cma exam notes
Calculator:
To clear register
Sharp EL-738: Press 2nd F then mode (CA on top)
Bond
1. Company acquired bond:
Accrued coupon payments received = FMV x coupon rate x # of months received (months counted from last coupon payment, coupon payment date can be tell by bonds dated at date. Even though semi-annually, doesn’t mean it’s issued at June 30/Dec 31)
Journal entry:
Dr. xxx investments
** Dr. Investment income Cr. Cash
Continent liability pg284 Derecognize asset
Diminishing balance
Net book value of asset = value of asset x (1-rate of diminishing)*years have used
(* represent power of)
If you are required to determine the net book value of an asset at the end of the nth year, you can do so by using the following formula:
Net Book Value at end of nth year = Original cost x (1- depreciation rate)n
For example, the net book value at the end of the 10th year is:
$200,000 (1 - .20)10
= $200,000(.8)10
= $21,474
Remember can only depreciate no more than the residual value
Note that when assets are traded in, the market value of the asset traded in becomes the proceeds on disposal and not the trade-in value. The reason for this is that the trade-in value often reflects a discount on the purchase price of the new asset purchased, which should be recorded as such.
Shareholder’s equity
Revaluation Model
Revaluation surplus – When Revaluation results in an increase in carrying values,
Dr. Asset
Cr. Revaluation surplus (this account is part of Other Comprehensive Income in Shareholder’s Equity) when the asset incurred a decrease in the past that was expensed to the income statement (previous year Revaluation loss- flow to Income statement), previous year Revaluation loss has to be reverse first, remaining amounts goes to Revaluation surplus account.
Ex. Dr. Asset Cr. Revaluation Gain (reverse previous year Revaluation loss) Cr. Revaluation Surplus
Revaluation surplus (credit) can be reduced if
To clear register
Sharp EL-738: Press 2nd F then mode (CA on top)
Bond
1. Company acquired bond:
Accrued coupon payments received = FMV x coupon rate x # of months received (months counted from last coupon payment, coupon payment date can be tell by bonds dated at date. Even though semi-annually, doesn’t mean it’s issued at June 30/Dec 31)
Journal entry:
Dr. xxx investments
** Dr. Investment income Cr. Cash
Continent liability pg284 Derecognize asset
Diminishing balance
Net book value of asset = value of asset x (1-rate of diminishing)*years have used
(* represent power of)
If you are required to determine the net book value of an asset at the end of the nth year, you can do so by using the following formula:
Net Book Value at end of nth year = Original cost x (1- depreciation rate)n
For example, the net book value at the end of the 10th year is:
$200,000 (1 - .20)10
= $200,000(.8)10
= $21,474
Remember can only depreciate no more than the residual value
Note that when assets are traded in, the market value of the asset traded in becomes the proceeds on disposal and not the trade-in value. The reason for this is that the trade-in value often reflects a discount on the purchase price of the new asset purchased, which should be recorded as such.
Shareholder’s equity
Revaluation Model
Revaluation surplus – When Revaluation results in an increase in carrying values,
Dr. Asset
Cr. Revaluation surplus (this account is part of Other Comprehensive Income in Shareholder’s Equity) when the asset incurred a decrease in the past that was expensed to the income statement (previous year Revaluation loss- flow to Income statement), previous year Revaluation loss has to be reverse first, remaining amounts goes to Revaluation surplus account.
Ex. Dr. Asset Cr. Revaluation Gain (reverse previous year Revaluation loss) Cr. Revaluation Surplus
Revaluation surplus (credit) can be reduced if