Equity Investments at Cost 354 Equity Investments using Equity Method Accounting 358 Investments in Debt Securities 366 Debt Investments at Fair Value 366 Debt Investments at Amortized Cost 375 Investor Stock Dividends, Splits, and Rights 379 Comparison and Transfers of Investments 382 IFRS—Investments in Equity and Debt 390 Intangible Assets—Goodwill and Other 395 Introduction to Intangible Assets 395 Goodwill 400 Research and Development Costs 407 Software Costs 410 Intangibles and IFRS 414 Payables and Accrued Liabilities 417 Introduction to Current Liabilities 417 Specific Current Liabilities 420 Asset Retirement Obligations and Environmental Liabilities 422 Payroll and Compensated Absences 425 Contingencies, Commitments, and Guarantees (Provisions) 429 Contingent Liability Principles 429 Examples of Contingent Liabilities 432 IFRS—Contingencies 435 Long-Term Debt (Financial Liabilities) 437 Notes Payable 437 Bonds Payable 443 Bond Accounting Principles 443 Bond Complications 447 Bond Fair Value Option, International 450 Modification and Debt Retirement 453 Refinancing Short-Term Obligations 453 Debt Retirement 455 Troubled Debt 457 Debt Covenant Compliance 464 Distinguishing Liabilities from Equity 469 Equity 473 Owners’ Equity Basics 473 Stock Issuance 482 Preferred Stock 487 Treasury Stock 490 Dividends 495 Stock Dividends and Splits 499 Dividend Allocation 502 Stock Rights, Retained Earnings 506 Book Value per Share 510 Select Transactions 513 Revenue Recognition 514 Five Steps of Revenue Recognition 514 Determining Transaction Price 519 Allocating Transaction Price 524 Special Issues in Revenue Recognition 527 Contract Modifications and Other Considerations 533 Accounting for Construction Contracts 541 Employee/Retiree Benefit Plans 548 Pension Principles, Reporting 548 Pension Expense Basics 553 Pension Expense, Delayed Recognition 556 Pension Plan Reporting, International 565 Postretirement Benefits 568 Share-Based Payments 574 Stock Options 574 Stock Awards 582 Stock Appreciation Rights 586 Income Taxes 589 Income Tax Basics 589 Permanent Differences 592 Temporary Differences 594 Tax Accrual Entry 600 Interperiod Tax Allocation Process 604 Valuation Allowance for Deferred Tax Assets 608 Uncertain Tax Positions 611 Net Operating Losses 614 Accounting Changes and Error Corrections 621 Types of Changes and Accounting Approaches 621 Retrospective Application 625 Prospective Application 628 Accounting Errors—Restatement 631 Business Combinations 635 Introduction to Business Combinations 635 AcquisitionMethod of Accounting 639 Introduction to Acquisition Method of Accounting 639 Determining the Cost of the Business Acquired 643 Recognizing/Measuring Assets, Liabilities, and Noncontrolling Interest 647 Recognizing/Measuring Goodwill or Bargain Purchase Amount 652 Post-Acquisition Issues 655 Disclosure Requirements—Acquisition Method 659 Recording Business Combinations 661 IFRS—Business Combinations 672 Financial Instruments 675 Financial Instruments Introduction 675 IFRS—Financial Instruments 678 Financial Instruments Disclosures 683 Derivatives and Hedging 686 Derivatives Introduction 686 Hedging Introduction 691 Fair Value Hedges 696 Cash-Flow Hedges 699 Foreign Currency Hedges 704 Effectiveness and Disclosure 706 IFRS—Hedging 710 Foreign Currency Denominated Transactions 713 Introduction and Definitions 713 Import Transactions 718 Export Transactions 721 Foreign Currency Hedges 723 Introduction to Forward and Option Contracts 723 Natural (Economic) Hedge 728 Hedging Forecasted Transactions and Firm Commitment 732 Hedging Asset/Liability, Available for Sale, and Foreign Operations 736 Speculation and Summary 739 Conversion of Foreign Financial Statements 741 Introduction to Conversion of Foreign Financial Statements 741 Conversion Using Translation 743 Conversion Using Remeasurement 746 Remeasurement, Translation, and IFRS 750 Leases 752 Background, Short-Term Leases, and Operating Leases 752 Finance Lease Basics 758 Finance Lease—Lessee 763 Sales-Type Leases—Lessor 769 Direct Financing Leases—Lessor 774 Sale-Leasebacks and Disclosures 780 Additional Aspects of Leases 785 Not-for-Profit Organizations 790 Introduction to Types of Not-for-Profit Entities and Standard Setting 790 Financial Reporting 792 Donations, Pledges, Contributions, and Net Assets 800 Special Issues—Recent Developments 807 Special Industries: Healthcare and Colleges 811 Healthcare Organizations 811 Colleges and Universities 817 State and Local Governments 821 State and Local Government Concepts 822 Introduction to Governmental Organizations 822 GASB Concepts Statements 825 Fund Accounting 831 Measurement Focus Basis of Accounting 837 Budgetary Accounting 842 Encumbrance Accounting 845 Deferred Outflows and Deferred Inflows of Resources 850 Net Position and Fund Balance 855 Governmental Funds 859 Proprietary Funds 876 Fiduciary Funds 881 Format and Content of Comprehensive Annual Financial Report (CAFR) 901 The Comprehensive Annual Financial Report 901 Determining the Financial Reporting Entity 916 Major Funds and Fund-Level Reporting 920 Deriving Government-Wide Financial Statements from Fund-Level Financial Statements 922 Typical Items and Specific Types of Transactions and Events 928 Interfund Transactions, Construction Projects, and Infrastructure 928 Long-Term Liabilities Other Than Bonded Debt 934 Terminology and Nonexchange Transactions 938 Special Items—Recent Developments 948 Index 957  

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