Revenue
What is the key difference between 606 and 605
Timing of Revenue
What is the key difference between Finance and operating lease
How they are amortized under GAAP
What is the biggest change from legacy GAAP for credit losses
Probable vs Expected loss
Who identifies related parties under GAAP
Management
Name a client that does GAAP Financials
Most Clients
What is a contract asset?
A reporting entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer
Under ASU, what are the options for capitalizing and amortizing a lease
What is the ASU's objective
to provide financial statement users with more decision-useful information about a reporting entity’s
When are definitive-lived assets reviewed for impairment?
only when certain triggering events occur that indicate their values are likely to be impaired
Define level 1 and level 2 investments
Level 1: Listed stocks
Level 2: assets are commonly held by private equity firms, insurance companies, and other financial institutions with investment arms
At what point do we differentiate the recognition between principal vs agent
How would you go about bookkeeping a lease payment liability?
Lease payment liability is increased by recognizing periodic interest on the lease liability and decreased by payments made during the lease period
How were credit losses estimated in Legacy GAAP?
losses were recorded when it became probable that all contractual amounts would not be collected, based on information known at the balance sheet date (Incurred Loss Model)
What does topic 805 require?
requires that acquisitions (net assets) be recorded based on their fair values
Define level 3 investments
Real estate and Private Equity investments
When determining principal vs agent what information must you provide
Under ASU 2021-09 what are non-public business lessees able to do?
They are able to make the risk free election by class of underlying assets
In topic 326 what do you use to estimate credit losses over the financial assets life
current expected credit loss (CECL) model
If you own a chain of restaurants during COVID and are shut down and have substantial assets (fridges/ovens etc) tied up and unused for 18 months, how can these be classified under GAAP?
Topic 36 – PPE Classifies them as
What is another alternative to GAAP reporting?
IFRS
What are six- step approach for topic
What is the object of ASU 2021-09?
To provide lessees that are not public business entities with more flexibility in how they determine the discount rate for their leases and make the risk-free rate election to reduce their initial adoption and ongoing implementation costs associated with Topic 842
Explain the CECL Model
The CECL model requires that if losses exist, the carrying value of the investment equals amortized cost minus the allowance for credit losses, that is, the amount expected to be collected - contractual life should incorporate expected prepayments, but possible extensions should not be included
When management determines that there is a substantial doubt about a reporting entity’s ability to continue as a going concern, they must disclose the following:
The substantial doubt about the reporting entity’s ability to continue as a going concern
The principal conditions and events giving rise to the substantial doubt
• Management’s evaluation of the significance of those conditions and events
• Any mitigating conditions and events, including management’s plans 52 Kaplan Inc. Communication
As an employee where should you identify fund practices with respect to GAAP requirements?
Legal Documents