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All CPA FAR Formulas

Financial Reporting 40 items

Basic EPS

\text{Basic EPS} = \frac{\text{Net Income} - \text{Preferred Dividends}}{\text{Weighted Avg Common Shares Outstanding}}

Stock dividends and splits applied retroactively to all prior periods.

Indirect method: operating cash flows

Start: Net Income
+ Depreciation and amortization
+ Loss/(Gain) on asset disposal
+ Decrease/(Increase) in current assets
+ Increase/(Decrease) in current liabilities
= Cash from Operations

Comprehensive income and OCI mnemonic (PUFE)

Comprehensive Income=NI+OCI\text{Comprehensive Income} = NI + OCIComprehensive Income=NI+OCI
OCI items (PUFE):
P: Pension adjustments
U: Unrealized G/L on AFS debt
F: FX translation
E: Effective portion of CF hedge

Debt-to-equity and times interest earned

D/E=Total LiabilitiesTotal Stockholders’ Equity\text{D/E} = \frac{\text{Total Liabilities}}{\text{Total Stockholders' Equity}}D/E=Total Stockholders’ EquityTotal Liabilities​
TIE=EBITInterest Expense\text{TIE} = \frac{\text{EBIT}}{\text{Interest Expense}}TIE=Interest ExpenseEBIT​
Higher TIE → greater ability to service debt.

Anti-dilution rule (diluted EPS)

Include a potential share ONLY if it decreases EPS. Test each security separately, most dilutive first. Net loss year: all anti-dilutive, so diluted EPS = basic EPS.

Comprehensive Income decomposition

CI = NI + OCI

OCI items (PUFE): Pension adjustments, Unrealized G/L on AFS debt securities, Foreign currency translation, Effective portion of cash-flow hedges. Reported net of tax.

SEC Form 10-Q filing deadlines

Large accelerated & accelerated filers: 40 days after quarter-end. Non-accelerated filers: 45 days. Filed for Q1-Q3 only; Q4 results are reported in the annual 10-K.

NFP conditional vs unconditional contributions

Conditional = barrier + right of return → defer; cash received = Refundable Advance liability; recognize when ALL barriers overcome. Unconditional = no barrier → recognize immediately.

Book value per common share

BVPS = (CSE - PE - DA) / CSO

CSE = common stockholders' equity, PE = preferred equity, DA = dividends in arrears, CSO = common shares outstanding (issued − treasury)

Discontinued operations criteria

Held-for-sale (ALL): 1) Mgmt commits to plan 2) Available for immediate sale as-is 3) Active buyer search 4) Sale probable within 1 yr 5) Marketed at reasonable price 6) Unlikely plan changes.

Cash to accrual basis conversion

Revenue:

Accrual\ Rev = Cash\ Rev + \Delta AR - \Delta Unearned

. Expense:

Accrual\ Exp = Cash\ Paid + \Delta AP - \Delta Prepaid

. Add increases in liabilities; subtract increases in assets.

DuPont decomposition (3-step)

ROE = \frac{NI}{Sales} \times \frac{Sales}{Avg\,Assets} \times \frac{Avg\,Assets}{Avg\,Equity}

Profit Margin × Asset Turnover × Equity Multiplier

Foreign currency — direct vs indirect quotation

\text{Direct} = 1 / \text{Indirect}

. Direct = domestic price per 1 foreign unit (e.g., $1.10/€1). Indirect = foreign units per 1 domestic unit (e.g., €0.91/$1). Reciprocals.

Diluted EPS — If-converted method (convertible preferred)

Diluted\ EPS = \dfrac{NI - Pref + PrefDiv_{conv}}{WAOCS + ShrFromConv}

Include only if dilutive; test each issue separately.

Profitability ratios suite

GM = (Sales - COGS)/Sales

;

PM = NI/Sales

;

ROA = NI/\text{Avg Assets}

;

ROE = NI/\text{Avg Equity}

NI = net income; use averages for balance-sheet denominators.

Stock dividend — small (<20-25%) treatment

DR Retained Earnings = FMV × shares; CR Common Stock = Par × shares; CR APIC = (FMV − Par) × shares.

\Delta RE = FMV \times shares

. FMV = fair market value at declaration; reduces RE at FMV.

Governmental fund types (GRaSPP)

GRaSPP = 1) General Fund 2) Special Revenue Fund 3) Debt Service Fund 4) Capital Projects Fund 5) Permanent Fund. All 5 use modified accrual basis + current financial resources measurement focus.

Foreign-currency transaction G/L matrix

FC strengthens: Asset→Gain, Liability→Loss. FC weakens: Asset→Loss, Liability→Gain.

G/L = (Spot_{settle} - Spot_{txn}) \times FC

. Recognize at each B/S date and settlement; hits income (ASC 830).

Proprietary fund types and enterprise fund criteria

1) Internal Service (internal customers) 2) Enterprise (external customers), REQUIRED if ANY: debt secured by fee revenue; law requires fees cover costs; pricing policy targets cost recovery.

Cumulative preferred dividends in arrears

Arrears = Shares \times Par \times Rate \times Years\ Unpaid

disclosed in notes (not a liability) until declared.

Segment reporting — quantitative thresholds

Subsequent events — Type 1 vs Type 2

Type 1 (recognized): condition existed at B/S date → adjust F/S. Type 2 (nonrecognized): condition arose after B/S date → disclose only.

Stock dividend — large (≥20-25%) treatment

Treated like stock split. DR Retained Earnings; CR Common Stock (par × shares issued).

\Delta RE = Par \times Shares_{issued}

. FMV ignored. Total equity unchanged.

NFP donated services (SOME mnemonic)

Recognize only if ALL met: 1) Specialized skills required, 2) Otherwise needed by org (would purchase), 3) Measurable, 4) Easily valued at fair value. Else: no entry.

Fiduciary fund types

Full accrual, economic resources: 1) Custodial: temporary custody 2) Investment Trust: external investment pools 3) Private-Purpose Trust: legally protected assets 4) Pension/OPEB Trust.

SEC Form 10-K filing deadlines

1) Large Accelerated (float ≥ $700M) = 60 days 2) Accelerated ($75M–$700M float, ≥ $100M revenue) = 75 days 3) Non-Accelerated (< $75M float) = 90 days after fiscal year-end.

Diluted EPS — Treasury Stock Method (options/warrants)

\Delta Shares = N - (N \times K / P)

; apply only if

K < P

(in the money). Add

\Delta Shares

to diluted EPS denominator. N = issued options/warrants, K = strike price, P = avg market price.

AR turnover and Days Sales in AR

\text{AR Turnover} = \dfrac{\text{Net Credit Sales}}{\text{Avg Net AR}}

;

\text{Days Sales in AR} = \dfrac{365}{\text{AR Turnover}}

higher turnover and fewer days = faster collection.

Operating cash flow ratio

OCF\ Ratio = CFO / Current\ Liabilities

CFO = cash from operations; Current Liabilities = period-end balance.

NFP cash and unconditional contribution recognition

Cash: recognize revenue at FV when received. Unconditional pledge:

PledgeReceivable = \sum CF_t / (1+r)^t

recognize at NPV when promise made.

AP turnover and Days Payable Outstanding (DPO)

\text{AP Turnover} = COGS / \text{Avg AP}

;

DPO = 365 / \text{AP Turnover}

Avg AP = (beg AP + end AP)/2.

Cash Conversion Cycle (CCC)

CCC = DSO + DIO - DPO

DSO = days sales outstanding (AR), DIO = days inventory outstanding, DPO = days payable outstanding. Measures days cash is tied up in operations; lower is better.

NFP three required financial statements + net asset classes

Required: 1) Statement of Financial Position 2) Statement of Activities 3) Statement of Cash Flows. Net asset classes: Without Donor Restrictions, With Donor Restrictions.

Modified accrual revenue recognition rule

Revenue when MEASURABLE and AVAILABLE (collectible in current period or within 60 days after period end). Expenditures when liability is incurred (not when paid).

Multi-step income statement structure

1) Net Sales − COGS = Gross Profit 2) Gross Profit − Operating Expenses = Operating Income 3) Operating Income ± Non-operating items = Pre-tax Income 4) Pre-tax Income − Tax = Net Income.

Government-wide vs fund-level financial statements

Government-wide: full accrual + economic resources; ALL assets/liabs incl. capital + LT debt. Governmental funds: modified accrual + current financial resources; NO capital assets, NO LT debt.

Liquidity ratios — Current and Quick

Current = CA / CL

;

Quick = (Cash + ST\ Mkt\ Sec + Net\ AR) / CL

CA = current assets, CL = current liabilities; Quick excludes inventory and prepaids.

Inventory turnover and Days in Inventory

\text{Inv Turnover} = \frac{COGS}{\text{Avg Inventory}}

;

\text{Days in Inv} = \frac{365}{\text{Inv Turnover}}

Avg Inv = (Beg + End)/2

Diluted EPS — If-converted method (convertible bonds)

Diluted\ EPS = \dfrac{NI - Pref + Int(1-t)}{WAOCS + ConvShares}

Int = bond interest, t = tax rate, ConvShares = shares from conversion. Test each issue separately; include only if dilutive.

FC translation vs remeasurement method

Translation (functional=local): A/L current, equity historical, I/S avg; G/L→OCI. Remeasurement (functional=parent's): monetary current, non-monetary historical, COGS/dep historical; G/L→NI.

Select Balance Sheet Accounts 39 items

FIFO vs. weighted average inventory cost

FIFO COGS=oldest costs used first\text{FIFO COGS} = \text{oldest costs used first}FIFO COGS=oldest costs used first
WA Cost per Unit=Total Cost of Goods AvailableTotal Units Available\text{WA Cost per Unit} = \frac{\text{Total Cost of Goods Available}}{\text{Total Units Available}}WA Cost per Unit=Total Units AvailableTotal Cost of Goods Available​
WA COGS=WA Cost per Unit×Units Sold\text{WA COGS} = \text{WA Cost per Unit} \times \text{Units Sold}WA COGS=WA Cost per Unit×Units Sold

LIFO reserve and LIFO effect

\text{LIFO Reserve} = \text{FIFO Inventory} - \text{LIFO Inventory}

\text{LIFO Effect} = \Delta \text{LIFO Reserve}

(extra COGS under LIFO vs. FIFO)

Bad debt expense (allowance method)

\text{Bad Debt Expense} = \text{Estimated Uncollectible} - \text{Existing Credit Balance in Allowance}

% of sales method: no adjustment for existing balance.

Bond effective-interest amortization

IntExp = BegCV \times MktRate

;

CashInt = Face \times Coupon

; Amort = |IntExp − CashInt|. Discount: IntExp > Cash, CV ↑. Premium: IntExp < Cash, CV ↓.

Pension Net Periodic Cost (SIRAGE)

NPPC = S + I - R + A + G + E

S=Service cost, I=Interest cost, R=Expected Return on plan assets, A/G/E=Amortization of prior service cost, Gains/Losses, Existing (transition) obligation

Long-lived asset impairment — recoverability + measurement

Held-for-use: Undiscounted CF < CV → fail recoverability; Loss = CV − FV; no restoration. Held-for-sale: Loss = CV − (FV − Cost to Sell); no depreciation; restoration allowed.

Cloud computing arrangements — 3 phases

1) Preliminary Project: EXPENSE. 2) Application Development: CAPITALIZE impl costs; expense training & data conversion. 3) Post-Implementation: EXPENSE. Amortize over hosting term.

Cash equivalents 90-day rule

Cash equivalent if BOTH: 1) Readily convertible to known cash amount 2) Original maturity ≤ 90 days from acquisition date. Excludes: CDs > 90 days, equity securities.

Cost depletion (4-step)

1) Base = (Land + Development + Restoration) − Residual. 2)

Rate = Base / Estimated\ Recoverable\ Units

. 3) Depletion = Rate × Units extracted. 4) COGS portion = Rate × Units sold.

ARO accretion expense

Annual unwinding of discount on asset retirement obligation

Account

Accretion Expense

Beginning ARO × credit-adjusted risk-free rate

Asset Retirement Obligation

Same amount

Capitalized interest on self-constructed assets

Cap Int = min(Actual Int Incurred, Avoidable Int);

Avoidable = AAE \times r

AAE = avg accumulated expenditures, r = specific then weighted-avg rate.

Lower of Cost or Market (LIFO / retail method)

Market = \text{middle}(Ceiling, Replacement, Floor)

; Ceiling = NRV = SP − cost to sell; Floor = NRV − normal profit. Inventory = min(Cost, Market). Applies to LIFO and retail method only.

Units-of-production depreciation

Dep/unit = (Cost - Salvage) / Total\ Units

;

Year\ Dep = Dep/unit \times Units\ Produced

usage-based; ignores time. Use when wear correlates with output (machines, vehicles by miles).

Stock issuance above par

DR Cash at issue price; CR Common Stock at par; CR APIC for the excess.

Account

Cash

Shares × Issue Price

Common Stock

Shares × Par Value

Additional Paid-in Capital - Common Stock · Plug

Plug (excess over par)

PP&E capitalization — land vs plant items

Land (not depreciated): title/legal fees, clearing/grading, back-tax assumed, razing old buildings less salvage. Plant (depreciated): construction-period interest, architect fees.

Bond issuance at a premium

Market rate < coupon rate; cash proceeds exceed face value.

Account

Cash

PV @ market rate

Premium on Bonds Payable

Plug

Bonds Payable

Face Value

Double-declining balance depreciation

Dep_t = (Cost - AccDep_{t-1}) \times (2 / UL)

UL = useful life in years; ignore salvage in formula but stop when book value = salvage. Front-loaded; no salvage subtraction up front.

Pension funding and net periodic cost

Single-period pension expense + funding. NPPC = SIRAGE total. Plug to Pension Asset/Liability.

Account

Net Periodic Pension Cost

SIRAGE total

Cash

Plan contribution

Pension Liability · DR Pension Asset if overfunded

Plug

Asset Retirement Obligation (ARO) initial recognition

ARO = PV(\text{expected retirement cash outflows})

at credit-adjusted risk-free rate. JE: DR Asset Retirement Cost (capitalized to PPE); CR ARO.

Periodic vs perpetual inventory

Periodic: Buy DR Purchases; Sell CR Sales (no COGS entry). Perpetual: Buy DR Inventory; Sell CR Sales AND DR COGS, CR Inventory.

COGS_{periodic}=BI+Purch-EI

Property dividend declaration (in-kind)

Remeasure asset to FMV at declaration; recognize gain/loss, then declare dividend at FMV.

Account

Investment in Securities (or Asset) · if gain

FMV − CV

Gain on Appreciation of Property

FMV − CV

Retained Earnings

FMV of property

Property Dividends Payable

FMV of property

Lease liability formula (lessee)

LL = PV(\text{REPORT})

R=Required fixed pmts, E/P=Exercise of Purchase option (rsbly certain), O=Only index/rate-variable pmts, R=Residual guarantees likely owed, T=Termination penalties

Finance lease — initial recognition (lessee, ASC 842)

OWNES met. ROU = LL + IDC + prepayments − incentives. Cash CR = net IDC + prepayments − incentives.

Account

Right-of-Use Asset

LL + IDC + prepaid − incentives

Lease Liability

PV of lease payments

Cash · net cash outflow

IDC + prepaid − incentives

Dollar-value LIFO with price index

EI at base = EI at current ÷ current index. Layer Δ = EI at base − prior EI at base. New layer = layer Δ × current index. DVL EI = base layer + Σ(prior layers at their indexes) + new layer.

ROU asset formula (lessee)

ROU = LL + IDC + Prepay - Incentives

LL = lease liability, IDC = initial direct costs, Prepay = prepaid lease pmts, Incentives = lessor incentives received.

Composite (group) depreciation method

\text{Annual Dep} = \sum(\text{Depr Base}_i / \text{UL}_i)

;

\text{Composite Life} = \sum\text{Depr Base} / \text{Annual Dep}

. Retirements: no G/L, Dr Cash & AD, Cr Asset.

Bank reconciliation (DO + BINS)

Bank (DO): Balance + Deposits in Transit − Outstanding Checks = True Cash. Book (BINS): Balance + Bank collections + Interest − NSF − Service charges = True Cash.

Factoring AR — with vs without recourse

Without recourse = true sale. With recourse = sale only if ALL: 1) control surrenders 2) repurchase obligation reasonably estimable 3) no required repurchase. Else secured borrowing.

Lower of Cost or NRV (FIFO / Weighted Average)

NRV = SP - CTS

;

Inventory = \min(Cost, NRV)

SP = selling price, CTS = cost to complete & sell.

Premium liability for sales coupons

Year-end accrual: outstanding coupons × per-premium cost.

Account

Premium Expense

Outstanding Claims × Cost per Premium

Premium Liability

Outstanding Claims × Cost per Premium

Treasury stock — par-value method buyback

Par method recognizes G/L at repurchase, unlike cost method

Account

Treasury Stock

Par × Shares

APIC - Common Stock

Original APIC per share × Shares

Retained Earnings · if repurchase > original issue

Plug

Cash

Repurchase Price

Discounting notes receivable (4-step)

MV = Face + Interest

BD = DiscRate \times MV \times t

Cash = MV - BD

IntInc/Exp = Cash - CV

. MV=maturity value, BD=bank discount, t=time to maturity, CV=carrying value.

Treasury stock — cost method buyback

DR Treasury Stock (contra-equity) at total cost; CR Cash. No G/L until reissue/retirement.

Account

Treasury Stock

Shares × Repurchase Price

Cash

Shares × Repurchase Price

Treasury stock retirement (cost method)

Reverses original issue (par + APIC) and removes treasury stock at cost; plug to RE if loss, APIC-T/S if gain.

Account

Common Stock

Par × shares retired

APIC - Common Stock

Original APIC per share × shares

Retained Earnings · if loss on retirement

Plug

Treasury Stock

Repurchase cost

APIC - Treasury Stock · if gain on retirement

Plug

Bond issuance at par

Market rate = coupon rate; no premium or discount.

Account

Cash

Face Value

Bonds Payable

Face Value

Operating lease — initial recognition (lessee, ASC 842)

OWNES NOT met. ROU = LL + IDC + prepaid − incentives. Single straight-line expense after.

Account

Right-of-Use Asset

LL + IDC + prepaid − incentives

Lease Liability

PV of lease payments

Cash · net cash outflow

IDC + prepaid − incentives

Allowance for doubtful accounts — % of sales vs aging

% of sales (income-stmt):

BDE = \%\times \text{Credit Sales}

ignores existing allowance. Aging (balance-sheet):

BDE = \text{Est. Uncollectible} - \text{Existing Allowance CR Bal}

Sales discount — gross vs net method

Gross: AR/Sales at full; if taken, Dr Sales Discount (contra-rev). Net: AR/Sales at full−disc; if NOT taken, Cr Sales Discount Forfeited (other rev). Net is theoretically purer.

Bond issuance at a discount

Market rate > coupon rate; cash proceeds < face value

Account

Cash

PV @ market rate

Discount on Bonds Payable

Plug

Bonds Payable

Face Value

Select Transactions 30 items

Straight-line depreciation

\text{SL Depreciation} = \frac{\text{Cost} - \text{Salvage}}{\text{Useful Life}}

Constant expense each period; most common method.

Sum-of-years'-digits (SYD) depreciation

SYD=n(n+1)2\text{SYD} = \frac{n(n+1)}{2}SYD=2n(n+1)​
SYD Expenset=n−t+1SYD×(Cost−Salvage)\text{SYD Expense}_t = \frac{n - t + 1}{\text{SYD}} \times (\text{Cost} - \text{Salvage})SYD Expenset​=SYDn−t+1​×(Cost−Salvage)
nnn = useful life, ttt = year number.

Finance lease criteria mnemonic (ASC 842 OWNES)

Finance if ANY met:
O: Ownership transfer
W: Written purchase option (reasonably certain)
N: Net term ≥75%\geq 75\%≥75% economic life
E: Economic PV ≥90%\geq 90\%≥90% FV
S: Specialized (no alt use)

Goodwill impairment test

Step 1 (optional qualitative): is FV < CV more likely than not?
Step 2: Loss=CVRU−FVRU\text{Loss} = CV_{RU} - FV_{RU}Loss=CVRU​−FVRU​
Loss capped at goodwill CV; write down goodwill only.

Finance vs. operating lease: 75% and 90% bright lines

Under ASC 842, the 75% economic-life and 90% FV tests are NOT strict bright lines (they were under ASC 840); evaluate substance near thresholds.

DTA vs DTL — 4-pattern table

Income: Book first → DTL (installment sales). Tax first → DTA (advance rent). Expense: Book first → DTA (warranty). Tax first → DTL (accelerated tax depreciation).

Fair value valuation techniques (MIC)

1) Market: prices from comparable transactions. 2) Income: PV of future cash flows (DCF). 3) Cost: current replacement cost less obsolescence. Maximize observable inputs.

Permanent vs temporary tax differences

PERMANENT (no DTA/DTL): muni interest, key-man life proceeds/premiums, fines, 50% meals, DRD. TEMPORARY (create DTA/DTL, reverses): depreciation, bad debt, warranty, prepaid.

Gain contingency rules

1) NEVER accrue (conservatism principle). 2) Disclose in notes only if probable. 3) Recognize in income only when realized/legally certain.

Intercompany bond extinguishment elimination

Sub bond constructively retired when parent buys it. Add CR Discount or DR Premium for any unamortized issue costs.

Account

Bonds Payable

Face Value

Investment in Bonds

Parent's Carrying Value

Gain on Extinguishment of Debt · DR Loss if reverse

Plug

Net Operating Loss (NOL) treatment

Post-2017 NOLs: 1) Indefinite carryforward, no carryback 2) Deduction limited to 80% of taxable income in CF year. Pre-2018 NOLs: 2-yr carryback / 20-yr CF, no 80% cap.

Fair value hierarchy — Levels 1, 2, 3

L1: quoted prices in active markets for identical assets/liabilities. L2: observable inputs, quoted prices for similar items. L3: unobservable inputs, entity's own assumptions.

Equity method — investment carrying value formula

End = Beg + (\%\times NI) - (\%\times Div) - Amort_{FV/CV}

NI = investee net income, Amort = FV/CV difference amortization (excl. goodwill).

Loss contingency thresholds (probable / RP / remote)

1) Probable + estimable → accrue liability AND disclose 2) Reasonably possible → disclose only 3) Remote → no action. Range: accrue most likely; if none, accrue lowest end.

Error correction — prior period adjustment

1) Restate prior periods presented 2) Adjust opening RE of earliest period presented (net of tax) for cumulative effect on periods not presented 3) Disclose error nature + effect.

Intercompany inventory elimination (consolidating)

Eliminate full intercompany sale and any unrealized profit on goods still on hand at year-end.

Account

Sales (Intercompany)

Full intercompany sales price

Cost of Goods Sold (Intercompany)

Intercompany COGS

Inventory · Plug for goods still on hand

Unrealized profit in ending inventory

Revenue — output method vs input method

Output: progress = value to customer (units delivered, milestones). Input: progress = entity's efforts (cost-to-cost = Costs incurred / Total est. costs).

Intraperiod tax allocation (IDA)

Allocate tax to: 1) Continuing ops (gross of tax) 2) Discontinued ops (net of tax) 3) Accounting principle change-retrospective (net of tax) 4) OCI items (each net of own tax).

Revenue timing — over time vs point in time

Over time if ANY: 1) customer controls asset as created/enhanced, 2) simultaneously receives + consumes benefit, 3) no alternative use AND enforceable right to payment for work to date.

Principal vs most advantageous market

Principal market = greatest volume/activity; its price = FV (even if another market is more favorable). If no principal market, Most Advantageous Market = highest price net of transaction costs.

Highest and best use (non-financial assets)

HBU = use maximizing FV from market-participant view (not entity-specific). Must be: 1) physically possible, 2) legally permissible, 3) financially feasible.

Change in accounting principle — retrospective treatment

1) Restate all prior periods shown 2) Adjust beginning R/E of earliest period for cumulative effect (net of tax). Exceptions (prospective): change TO LIFO; change in depreciation method.

Dividends-received deduction (DRD) tiered exclusions

Domestic C-corp shareholder: 1) <20% ownership → 50% DRD 2) 20%–<80% → 65% DRD 3) ≥80% (affiliated) → 100% DRD. Permanent difference (not temporary).

Long-term contracts — % completion (cost-to-cost)

Progress = CostToDate / TotalEstCost

;

RevRec = Progress \times ContractPrice

;

GPRec = Progress \times EstProfit

less prior. Loss contracts: recognize entire expected loss immediately.

DOG remote-disclosure exception

Disclose even if remote: D: Debt of others guaranteed; O: Obligations under standby letters of credit; G: Guarantees to repurchase receivables (AR) sold. Other remote: no disclosure.

Uncertain tax position — 2-step (more likely than not)

1) Recognition: recognize benefit only if MLTN (>50%) sustained on exam. 2) Measurement: largest amount cumulatively >50% likely realized. Fail Step 1: DR Tax Expense / CR Other Liabilities (UTP).

Consolidation adjustments (CARIN BIG)

Eliminate sub's: C-Common Stock, A-APIC, R-Retained Earnings, I-Investment in Sub; N-create NCI at FV. B-Balance sheet to FV, I-Identifiable Intangibles at FV, G-Goodwill as plug.

Revenue recognition 5-step model (I am a STAR)

1) Identify Contract 2) Identify Performance obligations 3) Determine Transaction price 4) Allocate price to POs (relative standalone selling price) 5) Recognize revenue as each PO is satisfied.

Change in accounting estimate — prospective treatment

Prospective only: 1) No restatement of prior periods 2) New estimate applied current period forward. Change in depreciation method = estimate effected by change in principle.

Change in reporting entity — retrospective restatement

1) Restate all prior periods presented as if new entity always existed 2) Adjust beginning RE of earliest period 3) Disclose effect on income, EPS, and retained earnings.

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