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Flashcard 1451370614028

Tags
#cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
Question
Revenue–Cost RelationshipShort-Run DecisionLong-Term Decision
TRTC[...][...]
Answer
Stay in market

Stay in market


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Revenue–Cost Relationship Short-Run Decision Long-Term Decision TR ≥ TC Stay in market Stay in market TR > TVC but TR < TFC + TVC Stay in market Exit market TR < TVC Shut down production to zero Exit market

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When total revenue is enough to cover total variable cost but not all of total fixed cost, the firm can survive in the short run but will be unable to maintain financial solvency in the long run. Exhibit 21 <span>Revenue–Cost Relationship Short-Run Decision Long-Term Decision TR ≥ TC Stay in market Stay in market TR > TVC but TR < TFC + TVC Stay in market Exit market TR < TVC Shut down production to zero Exit market <span><body><html>







Flashcard 1452505959692

Tags
#reestructuracion-financiera
Question

Cuarta fase: Análisis derivado de la reestructura financiera
Deben considerarse los impactos de corto, mediano y largo plazo en diferentes renglones, como:

v Niveles de apalancamiento financiero y operativo.

v Tasas de [...]

Answer

Tasas de productividad y rentabilidad.


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>Cuarta fase: Análisis derivado de la reestructura financiera Deben considerarse los impactos de corto, mediano y largo plazo en diferentes renglones, como: v Costos financieros. v Utilidades. v Flujos de efectivo. v Estructura de activos y pasivos. v Niveles de apalancamiento financiero y operativo. v Tasas de productivida

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Flashcard 1464657120524

Tags
#art-of-memory
Question
If the images are [...] (journey or not), then it is harder to recall them in the right order.
Answer
not linked


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If the images are not linked (journey or not), then it is harder to recall them in the right order.

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How to Link Mnemonic Images - Memory Techniques Wiki
How to Link Mnemonic Images - Memory Techniques Wiki How to Link Mnemonic Images From Memory Techniques Wiki Jump to: navigation, search Images can be linked or not linked. If the images are not linked, then it is harder to recall them in the right order. For example when you made a shopping list that you forgot home, then at store you probably won't be able to recall all the items you want to buy. Linked images are somehow connected. For instance if the first two items of the list were oranges and tooth paste, then in order to link the images of orange and toothpaste you could imagine that you drill a hole in the orange and fill it with toothpaste. Types of image links r30 proposed three 3 basic ways to link images with each other: Transforming one image into another Interaction between two images Chaining multiple images with a story (a.k.a the story method) The images of the chain (Story Method) can be connected using interaction and/or transformation. Then the chain becomes what we like to call a story, be the story logical or not. This method is demonstrated at this page. More information and examples (with pictures) of all three linking techniques can be found at r30's website. See Linking Techniques Comparison discussion for some initial ideas. T







Flashcard 1480003292428

Tags
#cfa-level-1 #reading-25-understanding-income-statement #revenue-recognition
Question
The [...] is similar to the revenue recognition method under IFRS, when the outcome of a contract cannot be measured reliably.
Answer
cost recovery method


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3.2.2. Installment Sales
ed cash. Under the cost recovery method, the seller does not report any profit until the cash amounts paid by the buyer—including principal and interest on any financing from the seller—are greater than all the seller’s costs of the property. <span>Note that the cost recovery method is similar to the revenue recognition method under international standards, described above, when the outcome of a contract cannot be measured reliably (although the term cost recovery method is not used in the international standard). Example 4 illustrates the differences between the installment method and the cost recovery method. Installment sales and cost recovery treatment of revenue recognition are







Flashcard 1481682849036

Tags
#cfa-level-1 #expense-recognition #reading-25-understanding-income-statement
Question
Diminishing balance method ( [...] )
Answer
accelerated depreciation


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ect the pattern over which the economic benefits of the asset are expected to be consumed. IFRS do not prescribe a particular method for computing depreciation but note that several methods are commonly used, such as the straight-line method, <span>diminishing balance method (accelerated depreciation), and the units of production method (depreciation varies depending upon production or usage). The straight-line method allocates evenly the cost of long-lived assets less e

Original toplevel document

4.2. Issues in Expense Recognition
the amount of future expenses resulting from its warranties, to recognize an estimated warranty expense in the period of the sale, and to update the expense as indicated by experience over the life of the warranty. <span>4.2.3. Depreciation and Amortisation Companies commonly incur costs to obtain long-lived assets. Long-lived assets are assets expected to provide economic benefits over a future period of time greater than one year. Examples are land (property), plant, equipment, and intangible assets (assets lacking physical substance) such as trademarks. The costs of most long-lived assets are allocated over the period of time during which they provide economic benefits. The two main types of long-lived assets whose costs are not allocated over time are land and those intangible assets with indefinite useful lives. Depreciation is the process of systematically allocating costs of long-lived assets over the period during which the assets are expected to provide economic benefits. “Depreciation” is the term commonly applied to this process for physical long-lived assets such as plant and equipment (land is not depreciated), and amortisation is the term commonly applied to this process for intangible long-lived assets with a finite useful life.32 Examples of intangible long-lived assets with a finite useful life include an acquired mailing list, an acquired patent with a set expiration date, and an acquired copyright with a set legal life. The term “amortisation” is also commonly applied to the systematic allocation of a premium or discount relative to the face value of a fixed-income security over the life of the security. IFRS allow two alternative models for valuing property, plant, and equipment: the cost model and the revaluation model.33 Under the cost model, the depreciable amount of that asset (cost less residual value) is allocated on a systematic basis over the remaining useful life of the asset. Under the cost model, the asset is reported at its cost less any accumulated depreciation. Under the revaluation model, the asset is reported at its fair value. The revaluation model is not permitted under US GAAP. Here, we will focus only on the cost model. There are two other differences between IFRS and US GAAP to note: IFRS require each component of an asset to be depreciated separately and US GAAP do not require component depreciation; and IFRS require an annual review of residual value and useful life, and US GAAP do not explicitly require such a review. The method used to compute depreciation should reflect the pattern over which the economic benefits of the asset are expected to be consumed. IFRS do not prescribe a particular method for computing depreciation but note that several methods are commonly used, such as the straight-line method, diminishing balance method (accelerated depreciation), and the units of production method (depreciation varies depending upon production or usage). The straight-line method allocates evenly the cost of long-lived assets less estimated residual value over the estimated useful life of an asset. (The term “straight line” derives from the fact that the annual depreciation expense, if represented as a line graph over time, would be a straight line. In addition, a plot of the cost of the asset minus the cumulative amount of annual depreciation expense, if represented as a line graph over time, would be a straight line with a negative downward slope.) Calculating depreciation and amortisation requires two significant estimates: the estimated useful life of an asset and the estimated residual value (also known as “salvage value”) of an asset. Under IFRS, the residual value is the amount that the company expects to receive upon sale of the asset at the end of its useful life. Example 9 assumes that an item of equipment is depreciated using the straight-line method and illustrates how the annual depreciation expense varies under different estimates of the useful life and estimated residual value of an asset. As shown, annual depreciation expense is sensitive to both the estimated useful life and to the estimated residual value. <span><body><html>







Flashcard 1481694645516

Tags
#cfa-level-1 #expense-recognition #reading-25-understanding-income-statement
Question
Under [...], the residual value is the amount that the company expects to receive upon sale of the asset at the end of its useful life.
Answer
IFRS


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a straight line with a negative downward slope.) Calculating depreciation and amortisation requires two significant estimates: the estimated useful life of an asset and the estimated residual value (also known as “salvage value”) of an asset. <span>Under IFRS, the residual value is the amount that the company expects to receive upon sale of the asset at the end of its useful life. Example 9 assumes that an item of equipment is depreciated using the straight-line method and illustrates how the annual depreciation expense varies under different estimates of the use

Original toplevel document

4.2. Issues in Expense Recognition
the amount of future expenses resulting from its warranties, to recognize an estimated warranty expense in the period of the sale, and to update the expense as indicated by experience over the life of the warranty. <span>4.2.3. Depreciation and Amortisation Companies commonly incur costs to obtain long-lived assets. Long-lived assets are assets expected to provide economic benefits over a future period of time greater than one year. Examples are land (property), plant, equipment, and intangible assets (assets lacking physical substance) such as trademarks. The costs of most long-lived assets are allocated over the period of time during which they provide economic benefits. The two main types of long-lived assets whose costs are not allocated over time are land and those intangible assets with indefinite useful lives. Depreciation is the process of systematically allocating costs of long-lived assets over the period during which the assets are expected to provide economic benefits. “Depreciation” is the term commonly applied to this process for physical long-lived assets such as plant and equipment (land is not depreciated), and amortisation is the term commonly applied to this process for intangible long-lived assets with a finite useful life.32 Examples of intangible long-lived assets with a finite useful life include an acquired mailing list, an acquired patent with a set expiration date, and an acquired copyright with a set legal life. The term “amortisation” is also commonly applied to the systematic allocation of a premium or discount relative to the face value of a fixed-income security over the life of the security. IFRS allow two alternative models for valuing property, plant, and equipment: the cost model and the revaluation model.33 Under the cost model, the depreciable amount of that asset (cost less residual value) is allocated on a systematic basis over the remaining useful life of the asset. Under the cost model, the asset is reported at its cost less any accumulated depreciation. Under the revaluation model, the asset is reported at its fair value. The revaluation model is not permitted under US GAAP. Here, we will focus only on the cost model. There are two other differences between IFRS and US GAAP to note: IFRS require each component of an asset to be depreciated separately and US GAAP do not require component depreciation; and IFRS require an annual review of residual value and useful life, and US GAAP do not explicitly require such a review. The method used to compute depreciation should reflect the pattern over which the economic benefits of the asset are expected to be consumed. IFRS do not prescribe a particular method for computing depreciation but note that several methods are commonly used, such as the straight-line method, diminishing balance method (accelerated depreciation), and the units of production method (depreciation varies depending upon production or usage). The straight-line method allocates evenly the cost of long-lived assets less estimated residual value over the estimated useful life of an asset. (The term “straight line” derives from the fact that the annual depreciation expense, if represented as a line graph over time, would be a straight line. In addition, a plot of the cost of the asset minus the cumulative amount of annual depreciation expense, if represented as a line graph over time, would be a straight line with a negative downward slope.) Calculating depreciation and amortisation requires two significant estimates: the estimated useful life of an asset and the estimated residual value (also known as “salvage value”) of an asset. Under IFRS, the residual value is the amount that the company expects to receive upon sale of the asset at the end of its useful life. Example 9 assumes that an item of equipment is depreciated using the straight-line method and illustrates how the annual depreciation expense varies under different estimates of the useful life and estimated residual value of an asset. As shown, annual depreciation expense is sensitive to both the estimated useful life and to the estimated residual value. <span><body><html>







Flashcard 1497398643980

Tags
#cfa-level-1 #reading-22-financial-statement-analysis-intro
Question
Each line item of the consolidated income statement includes the entire amount from the relevant line item on the subsidiary’s income statement (after [...]);
Answer
removing any intercompany transactions


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Each line item of the consolidated income statement includes the entire amount from the relevant line item on the subsidiary’s income statement (after removing any intercompany transactions); however, if the parent does not own 100 percent of the subsidiary, it is necessary for the parent to present an allocation of net income to the minority interests.

Original toplevel document

3.1.2.1. Income Statement
nformation consolidated with that of the subsidiary. (When a parent company owns more than 50 percent of the voting shares of a subsidiary company, it is presumed to control the subsidiary and thus presents consolidated financial statements.) <span>Each line item of the consolidated income statement includes the entire amount from the relevant line item on the subsidiary’s income statement (after removing any intercompany transactions); however, if the parent does not own 100 percent of the subsidiary, it is necessary for the parent to present an allocation of net income to the minority interests. Minority interests, also called non-controlling interests, refer to owners of the remaining shares of the subsidiary that are not owned by the parent. The share of consolidated net inco







Flashcard 1497401003276

Tags
#cfa-level-1 #reading-22-financial-statement-analysis-intro
Question
If the parent company does not own 100 percent of the subsidiary, it is necessary for the parent to present an allocation of net income to the [...] .
Answer
minority interests


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Each line item of the consolidated income statement includes the entire amount from the relevant line item on the subsidiary’s income statement (after removing any intercompany transactions); however, if the parent does not own 100 percent of the subsidiary, it is necessary for the parent to present an allocation of net income to the minority interests.

Original toplevel document

3.1.2.1. Income Statement
nformation consolidated with that of the subsidiary. (When a parent company owns more than 50 percent of the voting shares of a subsidiary company, it is presumed to control the subsidiary and thus presents consolidated financial statements.) <span>Each line item of the consolidated income statement includes the entire amount from the relevant line item on the subsidiary’s income statement (after removing any intercompany transactions); however, if the parent does not own 100 percent of the subsidiary, it is necessary for the parent to present an allocation of net income to the minority interests. Minority interests, also called non-controlling interests, refer to owners of the remaining shares of the subsidiary that are not owned by the parent. The share of consolidated net inco







Flashcard 1497403362572

Tags
#cfa-level-1 #reading-22-financial-statement-analysis-intro
Question
The share of [...] is shown at the bottom of the income statement along with the net income attributable to shareholders of the parent company.
Answer
consolidated net income attributable to minority interests


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The share of consolidated net income attributable to minority interests is shown at the bottom of the income statement along with the net income attributable to shareholders of the parent company.

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3.1.2.1. Income Statement
necessary for the parent to present an allocation of net income to the minority interests. Minority interests, also called non-controlling interests, refer to owners of the remaining shares of the subsidiary that are not owned by the parent. <span>The share of consolidated net income attributable to minority interests is shown at the bottom of the income statement along with the net income attributable to shareholders of the parent company. <span><body><html>







Flashcard 1497404935436

Tags
#cfa-level-1 #reading-22-financial-statement-analysis-intro
Question
The income statement is sometimes referred to as a [...] or profit and loss (P&L) statement .


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The income statement is sometimes referred to as a statement of operations or profit and loss (P&L) statement .

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Statement of comprehensive income
come, the result is referred to as “net loss.” Income statements are reported on a consolidated basis, meaning that they include the income and expenses of subsidiary companies under the control of the parent (reporting) company. <span>The income statement is sometimes referred to as a statement of operations or profit and loss (P&L) statement . The basic equation underlying the income statement is Revenue + Other income – Expenses = Income – Expenses = Net income. In general terms, when one company (the parent) co