1047

INDEXA

Accelerated depreciation, 248 Accounting basis of, 47, 144

Cash to accrual conversion, 48 Accounting changes, 107

Interim reporting, 746 Accounting information

Qualitative characteristics of (SFAC 2), 981

Accounting methods Governmental, 803

Accounting policies, disclosure of, 136 APB 22, 912

Accounting Principles Board Opinions

APB 6 (Status of ARB), 908 APB 9 (Results of operations), 908 APB 10 (Various topics), 909 APB 12 (Various topics), 909 APB 14 (Debt), 909 APB 18 (Equity method), 910 APB 21 (Interest on NR and NP), 911 APB 22 (Disclosure of accounting policies), 912

APB 23 (Income taxes), 912 APB 26 (Debt extinguishment), 912 APB 28 (Interim financial reporting), 913

APB 29 (Nonmonetary transactions), 914

APB 30 (Results of operations), 916 Accounting Research Bulletins

ARB 43 (Various topics), 904 ARB 45 (LT construction contracts), 906

ARB 51 (Consolidated financial statement), 907

Accounting standards, see also FASB Interpretations

APB, 908 ARB, 904 SFAC, 981 SFAS, 916

Accounting theory, see also Statements of Financial Accounting Concepts, 37

Capital maintenance theory, 42, 985 Conceptual framework

Basic elements, 41 Cash flow information, 43 Components of, 39 Objectives of financial reporting, 39

Qualitative characteristics, 40 Recognition and measurement, 41

Accounts payable, 303 Accounts receivable, 295

APB 21, 911 Bad debt expense, 296 Ratios, 309 Sale of, with recourse, 55 Sales discounts, 295 Write-offs of, 296

Accrual basis, 820 Accrual basis of accounting, 48, 985

Conversion to, 49 Accrual of expenses, 841 Accruals, 48, 985

Accrued liabilities, 304 Errors in, 90

Accumulated other comprehensive income, 578

Acid-test (quick) ratio, 309 Acquisition cost

Fixed assets, 239 Intangible assets, 253 Inventory, 194

Advances from customers, 305 Agency funds, 816, 838 AICPA Content and Skills Specification Outlines, 28

Allowance method, 296 Amortization, 985

Bonds Premium/discount, 372

Computer software costs, 256, 931 Differential

Business combinations, 663 Effective interest method, 375 Equity method investments, 583

Intangibles, in general, 254 Leases

Capitalized leased assets, 450, 457 Initial direct costs, 442, 453 Lease bonus (fee), 442, 443 Leasehold improvements, 442

Pensions Unrecognized net gain/loss, 414, 933

Unrecognized prior service cost, 413

Straight-line method, 375 Annuities

Future value of, 351, 353 Present value of, 352, 353

Annuity contracts, 935 Annuity due, 353 Appropriations (budgetary), 824 Appropriations of retained earnings, 525

Assets, 983 Current, 136, 293, 904 Deferred tax, 483 Impairment of, 968 Infrastructure, 809 Intangible, 253

At-the-money, 717 Available-for-sale securities, 578, 582

Hedge accounting, 713 SFAS 115, 947

B

Bad debts, 296 Allowance method, 296 Direct write-off method, 296

Bank reconciliations, 293 Adjusting entries, 294 Four-column cash reconciliation, 294

Bankruptcy, corporate, 534 Bargain purchase option, 444, 921 Basic earnings per share, 528 Basis of accounting, 47, 48, 144

Accrual, 820 Modified accrual, 820

Basket purchase of fixed assets, 247 Benefits/years-of-service approach, 411

Bifurcation, 717 Blended component unit, 807 Bonds, 372

Amortization Effective interest vs. straight-line methods, 375

Issue costs, 375 Premium/discount, 372

Callable SFAS 78, 931

Convertible, 375 APB 14, 909 Induced conversions of, 931

Current portion, 303 Disclosure of long-term debt

SFAS 47, 927 Extinguishment of debt, 377 Impairment of, 401, 402

SFAS 114, 945 Intercompany transactions in, 663 Investments, 372, 576

SFAS 115, 947 Issued with detachable stock purchase warrants, 376 APB 14, 909

Journal entries for, 373 Payable, 372 Valuation example, 373

Bonus arrangements, 304 Bonus method (new partners), 765 Budgetary comparison schedules, 819, 830

Budgeting Fund accounting, 824

Business combinations Consolidated financial statements

Balance sheet Date of combination, 659

Eliminating entries, 665 Intercompany transactions, 662

Bond transactions, 663 Fixed asset transactions, 663 Inventory transactions, 662

Minority interest, 667 Subsequent to acquisition, 661

Example of, 663 Worksheet, 664

Consolidation Of majority-owned subsidiaries (SFAS 94), 936

Date of combination

COPYRIG

HTED M

ATERIAL

1048 Index

Purchase method, 659 Deferred tax effects, 491 Differential, 660, 666 Purchase method, 659 Statutory consolidation, 655

Business-type activities, 807

C

Call option, 717 Callable obligations

SFAS 78, 931 Callable preferred stock, 521 Capital expenditures, 247 Capital leases, 440, 450, 629, 922 Capital maintenance theory, 42, 985 Capital projects funds, 811, 831 Capitalization of interest cost, 239

Diagram of, 241 SFAS 34, 925

Cash, 293 Cash basis of accounting, 48

Conversion to accrual basis, 48 Cash collection recognition basis, 47 Cash flow hedge, 711 Cash flow information (SFAC 7), 43 Cash reconciliation (four-column), 294

Cash surrender value of life insurance, 589

Change in accounting estimate, 112 Changes in accounting principle

Income statement presentation, 131 Interim reporting, 746

Changing prices and financial reporting

SFAS 89, 936 Collateral, 303 College accounting, 873, 881

Financial statements, 882 College and University Accounting, 841

Common stock, 520 Comparative financial statements, 143, 904

Compensated absences, 308 SFAS 43, 926

Compensation cost, 950 Completed-contract method, 203 Completion-of-production recognition basis, 47

Component unit, 806 Composite depreciation method, 250 Compounding of interest, 351 Comprehensive annual financial report (CAFR), 806

Comprehensive bases of accounting, 144

Comprehensive income, 43, 130, 133 SFAS 130, 953

Computer software costs, 256 SFAS 86, 931

Conceptual framework, 39 Consignments, 202 Constant dollar accounting, 140 Contingencies

Compensated absences, 308

Definition, 305 Gains, 308 Liabilities/losses, 305 Litigation, 307 Recording and disclosing, 305 SFAS 5, 917

Contingent issuances of common stock, 533

Contributed capital SFAS 116, 949

Contributions SFAS 116, 949 To not-for-profits, 875

Convertible debt, 375 APB 14, 909 Induced conversions of (SFAS 84), 931

Convertible preferred stock, 520 Corporations

Bankruptcy, 534 Quasi reorganization, 535 Reorganization, 535

Cost adjusted for fair value method, 583

Compared to equity method, 583, 585 Cost flow assumptions, 194

Periodic, 195 Perpetual, 195

Cost flow methods, inventory valuation, 195

Direct costing method, 202 Dollar-value LIFO, 198 FIFO, 198 Gross profit method, 201 LIFO, 198 Long-term construction contracts, 203 ARB 45, 906

Lower of cost or market, 196 Market value method, 202 Moving average, 196 Relative sales value method, 202 Simple average, 196 Specific identification, 195 Standard cost method, 201 Variable costing method, 202 Weighted-average, 196

Cost method (Treasury stock), 522 Cost of goods sold, 194

Interim reporting, 746 Cost recovery method, 47, 51 Cost-sharing plans, 837 Cumulative preferred stock, 520 Current assets, 134, 904 Current cost accounting, 42, 142 Current financial resources measurement focus, 820

Current liabilities, 134, 303, 904 ARB 43, Chapter 3A, 904 SFAS 43, 926

Current market value, 42 Current ratio, 309 Curtailment, 935

D

Debt

Bad debts, 296 Convertible

APB 14, 909 Induced conversions of, 931

Extinguishment, 377 APB 26, 912

Impairment of, 401, 582, 945 Issued with detachable purchase warrants, 376, 909

Long-term, disclosure of, 927 Modification of terms, 398 Restructure, 398

SFAS 15, 924 Securities, 372, 576

SFAS 115, 947 Short-term obligations expected to be refinanced, 304 SFAS 6, 919

Debt service funds, 811, 833 Deferrals, 48, 985 Deferred compensation, 423 Deferred taxes

APB 23, 912 Business investments, 491 Changing tax rates, 488, 944 Deferred tax asset valuation allowance, 490

Deferred tax assets/liabilities, 483, 943 Balance sheet presentation, 495, 944

Retained earnings presentation, 495

Equity method investments and, 586 Financial statement presentation, 494, 944

Future taxable/deductible amounts, 485, 943

Interim periods FASB I 18, 914

Loss carryforwards/carrybacks, 493 Permanent differences, 481 Scheduling and recording deferred tax amounts, 484

SFAS 109, 943 Subsidiaries and, 492 Temporary differences, 482, 483, 492, 495, 943

Defined benefit pension plan, 410, 837, 935

Defined contribution pension plan, 410, 837, 932

Depletion, 253 Depreciation, 248

Accelerated, 248 APB 12, 909 Changes in, 251 Composite (group), 250 Fractional year, 251 Inventory, 250 Physical usage, 250 Straight-line, 248

Derivative financial instruments, 706 Bifurcation, 709 Definition, 707, 717 Disclosure, 715 Embedded, 709 Exclusions, 708

Index 1049

Fair value measurement, 707 Forward exchange contracts, 714 Glossary, 717 Hedging instruments, 707, 709

Cash flow hedge, 711 Fair value hedge, 710 Foreign currency hedge, 713

Inclusions, 708 Initial net investment, 718 SFAS 107, 942 SFAS 133, 958 SFAS 138, 959

Derived tax revenues, 821 Detachable stock purchase warrants, 376

Development stage enterprises, 140, 257

SFAS 7, 920 Differential

Business combinations, 660, 666, 669 Equity method investments, 583, 585

Diluted earnings per share, 530 Dilutive securities, 530 Direct costing, 202 Direct financing lease, 440, 443, 447, 923

Financial statement elements, 449 Direct write-off method, 296 Disclosure

Accounting policies, 136 APB 22, 912

Contingencies, 305 Depreciable assets (APB 12), 909 Financial instruments

Derivative, 715 Fair values of, 715

SFAS 107, 942 Fixed assets

Impairment of (SFAS 144), 968 To be disposed of (SFAS 144), 968

Interim (APB 28), 913 Leases, 456, 921 Loan impairments, 945 Long-term obligations (SFAS 47), 927

Pensions, 955 Related-party transaction

SFAS 57, 930 Securities (SFAS 115), 947 Segments, 753 SFAS 131, 953 Stock compensation (SFAS 123), 950

Discontinued operations, 132, 746 SFAS 144, 969

Discount on forward contract, 717 Discrete view, 746 Discretely presented component unit, 807

Disposals of fixed assets, 251 SFAS 144, 968, 970

Dividends, 523 Payable, 304 Received, 583, 585 Types of, 523

Dollar-value LIFO, 198 Donations, 482

SFAS 116, 949

Double-extension technique, 199

E

Earnings per share Basic, 528 Diluted, 530 SFAS 128, 951 Simple capital structure, 528 Weighted-average common shares outstanding, 528

Economic resources measurement focus, 820

Effective interest amortization method, 375

Elimination entries, 660, 665 Eligibility requirements, 821 Embedded derivative instruments, 709, 717

Employee stock ownership plan (ESOP), 537

Employers’ accounting for postemployment benefits (SFAS 112), 423, 945

Settlements and curtailments of defined benefit pension plans (SFAS 88), 935

Termination benefits (SFAS 88), 935 Encumbrances, 825 Endowment funds, 838 Enterprise funds, 812, 836 Environmental remediation, 919 Equity (net assets), 983 Equity method of accounting, 583

APB 18, 910 FASB I 35, 907, 909, 910

Compared to cost adjusted for fair value, 583, 584

Deferred tax effects, 586 Differential, 583 Intercompany transactions, 584, 662 Retroactive change to, 585

Equity securities, 520, 576 SFAS 115, 947

Error correction, 90, 93 Income statement presentation, 131

Escheat property, 838 Estimated warranty liability, 482 Exchange revenues, 808 Exchange transactions, 820 Executory costs, 921 Expected cash flow approach, 45 Expendable trust funds, 838 Expenditures, 825

Classification, 825 Expenses, 984 Extraordinary items, 131, 746, 808

APB 9, 908 APB 30, 916 Extinguishment of debt, 377

F

Factoring accounts receivable, 298 With recourse, 55, 299 Without recourse, 298

Fair value hedge, 707

FASB Interpretations No. 1 (Accounting changes to inventory), 911

No. 8 (ST obligations repaid prior to being replaced by a LT security), 920

No. 14 (Estimating contingent losses), 918

No. 18 (Interim income taxes), 914 No. 30 (Involuntary conversions), 916

No. 35 (Equity method), 907, 909, 910

No. 37 (Translation adjustment), 930 No. 39 (Offsetting of amounts related to certain contracts), 909

No. 46 (Consolidation of variable interest entities), 907

FASB Technical Bulletins TB 85-3 (Operating leases with scheduled rent increases), 924

Fiduciary funds, 837 Agency funds, 816, 837 Investment trust funds, 815, 838 Pension (and other employee benefit) trust funds, 815, 837

Private-purpose trust funds, 815, 838 Statement of changes in net assets, 816

Statement of net assets, 816 Financial instruments

Cash, 293 Derivative contracts, 943 Disclosures about fair value of, 715

SFAS 107, 942 Securities

Debt, 372, 576 Equity, 520, 576

Financial reporting, 38 Changing prices and SFAS 89, 936 Objectives of

SFAC 1, 981 Recognition and measurement, 41

SFAC 5, 981 Financial statements, 130

Accounting policies, 136 Balance sheet, 134

Accounts payable, 303 Accounts receivable, 295 Accruals, 48 Bonds payable, 372 Consolidated, 659 Current assets, 904 Current liabilities, 136, 303, 905 Deferred tax assets/liabilities, 495 Fixed assets, 239 Intangible assets, 253 Inventory, 194, 905 Investments, 576 Notes payable, 354, 911 Notes receivable, 354, 911 Retained earnings

Appropriations, 525 Stockholders’ equity, 519, 983

Combined financial statement, 674 Comparative financial statement, 143 Comprehensive income, 130, 133

1050 Index

Consolidated financial statements, 655, 663 ARB 51, 907

Constant dollar accounting, 140 Current cost accounting, 142 Development stage enterprise accounting, 140

Elements of financial statement, 41 SFAC 6, 982

Foreign currency financial statement, 792, 928

Fund, 811 Government-wide, 807 Income statement, 130

APB 9, 908 Bad debts expense, 296 Change in accounting principle, 131

Correction of an error, 131 Depreciation, 248 Discontinued operations, 132, 916 Earnings per share, 528, 530 Example of, 130, 133 Extraordinary items, 131, 916 Income taxes, 494 Investment income, 582 Unusual or infrequent items, 131

Interim financial statement, 746 APB 28, 913

Not-for-profit, 882, 884 Other comprehensive bases of accounting, 144

Personal financial statement, 739 Prospective financial information, 144

Recognition criteria (SFAC 5), 981 Retained earnings statement, 130

Appropriations of, 525 Dividends, 523, 906 Prior period adjustments

Deferred tax effects, 494 Retroactive change to equity method, 585

Statement of affairs, 534 Statement of cash flows, 619

Classification in, 620, 937 Direct presentation, 621, 939 Examples of, 623 Financing activities, 620, 628, 938 Indirect presentation, 621, 939 Investing activities, 620, 628, 937 Noncash investing and financing activities, 620

Objectives of, 619 Operating activities, 620, 626, 628, 938

Financing activities, 620, 628 Firm commitment, 718

Unrecognized, 713 First-in, first-out (FIFO) method, 198 Fixed assets, 239

Acquisition cost, 239 Basket purchase of, 247 Computer software costs, 256 Depletion, 253 Depreciation, 248 Disclosure of (APB 12), 909 Disposals of, 251

SFAS 144, 968 Expenditures, capital vs. revenue, 247

Impairment of, 251 SFAS 144, 968

Insurance on, 253 Intercompany transactions, 663 Interest capitalization

Diagram of, 241 SFAS 34, 925

Nonmonetary exchanges, 242 Diagram of, 243

Start-up costs, 255 FOB destination/shipping point, 202 Forecasted transaction, 712, 718

Foreign currency denominated, 713 Foreign currency hedge, 713 Foreign currency transactions, 704, 718

Foreign currency translation, 786 Foreign currency statements, 786 SFAS 52, 928

Forward contract, 718 Discount or premium on, 717

Forward exchange contracts, 714, 718, 930

Fractional year depreciation, 251 Franchise agreements, 52

SFAS 45, 927 Functional currency, 792, 928 Fund accounting (GASB 34), 806

Basis, 820 Budgetary accounting, 824 Fiduciary funds, 815, 837

Agency funds, 816, 837 Investment trust funds, 815, 837 Pension (and other employee benefit) trust funds, 815, 837

Private-purpose trust funds, 815, 838

Financial statements, 829 Conversion from fund FS to government-wide FS, 840

Fund, 811 Government-wide statements, 807

Governmental funds, 811, 825 Capital projects funds, 811, 826, 831

Debt service funds, 811, 833 General fund, 811, 824, 826 Permanent funds, 811 Special revenue funds, 811, 824, 830

Interfund transactions, 839 Investments, 840 Management’s discussion and analysis, 807

Measurement focus, 820 Nonexchange transactions, 820 Notes to the financial statement, 816 Proprietary funds, 812, 835

Enterprise funds, 812, 836 Internal service funds, 812, 835

Reporting entity, 806 Required supplementary information, 818

Special assessments, 835 Fund financial statements, 809

Balance sheet, 812, 829, 834 Conversion to government-wide FS, 840

Statement of cash flows, 817 Statement of changes in fiduciary net assets, 818

Statement of fiduciary net assets, 816 Statement of net assets, 815 Statement of revenues, expenditures, and changes in fund balances, 813, 833

Statement of revenues, expenses, and changes in fund net assets, 816

Futures contracts, 718

G

Gain, 984 Gain contingencies, 308, 918 General fund, 811, 824, 826 General-purpose governments, 806 Goods in transit, 202 Goodwill, 253

Amortization of, 482 Impairment, 255 SFAS 142, 965

Goodwill method (new partners), 765 Government reporting model, 805 Governmental Accounting Standards Board (GASB), 804

Governmental funds, 811, 825 Capital projects funds, 811, 831 Debt service funds, 811 Expenditure classification, 825 General fund, 811, 824, 826 Permanent funds, 811 Special revenue funds, 811, 824, 830

Government-mandated nonexchange transactions, 821

Government-wide financial statements, 807

Conversion from fund FS, 840 Statement of activities, 807, 810 Statement of net assets, 807, 808

Gross profit method, 201 Group depreciation method

SFAS 142, 250 Guaranteed residual value, 444

H

Health care entities, 873, 883, 885 Financial statements, 884

Health care guide, 883 Hedging, 704, 706, 709

Cash flow hedges, 711 Disclosure, 715 Fair value hedges, 710 Foreign currency hedges, 713 Forward exchange contracts, 714 SFAS 133, 958

Held-to-maturity securities, 577, 579, 582

SFAS 115, 947 Historical cost principle, 42

Index 1051

I

If-converted method, 532 Impairment

Of assets acquired with goodwill, 255 Of fixed assets, 251 Of goodwill

SFAS 142, 965 Of loans, 401

SFAS 114, 945 Of long-lived assets

SFAS 144, 968 Of securities, 582

Imposed nonexchange transactions, 821

Income determination, 47 Completed-contract method, 203 Cost recovery method, 47, 51 Installment method, 47, 50 Net realizable value method, 47 Percentage-of-completion, 47, 203 Real estate sales, 52, 54 Sales basis, 47, 54 Transactions approach, 47

Income taxes SFAS 109, 943

Induced conversions of debt SFAS 84, 931

Infrastructure assets, 809 Infrequent item, 131 Initial direct costs, 442, 453 Initial net investment, 718 Installment sales method, 47, 50, 909 Insurance

Cash surrender value of life insurance, 589

Loss account for fixed assets, 253 Intangible assets, 253

Acquisition of, 253 Amortization of, 254 Goodwill, 253 Impairment, 254

Integral view, 746 Intercompany transactions, 584, 662 Interest

Capitalization of, 239 Diagram of, 241

Compounding, 351 Interest methods of allocation, 46 Interfund transactions, 839 Interim reporting, 746

Discrete view, 746 Integral view, 746

Internal service funds, 812, 835 International Financial Reporting Standards (IFRS)

Basic concepts, 57, 61, 359, 402 Business combinations and consolidations, 675

Deferred taxes, 497 Derivative instruments and hedging activities, 717

Fixed assets, 258 Inventory, 207 Investments, 589 Monetary current assets and current liabilities, 310

Statement of cash flows, 629

Stockholders’ equity, 539 In-the-money, 718 Intrinsic value, 718 Inventory, 194

Acquisition cost, 194 Consignments, 202 Cost of goods sold determination, 194

Intercompany transactions in, 662 Items included in, 202 Losses on purchase commitment, 197 Periodic method, 195 Perpetual method, 195 Ratios, 202 Shipping items, 202 Valuation, see Cost flow methods

ARB 43, Ch. 4, 904 FASB I 1, 911

Inventory depreciation method, 250 Investing activities, 620, 627 Investment trust funds, 815, 838 Investments, 372, 576, 840

Income statement presentation, 582 Investment percentage, 576 Involving significant influence, 583

APB 18, 910 Not involving significant influence, 577 Cost adjusted for fair value method, 583

Example of, 579 Impairment of, 582 SFAS 115, 947

Involuntary conversions, 482 FASB I 30, 916

L

Last-in, first-out (LIFO)method, 198 Leasehold improvements, 442 Leases, 440

Bargain purchase option, 444, 921 Capital lease, 440, 450, 629, 923

Financial statement elements, 449 Contingent rentals, 921 Direct financing lease, 440, 443, 457, 923 Financial statement elements, 449

Disclosure requirements, 456 Executory costs, 921 Fair value of leased property, 921 Free rent/uneven payments, 441 Implicit interest rate, 921 Incremental borrowing rate, 921 Initial direct costs, 442, 453 Lease bonus (fee), 442 Lease term, 921, 939 Leasehold improvements, 442 Lessee, 441, 442, 450, 921 Lessor, 441, 443, 450, 921 Minimum lease payments, 444, 921 Operating lease, 440, 441, 923

Financial statement elements, 442 With scheduled rent increases, 924

Residual value, 444, 922 Sale-leaseback, 55, 453, 924 Sales-type lease, 55, 440, 923

Financial statement elements, 449

Security deposits, 442 SFAS 98, 939 Summary, 456

Lending activities, 357, 358, 359, 377 Liabilities, 983

Contingent, 305 Current, 303, 905 Deferred tax, 483 Environmental remediation, 919 Short-term, expected to be refinanced, 304, 919

LIBOR, 718 Life insurance cash surrender value of, 589

Link-chain technique, 200 Liquidation dividends, 524 Litigation, contingencies and, 307 Loans

Acquisition/origination costs, 936 Impairment of, 401

SFAS 114, 945 Interfund, 839

Local currency, 792 Long-term construction contracts

ARB 45, 906 Loss carryforwards/carrybacks

Deferred tax effects, 493 Losses, 984

Contingent, 305, 918 On long-term construction contracts, 205

On purchase commitments, 197 Lower of cost or market method, 196

M

Management’s discussion and analysis, 807

Market value method, 202 Marketable securities, 576

Accounting for, 577 Equity method, 576

APB 18, 910 Deferred tax effects, 491, 586

SFAS 115, 947 Matching, 985 Measurement focus, 820 Minority interest, 667 Modified accrual basis, 820 Moving average method, 196

N

Net assets (equity), 983 Net operating loss carryovers

Deferred tax effects, 493 Net patient revenue, 884 Net realizable value, 42, 47 Net settlement, 718 Nondetachable stock purchase warrants, 376

Nonexchange revenues, 808 Nonexchange transactions, 820, 821 Nonexpendable trust funds, 838 Nonmonetary exchanges, 55, 242

APB 29, 914 Diagram of, 243

1052 Index

FASB I 30, 916 Notes, 355

Nonrefundable loan origination fees (SFAS 91), 936

Notes payable, 303, 354 APB 21, 911

Notes receivable, 354 APB 21, 911

Notes to the financial statements, 816 Not-for-profit accounting, 873, 983

Colleges and universities, 881 FASB and AICPA standards for, 874 Financial statements, 876, 882, 884 Health care entities, 883, 885 Illustrative transactions, 879

Not-for-Profit Guide, 873 Notional amount, 707, 718

O

Omnibus opinion APB 10, 909 APB 12, 909

Operating activities, 620, 624, 626, 938

Operating cycle, 136, 309 Operating lease, 440, 441, 923

Financial statement elements, 442 With scheduled rent increases, 924

Operating segment, 752 Operational efficiency ratios, 309 Ordinary annuities, 351, 352, 353 Organization costs, 256 Other comprehensive bases of accounting, 144

Other comprehensive income, 953 Other intangible assets, 253 Out-of-the-money, 719

P

Par value method (treasury stock), 522

Participating preferred stock, 520 Partnerships, 763

Admission of new partners, 764 Bonus method, 765 Goodwill method, 765

Death of partner, 767 Dissolution of, 764 Formation of, 763 Income/loss allocation, 763 Incorporation of, 771 Interest, sale of, 767 Liquidation of, 768 Transactions between partners, 767 Withdrawal of partner, 767

Payroll tax liability, 304 Pension (and other employee benefit) trust funds, 815, 837

Pensions, 410 Accumulated benefit obligation, 932 Annuity contract, 935 Curtailment, 935 Defined benefit plan, 411, 935 Defined contribution plan, 410, 932 Disclosures, 935, 955

Employer sponsor’s vs. plan’s accounting and reporting, 410

Employer’s accounting, 410 Funding of pension liability, 411 Market-related value of plan assets, 413, 932

Measurement date, 934 Pension cost/expense, 412, 933

Accrued or prepaid, 411 Components of, 412

Actual return on plan assets, 412, 932

Expected return on plan assets, 413

Gain or loss, 413, 932, 933 Interest on projected benefit obligation, 412

Prior service cost, 413, 933 Service cost, 412, 933

Projected benefit obligation, 412, 933 Settlement, 935 SFAS 87, 932 SFAS 88, 935 SFAS 132, 955 Single-employer defined benefit plans, 933

Termination benefits, 935 Percentage-of-completion method, 47, 203

Period costs, 195 Periodic inventory method, 195 Permanent differences, 482 Permanent funds, 811, 835 Permanently restricted net assets, 983 Permanently restricted resources, 881 Perpetual inventory method, 195 Personal financial statements, 739 Personal property taxes, 906 Petty cash, 293 Physical usage depreciation, 250 Point of sale recognition basis, 47 Postemployment benefits, 423

SFAS 112, 945 Postretirement benefits other than pensions, 421

Disclosures, 423 SFAS 106, 939

Preferred stock, 520 Callable, 521 Convertible, 520 Cumulative, 520 Participating, 520

Premium on forward contract, 717 Premium plans, contingent liabilities for, 306

Primary government, 806 Prior period adjustments, 131, 908

Deferred tax effects, 494 Retroactive change to equity method, 585

SFAS 16, 925 Prior service cost, 413, 933 Private-purpose trust funds, 815, 838 Product costs, 47 Product financing arrangements, 54 Proof of cash, 294 Property dividends, 523

Property taxes, 304, 906 Proprietary funds, 812, 835

Enterprise funds, 812, 836 Internal service funds, 812, 835 Statement of cash flows, 817 Statement of changes in net assets, 816

Statement of net assets, 814 Prospective financial information, 144

Purchase commitments Disclosure of (SFAS 47), 927 Losses on, 197

Purchase method, see also Business combinations

Consolidated balance sheet, 655 Purchase of groups of fixed assets, 247

Put option, 719

Q

Qualitative characteristics of accounting information, 40, 981

Quasi reorganization, 535 ARB 43, Ch. 7A, 904

Quick (acid) ratio, 309

R

Ratio analysis Acid-test (quick), 309 Book value of common stock, 538 Current, 309 Days in inventory, 203, 309 Days in receivables, 309 Debt to equity, 538 Dividend payout, 538 Inventory turnover, 202, 309 Length of operating cycles, 309 Rate of return on common stockholders’ equity, 538

Receivable turnover, 309 Real estate sales, 52, 54

SFAS 66, 930 Transactions, 52

Real property taxes, 906 Realization, 985 Reclassification adjustments, 133 Recognition, 41, 982 Reimbursement, 821 Related-party disclosures

SFAS 57, 930 Relative sales value method, 202 Remeasurement (foreign currency), 792

Rent Free or uneven payments, 441

Reportable operating segments, 954 Reporting currency, 792 Reporting entity, 806 Required supplementary information (RSI), 818

Research and development costs, 256 SFAS 2, 916

Residual value, 444, 922 Guaranteed, 444

Index 1053

Unguaranteed, 445 Retained earnings

Appropriations of, 525 Retirement of assets, 967 Retirement of stock, 523 Revenue, 984 Revenue expenditures, 247 Revenue recognition, 41, 981

Cost recovery method, 51 Franchise agreements, 52 Installment sales, 50 Long-term construction contracts, 203, 906

Nonmonetary exchanges, 55 Product financing arrangements, 54 Real estate transactions, 52, 54 Receivables, sale with recourse, 55 Sale-leaseback transactions, 55, 453, 924

Sales-type leases, 55, 440, 447, 923 SFAC 5, 981 When right of return exists, 54

SFAS 48, 928 Reversing entries, 48 Risk, 143

S

Sale-leaseback transactions, 55, 453, 923

Sales Of accounts receivable

With recourse, 55, 299 Without recourse, 298

Of real estate, 54 SFAS 66, 930 Transactions, 52

With right of return, 54 SFAS 48, 928

Sales basis of revenue recognition, 47, 54

Sales discounts, 295 Sales-type lease, 55, 440, 447, 923

Financial statement elements, 449 Schedule of employer contributions, 818

Schedule of funding progress, 818 Scrip dividends, 524 Secured borrowing, 302 Securities

Available-for-sale, 579, 582, 947 Debt, 372 Equity, 519, 576 Held-to-maturity, 577, 578, 582, 947 Impairment of, 948 Income statement presentation of, 582, 947

SFAS 115, 947 Trading, 578, 582, 947 Transfers between categories of, 582, 948

Securitizations, 302 Security deposits, 442 Segment reporting, 752

APB 30, 916 Disclosure, 753, 754 Restatement, 754

SFAS 131, 953 Servicing assets, 300 Settlement value, 42 SFAS 155, 974 SFAS 156, 975 SFAS 157, 975 SFAS 158, 976 SFAS 159, 977 SFAS 161, 979 SFAS 162, 980 SFAS 165, 980 SFAS 166, 980 SFAS 167, 980 SFAS 168, 981 Shipping terms, 202 Short-term obligations expected to be refinanced, 304

SFAS 6, 983 Simple average method, 195 Software costs, 256 Software revenue recognition, 53 Solvency ratios, 309 Special assessments, 835 Special items, 808 Special revenue funds, 811, 824, 830 Special-purpose entities, 655 Special-purpose governments, 806 Specific identification method, 195 Split-interest agreements, 876 Standard costing of inventory, 201 Start-up activities, 255 Statement of activities, 807, 810 Statement of affairs, 534 Statement of changes in fiduciary net assets, 816

Statement of fiduciary net assets, 816 Statement of net assets, 807, 808 Statements of Financial Accounting Concepts

SFAC 1 (Reporting objectives), 39 SFAC 2 (Accounting information), 40, 981

SFAC 5 (Recognition and measurement), 41, 981

SFAC 6 (Financial statements), 41, 983

SFAC 7 (Cash flow information), 43, 986, 988

Statements of Financial Accounting Standards

SFAS 2, 916 SFAS 5, 917 SFAS 6, 919 SFAS 7, 920 SFAS 13, 921 SFAS 15, 924 SFAS 16, 925 SFAS 34, 925 SFAS 43, 926 SFAS 45, 927 SFAS 47, 927 SFAS 48, 928 SFAS 52, 786, 928 SFAS 57, 930 SFAS 66, 930 SFAS 78, 931 SFAS 84, 931

SFAS 86, 931 SFAS 87, 932 SFAS 88, 935 SFAS 89, 936 SFAS 91, 936 SFAS 94, 936 SFAS 95, 937 SFAS 98, 939 SFAS 106, 939 SFAS 107, 942 SFAS 109, 943 SFAS 112, 945 SFAS 114, 398, 945 SFAS 116, 874, 949 SFAS 117, 874 SFAS 123, 950 SFAS 124, 874 SFAS 128, 951 SFAS 129, 952 SFAS 130, 519, 953 SFAS 131, 953 SFAS 132, 955 SFAS 133, 958 SFAS 136, 874, 875 SFAS 138, 959 SFAS 140, 302, 960 SFAS 142, 965 SFAS 143, 967 SFAS 144, 254, 968, 970 SFAS 145, 970 SFAS 146, 970 SFAS 147, 971 SFAS 149, 971 SFAS 150, 972 SFAS 151, 972 SFAS 152, 972 SFAS 153, 973 SFAS 154, 973

Statements of Governmental Accounting Standards Board

GASB 1, 807 GASB 6, 835 GASB 9, 812 GASB 25, 815, 824 GASB 27, 837 GASB 31, 824, 840 GASB 33, 820, 831 GASB 34, 806, 809, 816, 835 GASB 35, 841 GASB 36, 835 GASB 37, 838 GASB 38, 816 GASB 39, 807, 844 GASB 40, 816, 824 GASB 42, 833 GASB 43, 815, 824 GASB 45, 837 GASB 47, 838 GASB 48, 822 GASB 49, 822 GASB 50, 815 GASB 51, 821 GASB 52, 835 GASB 53, 822, 824 GASB 54, 811 GASB 59, 824

Statements of Position SOP 96-1, 919

1054 Index

Stock Common, 520 Dividends, 524, 587 Preferred, 520 Retirement of, 523 Splits, 524, 587 Subscriptions, 521 Treasury, 522 Warrants, 376, 909

Stock dividends, 524, 587 ARB 43, Ch. 7B, 904

Stock options ARB 43, Ch. 13B, 904

Stock ownership plans for employees, 537

Stock purchase warrants, 376, 909 Stock rights, 537, 587 Stock splits, 524, 587

ARB 43, Ch. 7B, 906 Stock subscriptions, 521 Stockholders’ equity, 519

Common stock, 520 Comprehensive income, 519 Preferred stock, 520 Retained earnings appropriated, 525 SFAS 128, 951 SFAS 129, 952 Stock, types of, 520 Treasury stock transactions, 522

Stockholders’ equity ratios, 538 Straight-line amortization, 375 Straight-line depreciation, 248 Subsidiaries

Consolidation of (SFAS 94), 936 Deferred tax effects, 492

Summary of significant accounting policies, 912

Sum-of-the-years’ digits method, 248 Swap contracts, 719 Swaption, 719

T

Temporarily restricted net assets, 984 Temporarily restricted resources, 880 Temporary differences, 481, 483, 491, 495

Donated asset, 482 Estimated warranty liability, 482 Goodwill, 482 Involuntary conversion of assets, 482 Plant assets and accumulated depreciation, 482

Unearned rent (royalty) revenue, 482 Time value of money, 42, 350

Amortization of bond interest, 372 Annuities, 351, 353 Applications of, 353 Bonds payable/bond investments, 372 Compounding interest, 351 Debt restructure, 398 Effective interest vs. straight-line amortization method, 375

Expected cash flow, 45 Factor tables, 352 Future value

Of an amount, 351 Of an annuity due, 353 Of an ordinary annuity, 351

Leases, 440 Notes receivable/payable, 354 Pensions, 410 Present value

Of a future amount, 42, 351 Of an annuity due, 353 Of an ordinary annuity, 352

SFAC 7, 43 Trading securities, 578, 579, 582

SFAS 115, 947 Transaction gain or loss, 719 Transfer of receivables, 298

Translation adjustments, 792 Translation of foreign currency, 786 Treasury stock, 522

APB 6, 908 ARB 43, Ch. 1B, 904

Treasury stock method (to test dilutiveness), 531

Troubled debt restructure, 398 SFAS 15, 924

U

Uncertainties, 143 Unconditional purchase obligations, 927

Underlyings, 707, 719 Unearned rent (royalty) revenue, 482 Unguaranteed residual value, 445, 922

University accounting, 873, 881 Unrecognized firm commitment, 713 Unrestricted net assets, 984 Unusual item, 131

V

Variable costing of inventory, 202 Variable interest entities, 655 Variance power, 875 Voluntary nonexchange transactions, 821

W

Warrants, detachable stock purchase, 376, 909

Weighted-average method, 196 With vs. without recourse, 298 Working capital, 909 Write-offs of accounts receivable, 296