Financial F1

• SEC
• But they commonly allow the accounting profession to establish GAAP and self-regulate

• Determined GAAP since 1973
• 5 full time members serve one 5 yr term and can do one more additional 5 yr term

• Statements of Financial Accounting standards (SFAS)
• FASB interpretations (FIN)
• FASB technical bulletins (FTB)
• Emerging issue task force statements (EITF)
• Staff positions
• implementation guides
• Statements of Financial accounting concepts (SFAC)

• Effective July 1, 2009
• Single source of authoritative nongovernmental US GAAP
• If it's not in the Codification, it's not in GAAP

• FASB
• EITF abstracts and topic D
• Derivative implementation group issues
• accounting Principles board opinions
• accounting Research bulletins
• accounting Interpretations
• AICPA

updates are not authoritative

develop a single set of high quality global accounting standards

International financial reporting interpretations committe

• provides guidance on newly identified financial reporting issues not addressed in IFRS
• assists IASB in achieving international convergence

• Like US GAAP
• issued by IASB

• goal=single set of high quality international accounting standards
• FASB and IASB work together to improve GAAP and IFRS and eliminate the differences

statements of financial accounting concepts

8 SFAC not GAAP but provide basis for financial accounting concepts

provide financial info about entity that is useful to the primary users in making decisions

• existing and potential:
• investors
• lenders
• other creditors

• resources of entity
• liabilities of entity
• efficiency and effectiveness of management

used for users to assess entity's prospects for FCF of enity and to estimate value of entity

• Fundamental characteristics=
• relevance
• faithful representation

• enhancing characteristics=
• comparability
• verifiability
• timeliness
• understandability

Predictive value=used to predict future outcomes

Confirming value=provides feedback about evaluations previously made by users

Materiality=different or missing info could affect decision made by user

Completeness=include all info necessary for user to understand economic phenomena

Neutrality=free from bias

Freedom from error=no errors in production of financial info or descriptions of economic phenomena. Does no require perfect accuracy however

• info can be compared with similar info about other entities or time periods and find similarities or differences. Consistency (using the same methods for the same items) helps achieve comparability.
• Helps determine which method to use

independent observers can agree that info is faithfully represented. complete agreement is not required

info reaches users in time to influence their decisions

classified, characterized and presented cleary and consisely.

Provides a framework to use when using FCF as a measurement

• Income from continuing operations=I/S
• Discontinued operations income=I/S after tax
• Extraordinary items (GAAP only)=I/S after tax
• Accounting principle change=RE stmt after tax

• Operating rev and exp reported separately from non op rev and exp and other g/l
• enhances user information

• When it is held for sale. This includes:
• mngt commits to a plan to sell
• can be sold in present condition
• actively trying to locate a buyer

Remeasure and recognize any gain or loss

• 1. an obligation event has occurred
• 2. there's a present obligation to make pmt or provide future services
• 3. little or no discretion to avoid obligation

• separately disclosed net of tax
• unusual and infrequent (if only one is met it goes to continuing ops)
• Not allowed for IFRS

• Prospective=affects current and future inc. from continuing ops (future changes should be disclosed)
• includes change to LIFO and depr change

direct effect=any adjustments to make it like you have always used that principle

• presenting non-comparative fin. stmts=difference between Beginning RE and what RE would have been if new principle had been retroactively applied
• presenting comparative fin. stmts= difference between beginning RE and what RE would have been if new principle had always been used

adjust beginning retained earnings in earliest period presented for cumulative effect. Prior periods should be restated (retrospective)

All prior year comparative stmts should be restated.

• presenting comparative fin. stmts=adjust RE of earliest year and correct errors in years presented
• not presenting comparative fin stmts=adjust BB of RE net of tax

all changes in equity except investments from and distributions to owners

• NI (IDE)
• +OCI (PUFER)
• Comprehensive income

• Pension adjustments
• Unrealized g/l on available for sale securities
• Foreign currency items
• Effective portion of cash flow hedges
• Revaluation surplus (IFRS only)

• 1. single stmt of comprehensive income
• 2. I/S followed by separate stmt of comp. income starting with NI
• 3. stmt of changes in equity (only GAAP)

profit/loss, assets, certain related items, NOT cash flow

• must meet only one
• 1. revenue=if all reported rev >all reported rev of all segments
• 2. reported profit/loss=if absolute profit/loss>10% of the greater of absolute amt of all profit reported by segments that did not report a loss or all loss reported by segments that reported a loss
• 3. assets=if assets>10% of assets of all segments

If total consolidated rev from reportable segments is <75% of consolidated rev, add more reportable segments (even if they do not meet 10% tests) until at least 75% of consolidated rev is included in reportable segments

operating segments that are not reportable go in all other segments category

• Revenues (for that segment internal and external)
• - directly traceable costs
• - reasonably allocated costs (by CFO)
• operating profit/loss for that segment (EBIT)

• Principle market=greatest volume
• use price in that market even if another market has a better price

• use most advantageous market=best price after considering trasaction costs
• don't include transaction costs in final fair value though

• changing techniques is considered a change in accting estimate
• Maret approach
• Income approach
• Cost approach

uses prices and other info from market transactions with identical or comparable A or L to determine fair value

PV of FCF for A or L

uses current replacement cost to A fair value

• Level 1=most reliable. Quoted prices in active markets for identical assets
• Level 2=Quoted prices for similar A in active markets or identical A in non active markets
• Level 3=unobservable inputs based on entities assumptions

• B/S=3 needed-E of CY, E of PY, and B of PY
• all other stmts 2 needed

The date of the earliest B/S presented-B of PY

make adjustments directly to retained earnings at the date of transition to IFRS

• What was GAAP, what is IFRS, why the difference?
• Reconcile total CI from GAAP to IFRS

• annual filing required by SEC
• 75 days after E of fiscal year for accelerated filers, 90 days for others
• includes summary of financial data, audited F/S, mgt discussion and analysis

• quarterly filing required by SEC
• 40 days after E of fiscal quarter for accelerated filers, 45 days for others
• unaudited GAAP F/S, interim MD&A, and disclosures

• annual filing for foreign private issuers
• 40-F for Canada, 20-F for others
• Similar to 10-K

• Filed semi-annually by foreign private issuers
• similar to 10-Q

• reports major corporate events
• asset acquisitions or disposals
• changes in trading markets, F/S, mgt. etc.

• files by directors, officers, or beneficial owners with >10% of a class of equity.
• assures no insider trading

• SEC requirements for interim and annual F/S
• interim F/S must be reviewed by an independent public accountant
• interim F/S require B/S at E of quarter and E of preceding fiscal year, I/S and CFS for most recent quarter, period between E of preceding fiscal year and E of most recent fiscal quarter, and for corresponding periods of preceding year

• audited by independent public accountant and audit report must be filed
• B/S for 2 most recent fiscal years
• other stmts for each of 3 fiscal years preceding dat of most recent audited B/S