Far Chapter 2 Out Of Chapter

Front 1

when do differed revenue and expenses occur

Back 1

when cash is received or expended but is not recognized in financial statements. T

Typically results in recognition of liability or prepaid expense.

Front 2

what does the recognition of an accrued asset represent?

Back 2

revenue recognized or earned through the passage of time but not yet paid to the entity.

Front 3

accrued liabilities

Back 3

represents expense recognized or incurred through the passage of time nut not yet paid to the entity.

Front 4

differed credits

Back 4

represent future income contract for and or collected in advance.

Front 5

How is unearned revenue treated in franchise accounting

Back 5

1: the pv of any contact amount relating to future services to be performed should be recorded as unearned.

2: unearned revenue is recognized as revenue once substantial performance has occurred.

Front 6

Franchise accounting, how is earned revenue from initial franchise fee treated.

Back 6

Record revenue when all material conditions of the sale have been substantially performed.

Front 7

In franchise accounting what what does substantial performance mean.

Back 7

Means that the following conditions have been met:

1: franchisor has no obligation to refunds any payment,
2: initial service required of the franchisor has been performed

3: all conditions of the sale have been met

Front 8

What are intangible assets

Back 8

Are long lived legal rights and comparative advantages developed or acquired by an enterprise.

they are typically used in operations of a business and provide benefit over several accounting. Periods.

Front 9

How are intangible assets classified

Back 9

They can be identifiable or not specifically identifiable.

1: identifiable are Patrons copyrights and franchise.
2: not specifically identifiable is good will.

Front 10

How are purchased intangible assets recorded

Back 10

They are recorded at cost.

registration fees and legal fees are not included as they are capitalized.

Front 11

How are legal fees and registration fees to acquire intangible assets treated

Back 11

They are capitalized

Front 12

How is cost internally developed intangible assets treated

Back 12

They are expensed against income in the period incurred because gaap does not allow capitalization of R&D expenses.

Front 13

What are the exception to capitalizeing cost associated with intangible assets.

Back 13

Cost that is specifically identifiable can be capitalized. Cost such as:

1: legal fees and related cost in the successful defenses of the asset.
2: registration and consulting fees
3: other direct cost to secure the asset.

Front 14

What dwtermins the classification of intangible assets.

Back 14

The economic life and severability

1: the classification depends on whither the economic life is can be determined or is indeterminable.

2: depends on whether the asset can be separated from the entity such as patent or is inseparable such as a trade mark or goodwill.

Front 15

When capitalizing cost for acquired intangible assets what should be done

Back 15

The cost should be recorded in an arm length transactions as assets.

Cost may be determined by either fair value of consideration given or property acquired, which ever is more evident.

the cost of an unidentifiable intangible asset is measured as the difference between the the acquisition and the sum of the cost assigned to identifiable assets acquired less liability assumed. (the cost of indefinable assets should not include goodwill)

The cost is measured by:
1: the amount of cash disbursed or the fair value of assets distributed.

2: the pv of the amounts to be paid for the liability incurred.

3: the fair value of considerations received for stock issued

Front 16

How are cost of intangible assets amortized

Back 16

The cost should be amortized by systematic charges to income over the estimated period benefited.

note patents are amortized over the shorter of the remaining legal or estimated life

Front 17

How is goodwill amortized

Back 17

Goodwill is not amortized. The appropriate approach is to test for impairment annually.

Front 18

How is a patient amortized

Back 18

Amortized over the shorter of estimated life or legal life

Front 19

What is the approach when an intangible assets becomes impaired.

Back 19

Write down the asset and recognize the impairment

Front 20

What is the approach if the useful life of an intangible assets reduced or extended

Back 20

The remaining net book value is amortized over the new life

Front 21

Under gaap how are finite life intangible assets treated

Back 21

They are reported at cost less amortization and impairment. Whereas nonfinite intangibles are reported at cost less impairment

Front 22

What is goodwill

Back 22

It is the representation of intangible resources and elements contacted with an entity. Examples include marketing , management expertise's.

it basically means capitalized excess earning power.

Front 23

What are the ways to calculate goodwill

Back 23

Acquisition method: the excesses of the acquired entity fair value over the fair value of the entity net assets

Equity method: the exces of the stock purchase over the fair value of the net assets acquired.

Front 24

What is the approach for maintaining goodwill

Back 24

Cost related to maintaining, developing, restoring, are expensed and not capitalized. Also goodwill internally generated is also expensed and not capitalized.

Front 25

Under us gaap how is R&D cos treated

Back 25

R&d cost is expensed unless it has an alternate. Future use. If so then it is capitalized. Also r&d cost incurred on behalf of other is also capitalized.

Front 26

How is the cost for software developed to be sold treated.

Back 26

Expense up to the point of technological feasibility, which is established. Upon the completion of a working model or a detailed program design.

after feasibility established you capitalize the cost up to the point when the product is released for sale.

Front 27

Capitalized software cost. How is annual amortization determined

Back 27

Is is the grater of the percentage of revenue or the straight line method

Front 28

Amortization of software cost.

what is the % of revenue formula and when is it used

Back 28

It = total capitalized amount times current gross revenue/total projected gross revenue for the product.

it is compared to the straight line method and used to to depreciate software cost whn it is greater than the straight line method.

Front 29

Amortization of software. Cost

what is the straight line method and when is it used.

Back 29

It = the total capitalized Amount * 1/ estimated economic life.

it is compared to the % of revenue method and is used when it is the lager number.

Front 30

How often should intangibles be checked for impairment

Back 30

Checked at least annually or when changes indicate that the carrying amount may not be recoverable.

Front 31

What is the process for emulating good will impairment

Back 31

It us a two step process.

step 1: identify impairment by comparing the fair value of each reporting unit with its carrying. Amount including goodwill

step 2: measure amount of goodwill impairment loss by comparing Implied fair value with the carrying. Amount of that goodwill. To do this you do the following: