CPA Unit F1- Financial Reporting

How to solve for Income from Continuing Operations

See photo; M1

Discontinued Operations (M1)

Solve for total loss then multiply by (1- tax rate)

Solving for Revenues in single step income statement (M1)

• do not include discontinued operations

Comprehensive Income

P- pension adjustments

U- unrealized gains and losses on AFS debt securities and hedges

F- foreign currency translation items

I- instrument specific credit risk

(5 commonly tested sources)

Periodic Filing SEC Forms (M2)

11-K, 10-K, 6-K

(8-Ks filed for major corp events only)

Treasury stock (affect of stockholders’ equity and EPS) (M3)

SHs Equity- decrease

EPS- increase

What are small and large stock dividends recorded at?

Small- fair value at declaration date

Large- par value

How to calculate retained earnings?

Photo (M4)

When should a liability for dividends payable be created? Date?

On date that board of directors formally approves dividend

Journal entry to record stock subscription

Subscriptions Receivable #

Common Stock Subscribed #

APIC #

How to convert foreign exchange rate to US dollars?

$1 (or respective amount given) / foreign exchange amount given

6 Held for sale criteria

1. Management commits to plan for sale

2. Activity available for sale in present condition

3. Active program to locate buyer

4. Sale of activity is probable and expected to be completed within year

Activity is actively marketed at reasonable sale price relative to its current fair value

1. no significant changes in plan to sell expected

2 methods to account for Treasury Stock

1. Cost Method

2. Legal method (par or stated method)

Cost Method for treasury stock

• treasury stock recorded and carried at reacquisition cost

• Recognize gain or loss at APIC when stock is retired or reissued

• Net income and RE will never be increased thru treasury stock transactions

legal (par/stated) method for treasury stock

• recognize gain or loss immediately under APIC when stock repurchase