U.S. GAAP
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U.S. GAAP
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25 Questions

1. Either does not have equity investors with voting rights or lacks sufficient financial resources to support its activities. Primary beneficiary must consolidate the VIE. The primary beneficiary is the entity that has the power to direct the activitie

2. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.

3. Impairment losses recognized in income statement and cost basis is reduced. If held-to-maturity - subsequent changes are not recognized. If available-for-sale - subsequent income is included in OCI.

4. Two Step Test: (1) test for recovery: compare carrying value to undiscounted future cash flows (2) calculate impairment: difference between carrying value and fair value. Reversal of impairment losses is only permitted for assets held for sale.

5. Characterized as having commercial substance and lacking commercial substance. Commercial substance (accounted for at fair value and all gains are recognized). Lacking commercial substance (gains are only recognized when boot is received). Losses are

6. Comparative financial statements not required. SEC requires comparative financial statements (2 B/S - 3 other). Cumulative effect is an adjustment to beginning retained earnings to the earliest prior period presented.

7. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.

8. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.

9. Finite life intangibles - two step process: compare carrying amount to undiscounted cash flows - then if carrying amount exceeds cash flows - impairment amount is the difference between carrying amount and fair value of asset. For indefinite life - c

10. Slight variation from year-end reporting.

11. Percentage of completion and completed contract method allowed.

12. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.

13. No impracticality exception for error corrections.

14. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.

15. Entities cannot apply the FASB conceptual framework to specific accounting issues

16. The subsequent event evaluation period extends through the date that the financial statements are issued (public companies) or the date that the financial statements are available to be issued (all other entities). Subsequent events are classified as

17. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.

18. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale

19. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.

20. Entities have two choices when accounting for gains and losses: (1) recognize on the income statement in period incurred (2) recognize in OCI in the period incurred and then amortize to pension expense using the corridor approach.

21. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.

22. Bank overdrafts are excluded from cash and classified as financing cash flows.

23. Funded status is reported of an overfunded pension plan is reported in full as a noncurrent asset. Underfunded plans are reported as current - non-current - or both.

24. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.

25. Effective interest method is required - unless the straight-line method is not materially different from the effective interest method. Amortization is done over the contractual life of the bond.

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