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Why do governmental funds use modified accrual instead of full accrual?
Governmental funds use modified accrual because they focus on current financial resources rather than total economic resources...
How does cash flow hedge accounting use OCI before amounts hit earnings?
For a cash flow hedge, the effective derivative gain or loss goes to OCI first and is later reclassified to earnings when the hedged cash flow affects income...
How do I record a foreign currency transaction gain or loss on a receivable?
Foreign currency receivables are recorded at the spot rate on the sale date and remeasured through earnings until collection...
When do I use fair value, the equity method, or consolidation for an investment?
Use consolidation for control, the equity method for significant influence, and fair value when neither control nor significant influence exists...
Why do we eliminate unrealized profit on intercompany inventory in consolidation?
Intercompany inventory profit is eliminated because the consolidated group has not earned it until the goods are sold to an outside customer...
How do I calculate goodwill in a business combination?
Goodwill equals consideration plus noncontrolling interest and any previously held interest, less the fair value of identifiable net assets...
Where do gross profit, operating income, and OCI go on a multi-step income statement?
Gross profit and operating income stay on the income statement, while OCI is presented separately and added to net income for comprehensive income...
How do I tell the difference between an error correction, a change in estimate, and a change in principle?
Errors are restated, estimates are handled prospectively, and changes in principle are usually retrospective if GAAP allows the switch...
How is stock-based compensation expense recognized over the vesting period?
Stock compensation expense is based on grant-date fair value of awards expected to vest and is recognized over the service period...
How do I compute basic and diluted EPS when stock options are outstanding?
Diluted EPS uses the treasury stock method for options, adding only the incremental shares that remain after assumed share repurchases...
How does a deferred tax asset work, and when do I need a valuation allowance?
A deferred tax asset records future tax savings, and a valuation allowance reduces it when some of that benefit is not likely to be realized...
When does a sale-leaseback count as a real sale under ASC 842?
A sale-leaseback is a sale only if control transfers under ASC 606. If control does not transfer, the transaction becomes a financing arrangement...
How do I measure the lease liability and right-of-use asset at lease commencement?
Lease liability starts with the present value of unpaid lease payments, and the right-of-use asset adjusts that amount for direct costs, prepaids, and incentives...
When do I accrue a contingent loss versus just disclose it?
Accrue a contingent loss only when it is probable and reasonably estimable. Otherwise disclose it unless the risk is remote...
Why does the carrying value of a bond move under the effective interest method?
Effective interest uses market yield on carrying value, so discounts accrete upward and premiums amortize downward toward face value...
What is the FAR difference between impairment for a held-for-use asset and a held-for-sale asset?
Held-for-use assets use a recoverability test first, while held-for-sale assets are measured directly at fair value less cost to sell...
How do I account for a change in useful life or salvage value for depreciation?
Changes in useful life or salvage value are handled prospectively. Recalculate depreciation from the current carrying amount and revised future estimates...
How do I classify assets and liabilities as current or noncurrent on the balance sheet?
Current classification usually follows the one-year or operating-cycle rule. The current portion of debt stays current unless refinancing rules are met...
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