1. Measurement BASIS EQUIPMENT a. NRV i. Decision to end operations and quickly dispose of assets b. Historical cost i.

. Appropriate if operations were continuing c. Current replacement costs i. Acquiring new and substantially equivalent property at current prices ii. Appropriate in optional supplemental price level f/s 2. Public companies must follow GAAP for (external) financial reporting purposes a. GAAP need not to be followed for (internal) managerial accounting 3. Confirming value a. Feedback about evaluations previously made by users 4. Assumptions a. Monetary unit i. Money is the common denominator for economic activity ii. Provides an appropriate basis for accounting measurement and analysis b. Periodicity i. Economic activity can be divided into meaningful time periods c. Economic entity i. Economic activity can be accounted for when considering an identifiable set of activities 5. Operating procedure for issuing FASB accounting standards update a. Accounting standards update is issued only after a majority vote by the members of FASB 6. Fundamental characteristics of useful financial information a. Relevance & b. Faithful representation 7. IASB framework underlying assumptions of f/s preparation & presentation a. Going concern b. Accrual accounting 8. Before an exposure draft is issued for public comment, it must be approved by at least 9 members of IASB 9. Revenue recognition principles a. Earned i. REVENUES are considered earned when entity has substantially accomplished what it must do to be entitled to the befits represented by the revnues b. Realized or realizable i. Revnues and gains are recognized when products, merchandise, or other assets are exchanged for cash or claims to cash or when related assets

received or held are readily convertible to known amounts of cash or claims to cash 1. Depreciated equip was sold in exchange for a note receivable ii. Matching principle 1. Expense matched against revenue I/s 1. Change in accounting principle considered inseparable from a change in estimate, the change is handled as a change is estimate a. Prospectively i. Component of income from continuing operations b. No cumulative effect adjustment 2. Extraordinary loss a. Unusual in nature i. Ex; flood loses are unusual in nature in that they are unrelated to the ordinary and typical activities of the co b. Infrequent in occurrence 3. Once the decision has been made to dispose of a component of a business and that component meets the criteria to be classified as HFS, the operating results of the component for the period reported on, and any gain or loss from the disposal, should be reported separately from continuing operations, net of tax a. Discontinued operations 4. I/S a. Inventory cost purchase price, freight in b. Selling expense freight out, salaries & commission, advertising c. General & Admin officers salaries, accounting & legal, insurance d. Non-operating auxiliary activities, interest expense (separate line) 5. G or L that are unusual in nature or occur infrequently but not both a. Separately as a component of income from continuing operations 6. Discontinued operations a. Report operating loss in period it occurred b. do not project gain on disposal 7. cumulative effect of a change in accounting principle a. separate category on the RE smt b. not a component of net income 8. FV < carrying value a. Impairment of assets of the component b. Impairment loss recognized in year the component is classified as HFS 9. Cumulative effect of change in accounting principle RE as an adjustment to beginning balance of RE, assuming cumulative effect can be calculated

a. Except: change in depreciation method since depreciation method is no longer considered to be a change in accounting principle b. A change in depreciation method i. Now considered both change in method and change in estimate ii. Changes should now be accounted as a change in estimate and handled prospectively iii. New depreciation method should be used as of the beginning of the year of change and should sart with the current BV of the underlying asset iv. No retroactive or retrospective calculations should be made v. No adjustments to RE 10. f/s of all prior periods presented should be restated when there is a change in entity such resulting form a. changing companies in consolidated f/s b. consolidated f/s vs previous individual f/s 11. GAAP a. Changes involving cost & equity methods of accounting of accounting i. Not considered changes in accounting principel b. Cost to equity requires restatement c. Equity to cost does not require restatement. Prospectively 12. Correction of error in f/s of prior period a. Not presenting comparative f/s b. Report, net of tax, in i. Current statement of RE as an adjustment of the opening balance 13. Changes in estimates affect only current and subsequent periods (not prior periods and not RE) a. Prospectively b. No separate line item presentation is made on any f/s c. If material change being made, appropriate footnote disclosure is necessary 14. Exit and disposal activities a. Involuntary employee termination benefits b. Costs to terminate a contract that is not a capital lease c. Other costs associated with exit or disposal activities, including costs to consolidate facilities or relocate employees 15. Liability is only recognized when all met: a. an obligating event has occurred b. the event results in present obligation to transfer assets or to provide services in the future

c. the entity has little or no discretion to avoid the future transfer of assets or providing of services d. an entitys commitment to an exit or disposal plan, by itself, is not enough to result in liability recognition OCI 1. Comprehensive income = NI + OCI 2. Main components a. Pension changes in funded status: due to gains/losses, psc, and net transition assets or obligations b. Unrealized g&l: i. unrealized holding g/l on AFS securities and unrealized holding gains and losses on debt securities transferred from HTM to AFS c. Foreign currency items i. Including translation adjustments d. Include revaluation surplus (GAINS) NOT revaluation loss i. Revaluation surpluses (g) recognized when intangible assets and fixed assets are revalued. Maybe transferred directly to RE when the related asset is used or derecognized e. Effective portion of CF hedges f. Comprehensive income may be shown on the face of a combined statement of income & comprehensive income a separate section below NI, or: i. In a separate stmt of comprehensive income, or ii. As a component of the statement of changes of owners equity (US GAAP only) iii. Income tax expense or benefit allocated must be disclosed, either on the face of the stmt or in notes to the stmt g. Comprehensive ncome i. All changes in SE from non-owner souces ii. NI+ OCI iii. Does not include investments by stockholders (owners) nor distributions or dividends to stockholders (owners) iv. CI reported in interim f/s and YE f/s 3. Unrealized g & l on trading securities go directly to the I/S 4. Transfer from AFS -> HTM a. Move out of OCI 5. Officers salaries (GAAP), officers expenses and intercompany sales (b/w entities included in a consolidated set of f/s) are all transactions in the ordinary course of business and generally would not require disclosure 6. IFRS loans to officers and key mgmt compensation require disclosure

7. Significant estimates should be disclosed when it is reasonably possible (not probable) that the estimate will change in the near term and that the effect of the change will be material. Immaterial items are not disclosed 8. When preparing interim f/s, income tax expense is estimated each quarter using the effective tax rate expected to apply to the entire year a. Interim f/s i. Lower of cost or market method should be applied ii. Impact of discontinued operations and extraordinary items, 1. Include (prorated) in net income and disclosed in the interim f/s notes 9. Un affiliated customer sales and intracompany sales must be disclosed separately 10. Equity in NI of another company, general corporate expenses, interest, income tax expense, and gains or losses on discontinued operations are all not included in segment profit unless they are included in the determination of segment profit reported to the Chief Operation Decision Maker. 11. Revenue as a criteria, a segment must include at least 10% of combined revenues, including intersegment sales 12. In order to conform to GAAP, f/s for public business enterprises must report segment info about a cos major customers if that co provides 10% or more of the combined revenue, internal and external, of all operation segments. 13. For each reportable segment of an enterprise a. Both profit or loss and TA should be disclosed under US GAAP 14. Segment CF is not reported under IFRS or US GAAP a. Segment L not reported under US GAAP 15. Development stage enterprises must use all the same principles as established enterprises including those of revenue recognition and deferral of expenses. a. Primary difference: development stage enterprises must provide additional disclosures not required of established operating enterprises 16. All organizational costs (start up costs) should be expensed when incurred 17. On the opening IFRs b/s, inventory must be reported at LC or NRV, with cost determined using an IFRS method (specific identification, FIFO, weighted/moving average) 18. Cos first IFRS f/s require: a. 3 b/s b. 2 stmt of comprehensive income c. 2 income statements (if using the 2 statement to approach to presenting comprehensive income) d. 2 CF stmt e. 2 stmt changes in equity f. Explicit statement regarding compliance with IFRS 19. Regulation S-X an entitys f/s filed with the SEC

a. b/s for the 2 most recent fiscal years b. statement of income, changes in owners equity, & c. CF for the 3 fiscal years preceding the date of the most recent audited b/s 20.