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1047
INDEXA
Accelerated depreciation, 248 Accounting basis of, 47, 144
Cash to accrual conversion, 48 Accounting changes, 107
Interim reporting, 746 Accounting information
Qualitative characteristics of (SFAC 2), 981
Accounting methods Governmental, 803
Accounting policies, disclosure of, 136 APB 22, 912
Accounting Principles Board Opinions
APB 6 (Status of ARB), 908 APB 9 (Results of operations), 908 APB 10 (Various topics), 909 APB 12 (Various topics), 909 APB 14 (Debt), 909 APB 18 (Equity method), 910 APB 21 (Interest on NR and NP), 911 APB 22 (Disclosure of accounting policies), 912
APB 23 (Income taxes), 912 APB 26 (Debt extinguishment), 912 APB 28 (Interim financial reporting), 913
APB 29 (Nonmonetary transactions), 914
APB 30 (Results of operations), 916 Accounting Research Bulletins
ARB 43 (Various topics), 904 ARB 45 (LT construction contracts), 906
ARB 51 (Consolidated financial statement), 907
Accounting standards, see also FASB Interpretations
APB, 908 ARB, 904 SFAC, 981 SFAS, 916
Accounting theory, see also Statements of Financial Accounting Concepts, 37
Capital maintenance theory, 42, 985 Conceptual framework
Basic elements, 41 Cash flow information, 43 Components of, 39 Objectives of financial reporting, 39
Qualitative characteristics, 40 Recognition and measurement, 41
Accounts payable, 303 Accounts receivable, 295
APB 21, 911 Bad debt expense, 296 Ratios, 309 Sale of, with recourse, 55 Sales discounts, 295 Write-offs of, 296
Accrual basis, 820 Accrual basis of accounting, 48, 985
Conversion to, 49 Accrual of expenses, 841 Accruals, 48, 985
Accrued liabilities, 304 Errors in, 90
Accumulated other comprehensive income, 578
Acid-test (quick) ratio, 309 Acquisition cost
Fixed assets, 239 Intangible assets, 253 Inventory, 194
Advances from customers, 305 Agency funds, 816, 838 AICPA Content and Skills Specification Outlines, 28
Allowance method, 296 Amortization, 985
Bonds Premium/discount, 372
Computer software costs, 256, 931 Differential
Business combinations, 663 Effective interest method, 375 Equity method investments, 583
Intangibles, in general, 254 Leases
Capitalized leased assets, 450, 457 Initial direct costs, 442, 453 Lease bonus (fee), 442, 443 Leasehold improvements, 442
Pensions Unrecognized net gain/loss, 414, 933
Unrecognized prior service cost, 413
Straight-line method, 375 Annuities
Future value of, 351, 353 Present value of, 352, 353
Annuity contracts, 935 Annuity due, 353 Appropriations (budgetary), 824 Appropriations of retained earnings, 525
Assets, 983 Current, 136, 293, 904 Deferred tax, 483 Impairment of, 968 Infrastructure, 809 Intangible, 253
At-the-money, 717 Available-for-sale securities, 578, 582
Hedge accounting, 713 SFAS 115, 947
B
Bad debts, 296 Allowance method, 296 Direct write-off method, 296
Bank reconciliations, 293 Adjusting entries, 294 Four-column cash reconciliation, 294
Bankruptcy, corporate, 534 Bargain purchase option, 444, 921 Basic earnings per share, 528 Basis of accounting, 47, 48, 144
Accrual, 820 Modified accrual, 820
Basket purchase of fixed assets, 247 Benefits/years-of-service approach, 411
Bifurcation, 717 Blended component unit, 807 Bonds, 372
Amortization Effective interest vs. straight-line methods, 375
Issue costs, 375 Premium/discount, 372
Callable SFAS 78, 931
Convertible, 375 APB 14, 909 Induced conversions of, 931
Current portion, 303 Disclosure of long-term debt
SFAS 47, 927 Extinguishment of debt, 377 Impairment of, 401, 402
SFAS 114, 945 Intercompany transactions in, 663 Investments, 372, 576
SFAS 115, 947 Issued with detachable stock purchase warrants, 376 APB 14, 909
Journal entries for, 373 Payable, 372 Valuation example, 373
Bonus arrangements, 304 Bonus method (new partners), 765 Budgetary comparison schedules, 819, 830
Budgeting Fund accounting, 824
Business combinations Consolidated financial statements
Balance sheet Date of combination, 659
Eliminating entries, 665 Intercompany transactions, 662
Bond transactions, 663 Fixed asset transactions, 663 Inventory transactions, 662
Minority interest, 667 Subsequent to acquisition, 661
Example of, 663 Worksheet, 664
Consolidation Of majority-owned subsidiaries (SFAS 94), 936
Date of combination
COPYRIG
HTED M
ATERIAL
1048 Index
Purchase method, 659 Deferred tax effects, 491 Differential, 660, 666 Purchase method, 659 Statutory consolidation, 655
Business-type activities, 807
C
Call option, 717 Callable obligations
SFAS 78, 931 Callable preferred stock, 521 Capital expenditures, 247 Capital leases, 440, 450, 629, 922 Capital maintenance theory, 42, 985 Capital projects funds, 811, 831 Capitalization of interest cost, 239
Diagram of, 241 SFAS 34, 925
Cash, 293 Cash basis of accounting, 48
Conversion to accrual basis, 48 Cash collection recognition basis, 47 Cash flow hedge, 711 Cash flow information (SFAC 7), 43 Cash reconciliation (four-column), 294
Cash surrender value of life insurance, 589
Change in accounting estimate, 112 Changes in accounting principle
Income statement presentation, 131 Interim reporting, 746
Changing prices and financial reporting
SFAS 89, 936 Collateral, 303 College accounting, 873, 881
Financial statements, 882 College and University Accounting, 841
Common stock, 520 Comparative financial statements, 143, 904
Compensated absences, 308 SFAS 43, 926
Compensation cost, 950 Completed-contract method, 203 Completion-of-production recognition basis, 47
Component unit, 806 Composite depreciation method, 250 Compounding of interest, 351 Comprehensive annual financial report (CAFR), 806
Comprehensive bases of accounting, 144
Comprehensive income, 43, 130, 133 SFAS 130, 953
Computer software costs, 256 SFAS 86, 931
Conceptual framework, 39 Consignments, 202 Constant dollar accounting, 140 Contingencies
Compensated absences, 308
Definition, 305 Gains, 308 Liabilities/losses, 305 Litigation, 307 Recording and disclosing, 305 SFAS 5, 917
Contingent issuances of common stock, 533
Contributed capital SFAS 116, 949
Contributions SFAS 116, 949 To not-for-profits, 875
Convertible debt, 375 APB 14, 909 Induced conversions of (SFAS 84), 931
Convertible preferred stock, 520 Corporations
Bankruptcy, 534 Quasi reorganization, 535 Reorganization, 535
Cost adjusted for fair value method, 583
Compared to equity method, 583, 585 Cost flow assumptions, 194
Periodic, 195 Perpetual, 195
Cost flow methods, inventory valuation, 195
Direct costing method, 202 Dollar-value LIFO, 198 FIFO, 198 Gross profit method, 201 LIFO, 198 Long-term construction contracts, 203 ARB 45, 906
Lower of cost or market, 196 Market value method, 202 Moving average, 196 Relative sales value method, 202 Simple average, 196 Specific identification, 195 Standard cost method, 201 Variable costing method, 202 Weighted-average, 196
Cost method (Treasury stock), 522 Cost of goods sold, 194
Interim reporting, 746 Cost recovery method, 47, 51 Cost-sharing plans, 837 Cumulative preferred stock, 520 Current assets, 134, 904 Current cost accounting, 42, 142 Current financial resources measurement focus, 820
Current liabilities, 134, 303, 904 ARB 43, Chapter 3A, 904 SFAS 43, 926
Current market value, 42 Current ratio, 309 Curtailment, 935
D
Debt
Bad debts, 296 Convertible
APB 14, 909 Induced conversions of, 931
Extinguishment, 377 APB 26, 912
Impairment of, 401, 582, 945 Issued with detachable purchase warrants, 376, 909
Long-term, disclosure of, 927 Modification of terms, 398 Restructure, 398
SFAS 15, 924 Securities, 372, 576
SFAS 115, 947 Short-term obligations expected to be refinanced, 304 SFAS 6, 919
Debt service funds, 811, 833 Deferrals, 48, 985 Deferred compensation, 423 Deferred taxes
APB 23, 912 Business investments, 491 Changing tax rates, 488, 944 Deferred tax asset valuation allowance, 490
Deferred tax assets/liabilities, 483, 943 Balance sheet presentation, 495, 944
Retained earnings presentation, 495
Equity method investments and, 586 Financial statement presentation, 494, 944
Future taxable/deductible amounts, 485, 943
Interim periods FASB I 18, 914
Loss carryforwards/carrybacks, 493 Permanent differences, 481 Scheduling and recording deferred tax amounts, 484
SFAS 109, 943 Subsidiaries and, 492 Temporary differences, 482, 483, 492, 495, 943
Defined benefit pension plan, 410, 837, 935
Defined contribution pension plan, 410, 837, 932
Depletion, 253 Depreciation, 248
Accelerated, 248 APB 12, 909 Changes in, 251 Composite (group), 250 Fractional year, 251 Inventory, 250 Physical usage, 250 Straight-line, 248
Derivative financial instruments, 706 Bifurcation, 709 Definition, 707, 717 Disclosure, 715 Embedded, 709 Exclusions, 708
Index 1049
Fair value measurement, 707 Forward exchange contracts, 714 Glossary, 717 Hedging instruments, 707, 709
Cash flow hedge, 711 Fair value hedge, 710 Foreign currency hedge, 713
Inclusions, 708 Initial net investment, 718 SFAS 107, 942 SFAS 133, 958 SFAS 138, 959
Derived tax revenues, 821 Detachable stock purchase warrants, 376
Development stage enterprises, 140, 257
SFAS 7, 920 Differential
Business combinations, 660, 666, 669 Equity method investments, 583, 585
Diluted earnings per share, 530 Dilutive securities, 530 Direct costing, 202 Direct financing lease, 440, 443, 447, 923
Financial statement elements, 449 Direct write-off method, 296 Disclosure
Accounting policies, 136 APB 22, 912
Contingencies, 305 Depreciable assets (APB 12), 909 Financial instruments
Derivative, 715 Fair values of, 715
SFAS 107, 942 Fixed assets
Impairment of (SFAS 144), 968 To be disposed of (SFAS 144), 968
Interim (APB 28), 913 Leases, 456, 921 Loan impairments, 945 Long-term obligations (SFAS 47), 927
Pensions, 955 Related-party transaction
SFAS 57, 930 Securities (SFAS 115), 947 Segments, 753 SFAS 131, 953 Stock compensation (SFAS 123), 950
Discontinued operations, 132, 746 SFAS 144, 969
Discount on forward contract, 717 Discrete view, 746 Discretely presented component unit, 807
Disposals of fixed assets, 251 SFAS 144, 968, 970
Dividends, 523 Payable, 304 Received, 583, 585 Types of, 523
Dollar-value LIFO, 198 Donations, 482
SFAS 116, 949
Double-extension technique, 199
E
Earnings per share Basic, 528 Diluted, 530 SFAS 128, 951 Simple capital structure, 528 Weighted-average common shares outstanding, 528
Economic resources measurement focus, 820
Effective interest amortization method, 375
Elimination entries, 660, 665 Eligibility requirements, 821 Embedded derivative instruments, 709, 717
Employee stock ownership plan (ESOP), 537
Employers’ accounting for postemployment benefits (SFAS 112), 423, 945
Settlements and curtailments of defined benefit pension plans (SFAS 88), 935
Termination benefits (SFAS 88), 935 Encumbrances, 825 Endowment funds, 838 Enterprise funds, 812, 836 Environmental remediation, 919 Equity (net assets), 983 Equity method of accounting, 583
APB 18, 910 FASB I 35, 907, 909, 910
Compared to cost adjusted for fair value, 583, 584
Deferred tax effects, 586 Differential, 583 Intercompany transactions, 584, 662 Retroactive change to, 585
Equity securities, 520, 576 SFAS 115, 947
Error correction, 90, 93 Income statement presentation, 131
Escheat property, 838 Estimated warranty liability, 482 Exchange revenues, 808 Exchange transactions, 820 Executory costs, 921 Expected cash flow approach, 45 Expendable trust funds, 838 Expenditures, 825
Classification, 825 Expenses, 984 Extraordinary items, 131, 746, 808
APB 9, 908 APB 30, 916 Extinguishment of debt, 377
F
Factoring accounts receivable, 298 With recourse, 55, 299 Without recourse, 298
Fair value hedge, 707
FASB Interpretations No. 1 (Accounting changes to inventory), 911
No. 8 (ST obligations repaid prior to being replaced by a LT security), 920
No. 14 (Estimating contingent losses), 918
No. 18 (Interim income taxes), 914 No. 30 (Involuntary conversions), 916
No. 35 (Equity method), 907, 909, 910
No. 37 (Translation adjustment), 930 No. 39 (Offsetting of amounts related to certain contracts), 909
No. 46 (Consolidation of variable interest entities), 907
FASB Technical Bulletins TB 85-3 (Operating leases with scheduled rent increases), 924
Fiduciary funds, 837 Agency funds, 816, 837 Investment trust funds, 815, 838 Pension (and other employee benefit) trust funds, 815, 837
Private-purpose trust funds, 815, 838 Statement of changes in net assets, 816
Statement of net assets, 816 Financial instruments
Cash, 293 Derivative contracts, 943 Disclosures about fair value of, 715
SFAS 107, 942 Securities
Debt, 372, 576 Equity, 520, 576
Financial reporting, 38 Changing prices and SFAS 89, 936 Objectives of
SFAC 1, 981 Recognition and measurement, 41
SFAC 5, 981 Financial statements, 130
Accounting policies, 136 Balance sheet, 134
Accounts payable, 303 Accounts receivable, 295 Accruals, 48 Bonds payable, 372 Consolidated, 659 Current assets, 904 Current liabilities, 136, 303, 905 Deferred tax assets/liabilities, 495 Fixed assets, 239 Intangible assets, 253 Inventory, 194, 905 Investments, 576 Notes payable, 354, 911 Notes receivable, 354, 911 Retained earnings
Appropriations, 525 Stockholders’ equity, 519, 983
Combined financial statement, 674 Comparative financial statement, 143 Comprehensive income, 130, 133
1050 Index
Consolidated financial statements, 655, 663 ARB 51, 907
Constant dollar accounting, 140 Current cost accounting, 142 Development stage enterprise accounting, 140
Elements of financial statement, 41 SFAC 6, 982
Foreign currency financial statement, 792, 928
Fund, 811 Government-wide, 807 Income statement, 130
APB 9, 908 Bad debts expense, 296 Change in accounting principle, 131
Correction of an error, 131 Depreciation, 248 Discontinued operations, 132, 916 Earnings per share, 528, 530 Example of, 130, 133 Extraordinary items, 131, 916 Income taxes, 494 Investment income, 582 Unusual or infrequent items, 131
Interim financial statement, 746 APB 28, 913
Not-for-profit, 882, 884 Other comprehensive bases of accounting, 144
Personal financial statement, 739 Prospective financial information, 144
Recognition criteria (SFAC 5), 981 Retained earnings statement, 130
Appropriations of, 525 Dividends, 523, 906 Prior period adjustments
Deferred tax effects, 494 Retroactive change to equity method, 585
Statement of affairs, 534 Statement of cash flows, 619
Classification in, 620, 937 Direct presentation, 621, 939 Examples of, 623 Financing activities, 620, 628, 938 Indirect presentation, 621, 939 Investing activities, 620, 628, 937 Noncash investing and financing activities, 620
Objectives of, 619 Operating activities, 620, 626, 628, 938
Financing activities, 620, 628 Firm commitment, 718
Unrecognized, 713 First-in, first-out (FIFO) method, 198 Fixed assets, 239
Acquisition cost, 239 Basket purchase of, 247 Computer software costs, 256 Depletion, 253 Depreciation, 248 Disclosure of (APB 12), 909 Disposals of, 251
SFAS 144, 968 Expenditures, capital vs. revenue, 247
Impairment of, 251 SFAS 144, 968
Insurance on, 253 Intercompany transactions, 663 Interest capitalization
Diagram of, 241 SFAS 34, 925
Nonmonetary exchanges, 242 Diagram of, 243
Start-up costs, 255 FOB destination/shipping point, 202 Forecasted transaction, 712, 718
Foreign currency denominated, 713 Foreign currency hedge, 713 Foreign currency transactions, 704, 718
Foreign currency translation, 786 Foreign currency statements, 786 SFAS 52, 928
Forward contract, 718 Discount or premium on, 717
Forward exchange contracts, 714, 718, 930
Fractional year depreciation, 251 Franchise agreements, 52
SFAS 45, 927 Functional currency, 792, 928 Fund accounting (GASB 34), 806
Basis, 820 Budgetary accounting, 824 Fiduciary funds, 815, 837
Agency funds, 816, 837 Investment trust funds, 815, 837 Pension (and other employee benefit) trust funds, 815, 837
Private-purpose trust funds, 815, 838
Financial statements, 829 Conversion from fund FS to government-wide FS, 840
Fund, 811 Government-wide statements, 807
Governmental funds, 811, 825 Capital projects funds, 811, 826, 831
Debt service funds, 811, 833 General fund, 811, 824, 826 Permanent funds, 811 Special revenue funds, 811, 824, 830
Interfund transactions, 839 Investments, 840 Management’s discussion and analysis, 807
Measurement focus, 820 Nonexchange transactions, 820 Notes to the financial statement, 816 Proprietary funds, 812, 835
Enterprise funds, 812, 836 Internal service funds, 812, 835
Reporting entity, 806 Required supplementary information, 818
Special assessments, 835 Fund financial statements, 809
Balance sheet, 812, 829, 834 Conversion to government-wide FS, 840
Statement of cash flows, 817 Statement of changes in fiduciary net assets, 818
Statement of fiduciary net assets, 816 Statement of net assets, 815 Statement of revenues, expenditures, and changes in fund balances, 813, 833
Statement of revenues, expenses, and changes in fund net assets, 816
Futures contracts, 718
G
Gain, 984 Gain contingencies, 308, 918 General fund, 811, 824, 826 General-purpose governments, 806 Goods in transit, 202 Goodwill, 253
Amortization of, 482 Impairment, 255 SFAS 142, 965
Goodwill method (new partners), 765 Government reporting model, 805 Governmental Accounting Standards Board (GASB), 804
Governmental funds, 811, 825 Capital projects funds, 811, 831 Debt service funds, 811 Expenditure classification, 825 General fund, 811, 824, 826 Permanent funds, 811 Special revenue funds, 811, 824, 830
Government-mandated nonexchange transactions, 821
Government-wide financial statements, 807
Conversion from fund FS, 840 Statement of activities, 807, 810 Statement of net assets, 807, 808
Gross profit method, 201 Group depreciation method
SFAS 142, 250 Guaranteed residual value, 444
H
Health care entities, 873, 883, 885 Financial statements, 884
Health care guide, 883 Hedging, 704, 706, 709
Cash flow hedges, 711 Disclosure, 715 Fair value hedges, 710 Foreign currency hedges, 713 Forward exchange contracts, 714 SFAS 133, 958
Held-to-maturity securities, 577, 579, 582
SFAS 115, 947 Historical cost principle, 42
Index 1051
I
If-converted method, 532 Impairment
Of assets acquired with goodwill, 255 Of fixed assets, 251 Of goodwill
SFAS 142, 965 Of loans, 401
SFAS 114, 945 Of long-lived assets
SFAS 144, 968 Of securities, 582
Imposed nonexchange transactions, 821
Income determination, 47 Completed-contract method, 203 Cost recovery method, 47, 51 Installment method, 47, 50 Net realizable value method, 47 Percentage-of-completion, 47, 203 Real estate sales, 52, 54 Sales basis, 47, 54 Transactions approach, 47
Income taxes SFAS 109, 943
Induced conversions of debt SFAS 84, 931
Infrastructure assets, 809 Infrequent item, 131 Initial direct costs, 442, 453 Initial net investment, 718 Installment sales method, 47, 50, 909 Insurance
Cash surrender value of life insurance, 589
Loss account for fixed assets, 253 Intangible assets, 253
Acquisition of, 253 Amortization of, 254 Goodwill, 253 Impairment, 254
Integral view, 746 Intercompany transactions, 584, 662 Interest
Capitalization of, 239 Diagram of, 241
Compounding, 351 Interest methods of allocation, 46 Interfund transactions, 839 Interim reporting, 746
Discrete view, 746 Integral view, 746
Internal service funds, 812, 835 International Financial Reporting Standards (IFRS)
Basic concepts, 57, 61, 359, 402 Business combinations and consolidations, 675
Deferred taxes, 497 Derivative instruments and hedging activities, 717
Fixed assets, 258 Inventory, 207 Investments, 589 Monetary current assets and current liabilities, 310
Statement of cash flows, 629
Stockholders’ equity, 539 In-the-money, 718 Intrinsic value, 718 Inventory, 194
Acquisition cost, 194 Consignments, 202 Cost of goods sold determination, 194
Intercompany transactions in, 662 Items included in, 202 Losses on purchase commitment, 197 Periodic method, 195 Perpetual method, 195 Ratios, 202 Shipping items, 202 Valuation, see Cost flow methods
ARB 43, Ch. 4, 904 FASB I 1, 911
Inventory depreciation method, 250 Investing activities, 620, 627 Investment trust funds, 815, 838 Investments, 372, 576, 840
Income statement presentation, 582 Investment percentage, 576 Involving significant influence, 583
APB 18, 910 Not involving significant influence, 577 Cost adjusted for fair value method, 583
Example of, 579 Impairment of, 582 SFAS 115, 947
Involuntary conversions, 482 FASB I 30, 916
L
Last-in, first-out (LIFO)method, 198 Leasehold improvements, 442 Leases, 440
Bargain purchase option, 444, 921 Capital lease, 440, 450, 629, 923
Financial statement elements, 449 Contingent rentals, 921 Direct financing lease, 440, 443, 457, 923 Financial statement elements, 449
Disclosure requirements, 456 Executory costs, 921 Fair value of leased property, 921 Free rent/uneven payments, 441 Implicit interest rate, 921 Incremental borrowing rate, 921 Initial direct costs, 442, 453 Lease bonus (fee), 442 Lease term, 921, 939 Leasehold improvements, 442 Lessee, 441, 442, 450, 921 Lessor, 441, 443, 450, 921 Minimum lease payments, 444, 921 Operating lease, 440, 441, 923
Financial statement elements, 442 With scheduled rent increases, 924
Residual value, 444, 922 Sale-leaseback, 55, 453, 924 Sales-type lease, 55, 440, 923
Financial statement elements, 449
Security deposits, 442 SFAS 98, 939 Summary, 456
Lending activities, 357, 358, 359, 377 Liabilities, 983
Contingent, 305 Current, 303, 905 Deferred tax, 483 Environmental remediation, 919 Short-term, expected to be refinanced, 304, 919
LIBOR, 718 Life insurance cash surrender value of, 589
Link-chain technique, 200 Liquidation dividends, 524 Litigation, contingencies and, 307 Loans
Acquisition/origination costs, 936 Impairment of, 401
SFAS 114, 945 Interfund, 839
Local currency, 792 Long-term construction contracts
ARB 45, 906 Loss carryforwards/carrybacks
Deferred tax effects, 493 Losses, 984
Contingent, 305, 918 On long-term construction contracts, 205
On purchase commitments, 197 Lower of cost or market method, 196
M
Management’s discussion and analysis, 807
Market value method, 202 Marketable securities, 576
Accounting for, 577 Equity method, 576
APB 18, 910 Deferred tax effects, 491, 586
SFAS 115, 947 Matching, 985 Measurement focus, 820 Minority interest, 667 Modified accrual basis, 820 Moving average method, 196
N
Net assets (equity), 983 Net operating loss carryovers
Deferred tax effects, 493 Net patient revenue, 884 Net realizable value, 42, 47 Net settlement, 718 Nondetachable stock purchase warrants, 376
Nonexchange revenues, 808 Nonexchange transactions, 820, 821 Nonexpendable trust funds, 838 Nonmonetary exchanges, 55, 242
APB 29, 914 Diagram of, 243
1052 Index
FASB I 30, 916 Notes, 355
Nonrefundable loan origination fees (SFAS 91), 936
Notes payable, 303, 354 APB 21, 911
Notes receivable, 354 APB 21, 911
Notes to the financial statements, 816 Not-for-profit accounting, 873, 983
Colleges and universities, 881 FASB and AICPA standards for, 874 Financial statements, 876, 882, 884 Health care entities, 883, 885 Illustrative transactions, 879
Not-for-Profit Guide, 873 Notional amount, 707, 718
O
Omnibus opinion APB 10, 909 APB 12, 909
Operating activities, 620, 624, 626, 938
Operating cycle, 136, 309 Operating lease, 440, 441, 923
Financial statement elements, 442 With scheduled rent increases, 924
Operating segment, 752 Operational efficiency ratios, 309 Ordinary annuities, 351, 352, 353 Organization costs, 256 Other comprehensive bases of accounting, 144
Other comprehensive income, 953 Other intangible assets, 253 Out-of-the-money, 719
P
Par value method (treasury stock), 522
Participating preferred stock, 520 Partnerships, 763
Admission of new partners, 764 Bonus method, 765 Goodwill method, 765
Death of partner, 767 Dissolution of, 764 Formation of, 763 Income/loss allocation, 763 Incorporation of, 771 Interest, sale of, 767 Liquidation of, 768 Transactions between partners, 767 Withdrawal of partner, 767
Payroll tax liability, 304 Pension (and other employee benefit) trust funds, 815, 837
Pensions, 410 Accumulated benefit obligation, 932 Annuity contract, 935 Curtailment, 935 Defined benefit plan, 411, 935 Defined contribution plan, 410, 932 Disclosures, 935, 955
Employer sponsor’s vs. plan’s accounting and reporting, 410
Employer’s accounting, 410 Funding of pension liability, 411 Market-related value of plan assets, 413, 932
Measurement date, 934 Pension cost/expense, 412, 933
Accrued or prepaid, 411 Components of, 412
Actual return on plan assets, 412, 932
Expected return on plan assets, 413
Gain or loss, 413, 932, 933 Interest on projected benefit obligation, 412
Prior service cost, 413, 933 Service cost, 412, 933
Projected benefit obligation, 412, 933 Settlement, 935 SFAS 87, 932 SFAS 88, 935 SFAS 132, 955 Single-employer defined benefit plans, 933
Termination benefits, 935 Percentage-of-completion method, 47, 203
Period costs, 195 Periodic inventory method, 195 Permanent differences, 482 Permanent funds, 811, 835 Permanently restricted net assets, 983 Permanently restricted resources, 881 Perpetual inventory method, 195 Personal financial statements, 739 Personal property taxes, 906 Petty cash, 293 Physical usage depreciation, 250 Point of sale recognition basis, 47 Postemployment benefits, 423
SFAS 112, 945 Postretirement benefits other than pensions, 421
Disclosures, 423 SFAS 106, 939
Preferred stock, 520 Callable, 521 Convertible, 520 Cumulative, 520 Participating, 520
Premium on forward contract, 717 Premium plans, contingent liabilities for, 306
Primary government, 806 Prior period adjustments, 131, 908
Deferred tax effects, 494 Retroactive change to equity method, 585
SFAS 16, 925 Prior service cost, 413, 933 Private-purpose trust funds, 815, 838 Product costs, 47 Product financing arrangements, 54 Proof of cash, 294 Property dividends, 523
Property taxes, 304, 906 Proprietary funds, 812, 835
Enterprise funds, 812, 836 Internal service funds, 812, 835 Statement of cash flows, 817 Statement of changes in net assets, 816
Statement of net assets, 814 Prospective financial information, 144
Purchase commitments Disclosure of (SFAS 47), 927 Losses on, 197
Purchase method, see also Business combinations
Consolidated balance sheet, 655 Purchase of groups of fixed assets, 247
Put option, 719
Q
Qualitative characteristics of accounting information, 40, 981
Quasi reorganization, 535 ARB 43, Ch. 7A, 904
Quick (acid) ratio, 309
R
Ratio analysis Acid-test (quick), 309 Book value of common stock, 538 Current, 309 Days in inventory, 203, 309 Days in receivables, 309 Debt to equity, 538 Dividend payout, 538 Inventory turnover, 202, 309 Length of operating cycles, 309 Rate of return on common stockholders’ equity, 538
Receivable turnover, 309 Real estate sales, 52, 54
SFAS 66, 930 Transactions, 52
Real property taxes, 906 Realization, 985 Reclassification adjustments, 133 Recognition, 41, 982 Reimbursement, 821 Related-party disclosures
SFAS 57, 930 Relative sales value method, 202 Remeasurement (foreign currency), 792
Rent Free or uneven payments, 441
Reportable operating segments, 954 Reporting currency, 792 Reporting entity, 806 Required supplementary information (RSI), 818
Research and development costs, 256 SFAS 2, 916
Residual value, 444, 922 Guaranteed, 444
Index 1053
Unguaranteed, 445 Retained earnings
Appropriations of, 525 Retirement of assets, 967 Retirement of stock, 523 Revenue, 984 Revenue expenditures, 247 Revenue recognition, 41, 981
Cost recovery method, 51 Franchise agreements, 52 Installment sales, 50 Long-term construction contracts, 203, 906
Nonmonetary exchanges, 55 Product financing arrangements, 54 Real estate transactions, 52, 54 Receivables, sale with recourse, 55 Sale-leaseback transactions, 55, 453, 924
Sales-type leases, 55, 440, 447, 923 SFAC 5, 981 When right of return exists, 54
SFAS 48, 928 Reversing entries, 48 Risk, 143
S
Sale-leaseback transactions, 55, 453, 923
Sales Of accounts receivable
With recourse, 55, 299 Without recourse, 298
Of real estate, 54 SFAS 66, 930 Transactions, 52
With right of return, 54 SFAS 48, 928
Sales basis of revenue recognition, 47, 54
Sales discounts, 295 Sales-type lease, 55, 440, 447, 923
Financial statement elements, 449 Schedule of employer contributions, 818
Schedule of funding progress, 818 Scrip dividends, 524 Secured borrowing, 302 Securities
Available-for-sale, 579, 582, 947 Debt, 372 Equity, 519, 576 Held-to-maturity, 577, 578, 582, 947 Impairment of, 948 Income statement presentation of, 582, 947
SFAS 115, 947 Trading, 578, 582, 947 Transfers between categories of, 582, 948
Securitizations, 302 Security deposits, 442 Segment reporting, 752
APB 30, 916 Disclosure, 753, 754 Restatement, 754
SFAS 131, 953 Servicing assets, 300 Settlement value, 42 SFAS 155, 974 SFAS 156, 975 SFAS 157, 975 SFAS 158, 976 SFAS 159, 977 SFAS 161, 979 SFAS 162, 980 SFAS 165, 980 SFAS 166, 980 SFAS 167, 980 SFAS 168, 981 Shipping terms, 202 Short-term obligations expected to be refinanced, 304
SFAS 6, 983 Simple average method, 195 Software costs, 256 Software revenue recognition, 53 Solvency ratios, 309 Special assessments, 835 Special items, 808 Special revenue funds, 811, 824, 830 Special-purpose entities, 655 Special-purpose governments, 806 Specific identification method, 195 Split-interest agreements, 876 Standard costing of inventory, 201 Start-up activities, 255 Statement of activities, 807, 810 Statement of affairs, 534 Statement of changes in fiduciary net assets, 816
Statement of fiduciary net assets, 816 Statement of net assets, 807, 808 Statements of Financial Accounting Concepts
SFAC 1 (Reporting objectives), 39 SFAC 2 (Accounting information), 40, 981
SFAC 5 (Recognition and measurement), 41, 981
SFAC 6 (Financial statements), 41, 983
SFAC 7 (Cash flow information), 43, 986, 988
Statements of Financial Accounting Standards
SFAS 2, 916 SFAS 5, 917 SFAS 6, 919 SFAS 7, 920 SFAS 13, 921 SFAS 15, 924 SFAS 16, 925 SFAS 34, 925 SFAS 43, 926 SFAS 45, 927 SFAS 47, 927 SFAS 48, 928 SFAS 52, 786, 928 SFAS 57, 930 SFAS 66, 930 SFAS 78, 931 SFAS 84, 931
SFAS 86, 931 SFAS 87, 932 SFAS 88, 935 SFAS 89, 936 SFAS 91, 936 SFAS 94, 936 SFAS 95, 937 SFAS 98, 939 SFAS 106, 939 SFAS 107, 942 SFAS 109, 943 SFAS 112, 945 SFAS 114, 398, 945 SFAS 116, 874, 949 SFAS 117, 874 SFAS 123, 950 SFAS 124, 874 SFAS 128, 951 SFAS 129, 952 SFAS 130, 519, 953 SFAS 131, 953 SFAS 132, 955 SFAS 133, 958 SFAS 136, 874, 875 SFAS 138, 959 SFAS 140, 302, 960 SFAS 142, 965 SFAS 143, 967 SFAS 144, 254, 968, 970 SFAS 145, 970 SFAS 146, 970 SFAS 147, 971 SFAS 149, 971 SFAS 150, 972 SFAS 151, 972 SFAS 152, 972 SFAS 153, 973 SFAS 154, 973
Statements of Governmental Accounting Standards Board
GASB 1, 807 GASB 6, 835 GASB 9, 812 GASB 25, 815, 824 GASB 27, 837 GASB 31, 824, 840 GASB 33, 820, 831 GASB 34, 806, 809, 816, 835 GASB 35, 841 GASB 36, 835 GASB 37, 838 GASB 38, 816 GASB 39, 807, 844 GASB 40, 816, 824 GASB 42, 833 GASB 43, 815, 824 GASB 45, 837 GASB 47, 838 GASB 48, 822 GASB 49, 822 GASB 50, 815 GASB 51, 821 GASB 52, 835 GASB 53, 822, 824 GASB 54, 811 GASB 59, 824
Statements of Position SOP 96-1, 919
1054 Index
Stock Common, 520 Dividends, 524, 587 Preferred, 520 Retirement of, 523 Splits, 524, 587 Subscriptions, 521 Treasury, 522 Warrants, 376, 909
Stock dividends, 524, 587 ARB 43, Ch. 7B, 904
Stock options ARB 43, Ch. 13B, 904
Stock ownership plans for employees, 537
Stock purchase warrants, 376, 909 Stock rights, 537, 587 Stock splits, 524, 587
ARB 43, Ch. 7B, 906 Stock subscriptions, 521 Stockholders’ equity, 519
Common stock, 520 Comprehensive income, 519 Preferred stock, 520 Retained earnings appropriated, 525 SFAS 128, 951 SFAS 129, 952 Stock, types of, 520 Treasury stock transactions, 522
Stockholders’ equity ratios, 538 Straight-line amortization, 375 Straight-line depreciation, 248 Subsidiaries
Consolidation of (SFAS 94), 936 Deferred tax effects, 492
Summary of significant accounting policies, 912
Sum-of-the-years’ digits method, 248 Swap contracts, 719 Swaption, 719
T
Temporarily restricted net assets, 984 Temporarily restricted resources, 880 Temporary differences, 481, 483, 491, 495
Donated asset, 482 Estimated warranty liability, 482 Goodwill, 482 Involuntary conversion of assets, 482 Plant assets and accumulated depreciation, 482
Unearned rent (royalty) revenue, 482 Time value of money, 42, 350
Amortization of bond interest, 372 Annuities, 351, 353 Applications of, 353 Bonds payable/bond investments, 372 Compounding interest, 351 Debt restructure, 398 Effective interest vs. straight-line amortization method, 375
Expected cash flow, 45 Factor tables, 352 Future value
Of an amount, 351 Of an annuity due, 353 Of an ordinary annuity, 351
Leases, 440 Notes receivable/payable, 354 Pensions, 410 Present value
Of a future amount, 42, 351 Of an annuity due, 353 Of an ordinary annuity, 352
SFAC 7, 43 Trading securities, 578, 579, 582
SFAS 115, 947 Transaction gain or loss, 719 Transfer of receivables, 298
Translation adjustments, 792 Translation of foreign currency, 786 Treasury stock, 522
APB 6, 908 ARB 43, Ch. 1B, 904
Treasury stock method (to test dilutiveness), 531
Troubled debt restructure, 398 SFAS 15, 924
U
Uncertainties, 143 Unconditional purchase obligations, 927
Underlyings, 707, 719 Unearned rent (royalty) revenue, 482 Unguaranteed residual value, 445, 922
University accounting, 873, 881 Unrecognized firm commitment, 713 Unrestricted net assets, 984 Unusual item, 131
V
Variable costing of inventory, 202 Variable interest entities, 655 Variance power, 875 Voluntary nonexchange transactions, 821
W
Warrants, detachable stock purchase, 376, 909
Weighted-average method, 196 With vs. without recourse, 298 Working capital, 909 Write-offs of accounts receivable, 296