MGA 624 Quiz 3 With Complete Questions And
Answers A+ Graded
Scope guidance - ANSWER indicates which transactions, items, or entities are subject
to the guidance within a topic
scope section may - ANSWER -list transactions/entities that are not within the scope.
-contain tests to determine what transactions should be
accounted for under a certain topic.
Recognition - ANSWER describes what, when, and how an item should be recorded in
the financial statements.
- Section 25
Derecognition - ANSWER (Section 40)
describes when and how an item should be removed from the financial statements.
- Notably, items can also be "removed" from the balance sheet through other means, for
example, through amortization or impairments.
subsequent event - ANSWER (ASC 855) is an event that takes place after the balance
sheet date, but before financial statements are issued.
- Located under the Broad Transactions area.
Recognized subsequent events ("type 1") - ANSWER Provide additional evidence about
conditions existing at the balance sheet date, including estimates inherent in preparing
the financial statements.
• Require adjustment to the financial statements.
Unrecognized subsequent events ("type 2") - ANSWER Provide evidence about
, conditions that did not exist at the balance sheet date but arose subsequent to that date.
• Do not require adjustment to the financial statements.
ASC 405-20(Extinguishments of Liabilities) - ANSWER provides guidance on when it is
appropriate to derecognize a liability.
The debtor pays the creditor and is relieved of its obligation; or
- The debtor is legally released from being the primary obligor under the liability, either
judicially or by the creditor.
ASC 740 - ANSWER (Income Taxes)applies to taxes that are "based on income".
- This topic is located in the Expenses area.
ASC 450 - ANSWER (Contingencies)- must be applied for taxes that are not based on
income.
ASC 845 - ANSWER Non monetary exchanges should be recognized at the fair values of
the assets exchanged.
- But only if the transaction has commercial substance.
- And the transaction cannot be between entities under common control.
ASC 845 is organized into several subsections, each with unique scope requirements: -
ANSWER - General
- Purchases and sales of inventory with the same counterparty
- Barter transactions
- Exchanges involving monetary consideration
Topic 815 - ANSWER (Derivatives) requires certain instruments to be carried at fair
value and marked-to-market each period.
Answers A+ Graded
Scope guidance - ANSWER indicates which transactions, items, or entities are subject
to the guidance within a topic
scope section may - ANSWER -list transactions/entities that are not within the scope.
-contain tests to determine what transactions should be
accounted for under a certain topic.
Recognition - ANSWER describes what, when, and how an item should be recorded in
the financial statements.
- Section 25
Derecognition - ANSWER (Section 40)
describes when and how an item should be removed from the financial statements.
- Notably, items can also be "removed" from the balance sheet through other means, for
example, through amortization or impairments.
subsequent event - ANSWER (ASC 855) is an event that takes place after the balance
sheet date, but before financial statements are issued.
- Located under the Broad Transactions area.
Recognized subsequent events ("type 1") - ANSWER Provide additional evidence about
conditions existing at the balance sheet date, including estimates inherent in preparing
the financial statements.
• Require adjustment to the financial statements.
Unrecognized subsequent events ("type 2") - ANSWER Provide evidence about
, conditions that did not exist at the balance sheet date but arose subsequent to that date.
• Do not require adjustment to the financial statements.
ASC 405-20(Extinguishments of Liabilities) - ANSWER provides guidance on when it is
appropriate to derecognize a liability.
The debtor pays the creditor and is relieved of its obligation; or
- The debtor is legally released from being the primary obligor under the liability, either
judicially or by the creditor.
ASC 740 - ANSWER (Income Taxes)applies to taxes that are "based on income".
- This topic is located in the Expenses area.
ASC 450 - ANSWER (Contingencies)- must be applied for taxes that are not based on
income.
ASC 845 - ANSWER Non monetary exchanges should be recognized at the fair values of
the assets exchanged.
- But only if the transaction has commercial substance.
- And the transaction cannot be between entities under common control.
ASC 845 is organized into several subsections, each with unique scope requirements: -
ANSWER - General
- Purchases and sales of inventory with the same counterparty
- Barter transactions
- Exchanges involving monetary consideration
Topic 815 - ANSWER (Derivatives) requires certain instruments to be carried at fair
value and marked-to-market each period.
