tetsuwangatomu
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Joined: 08 Oct 2010
Location: United States
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Posts: 133
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| Posted: 01 Nov 2010 at 17:19 | IP Logged
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Last minute cramming:
Non-monetary exchanges are categorized as either
1) An exchange that has "commercial substance" or
2) An exchange that "lack commerical substance"
1) Exchanges having "Commercial Substance" - The future risk,
timing or amount of cash flows change as a result of the transaction.
To use FAIR VALUE APPROACH - DISSIMILAR ASSETS.
-GAIN/LOSSES ARE ALWAYS RECOGNIZED
-GAIN/LOSSES = FMV OF OLD ASSET - BV OF OLD ASSET,
INCLUDING ANY CASH GIVEN OR REC'D
DR. NET ASSET (FMV OF OLD ASSET + CASH GIVEN, IF ANY)
DR. ACCUM DEPR OF ASSET GIVEN UP
DR. CASH REC'D, IF ANY
DR. LOSS (PLUG)
CR. OLD ASSET AT HISTORICAL COST
CR. CASH GIVEN, IF ANY
CR. GAIN (IF ANY)
2)EXCHANGES LACKING COMMERCIAL SUBSTANCES = BOOK VALUE
APPROACH - SIMIMAR ASSETS
-PROJECTED CASH FLOWS AFTER THE EXCHANGE ARE NOT
EXPECTED TO CHANGE SIGNIFICANTLY.
ALL LOSSES ARE RECOGNIZED ALWAYS
GAINS ARE RECOGNIZED OR NOT DEPENDING ON BOOTS REC'D AND
GIVEN.
-NO BOOT REC'D = NO GAIN
- BOOT GIVEN - NO GAIN
- BOOT REC'D>=25% OF TOTAL CONSIDERATION
REC'D=RECOGNIZE ALL GAIN
=BOOT REC'D <25% OF TOTAL CONSIDERATION REC'D=RECOGNIZE
GAIN IN PROPORTION TO BOOT REC'D
==
INTEREST ON SELF-CONSTRUCTED ASSETS
CAPITALIZED BASED ON THE WEIGHTED AVERAGE OF THE
ACCUMULATED EXPENDITURES MULTIPLIED BY AN APPROPRIATED
INTEREST RATE AND CANNOT EXCEED ACTUAL INTERES COST. INT
ON CONSTRUCTIONS TO BE CAPITALIZED, BEFORE AND AFTER TO
EXPENSE, INCURRED DURING INTENTIONAL DELAY TO EXPENSE.
NOT ON TOTAL DEBT PROCEEDS.
==
SALE-LEASEBACKS
THE LESSEE SELLS AN ASSET TO ANOTHER PARTY AND
SUBSEQUENTLY LEASES IT BACK.
IF MEETING "OWNS", THEN CAPITAL LEASE;
OTHERWISE, OPERATING LEASE. ANY GAIN/LOSS ON THE SALE IS
DEFERRED AND AMORTIZED IN PROPORTION TO THE GROSS GROSS
RENTAL PAYMENTS EXPENSED OVER THE LEASE TERM.
==
EXCEPTION:
REAL ECONOMIC LOSS:
IF FV OF ASSET < CARRYING VALUE, A LOSS MUST BE RECOGNIZED
IMMEDIATELY. (LIKE IMPAIRMENT RULE)
==
RIGHTS TO REMAINING USE OF PROPERTY RETAINED BY
SELLER/LESSEE IN CALC. AMOUNT OF DEFERRED GAIN
1) PV OF RENT PAYMENTS >=90% OF FV, DEFERRED ALL GAIN AND
AMORTIZE OVER THE LEASEBACK PERIOD.
2) PV OF RENT PAYMENTS > 10%, AND < 90% OF FV; DEFERRED
GAIN UP TO THE PV OF MINIMUM LEASE PAYMENTS AND RECOGNIZE
EXCESS GAIN IMMEDIATELY.
3) PV OF RENT PAYMENTS < 10% OF FV, MINOR LEASEBACK. LEASE
IS A SALE WITH FULL GAIN/LOSS RECOGNIZED IMMEDIATELY, AND
A SEPARATE LEASE.
==
RATIOS:
FOR SOLVENCY:
QUICK RATIOS(AKA ACID TEST):
(CASH + A/R)/CURRENT LIABILITIES
CURRENT RATIOS:
CURRENT ASSETS/CURRENT LIABILITIES
CURRENT LIAB. TO NET WORTH RATIO:
CURRENT LIAB./NET WORTH
NET WORTH = For a company, total assets minus total liabilities. Net
worth is an important determinant of the value of a company,
considering it is composed primarily of all the money that has been
invested since its inception, as well as the retained earnings for the
duration of its operation. Net worth can be used to determine
creditworthiness because it gives a snapshot of the company's
investment history. also called owner's equity, shareholders' equity,
or net assets.
CURRENT LIAB. TO INVENTORY RATIO:
CURRENT LIAB/INVENTORY
TOTAL LIAB. TO NET WORTH RATIO:
TOTAL LIAB. / NET WORTH
FIXED ASSETS TO NET WORTH
FIXED ASSETS/ NET WORTH
FOR EFFICIENCY
COLLECTION PERIOD RADIO IN DAYS
(AVG A/R / SALES) X 360
SALES TO INVENTORY (INVENTORY TURNOVER)RATIO
ANNUAL NET SALES / AVG INVENTORY
ASSETS TO SALES RATIO:
TOTAL ASSETS / SALES
SALES TO NET WC RATIO
SALES / NET WORKING CAPITAL
==
PROFITABLILITY RATIOS :
RETURN ON SALES RATIO:
NET PROFIT AFTER TAXES/NET SALES
RETURN ON ASSETS RATIO:
NET PROFIT AFTER TAXES/TOTAL ASSETS
RETURN ON NET WORTH RATIO:
NET PROFIT AFTER TAXES/NET WORTH
==
NET WORTH = For a company, total assets minus total liabilities. Net
worth is an important determinant of the value of a company,
considering it is composed primarily of all the money that has been
invested since its inception, as well as the retained earnings for the
duration of its operation. Net worth can be used to determine
creditworthiness because it gives a snapshot of the company's
investment history. also called owner's equity, shareholders' equity,
or net assets.
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Topic: FASB#153 - Non-monetary Exchanges...
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