Rivson Inc. is a large accelerated filer as determined by their public float of over $700mm. After the company’s fiscal year-end what is the maximum number of days, Rivson Inc. has to file the Form 10-K with the SEC?
A. 60 days.
B. 75 days.
C. 90 days.
D. 40 days.
The correct answer is A
A large accelerated filer is given a maximum of 60 days from the end of its fiscal year to file its Form 10-K with the SEC. An accelerated filer with a float between $75MM or more and less than $700MM is allowed 75 days. A non-accelerated filer
(less than $75MM float) is allowed 90 days.
The 10-Q deadline is 40-45 days depending on the size of the filer.
You can view the SEC website for additional information.
Sample FAR Questions #2: Going Concern Assumption
2. Management is required to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for:
A. A reasonable period of time not to exceed one year beyond the date of the external auditor’s report.
B. A reasonable period of time not to extend beyond the end of the current calendar year.
C. A reasonable period of time not to exceed one year beyond the date the financial statements are issued.
D. A reasonable period of time not to exceed one year beyond the date of the financial statements.
The correct answer is D.
An entity is considered to be a going concern if it is reasonably expected to be able to continue it’s business for the foreseeable future. Additionally, the entity must be able to settle all financial obligations for the foreseeable future.
Management is required to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year after the financial statements are issued.
3. Which of the following would not be considered an “other factor” when management is evaluating whether there is a substantial doubt as to whether the entity will be able to continue as a going concern within one year after the financial statements are issued?
A. investing $5m in new plant and machinery using an overdraft.
B. labor difficulties due to an increase minimum wage.
C. delayed payments to suppliers with some suppliers withdrawing credit and insisting on cash on delivery, which further impacts the overdrawn balance at the bank
D. cash flow forecast showing a significantly worsening position within the next 24 months.
The correct answer is D.
Management must take into considering other factors, including negative trends; internal matters, such as labor difficulties; external matters, such as the loss of a significant customer or supplier; or other indications of financial difficulty.
The cash flow forecast would not be considered an “other factor” because it is not within one year after the financial statements are issued.
You can review the AICPA update regarding the Going Concern assumption here.
Sample FAR Questions #3: Discontinued Operations
4. Handi-Snap Inc. has decided to discontinue operations of a component unit. The loss on disposal should:
A. Be an operating item.
B. Exclude operating losses during the period.
C. Be reported in other comprehensive income.
D. Include operating losses of the current period.
The correct answer is D.
Since Handi-Snap Inc. has earmarked a component as being discontinued and held for disposal, all financial statement amounts related to the component will be reported separately. The carrying value of the component will be reported as its net realizable value. You should remember that the income statement components will be reported separately, net of tax, as discontinued operations, including the current period’s operating loss.
Sample FAR Questions #4: IFRS
5. Stanley Inc. is a company reporting under IFRS. The company holds a position in Transmica Corp. bonds that it classifies as available-for-sale. In the previous year, Stanley Inc. recorded an impairment loss related to the Transmica Corp. bonds. In the current year, Stanley Inc. reversed a portion of the impairment loss.
How should Stanley Inc. account for the impairment loss reversal on its current year financial statements?
A. Book the reversal to the current year’s income statement.
B. Recognize the reversal to the current year’s other comprehensive income.
C. Book the increase as an adjustment to the previous year’s other comprehensive income.
D. Recognize the increase as an adjustment to the previous year’s income statement.
The correct answer is B.
Stanley Inc. should recognize the reversal to the current year’s other comprehensive income.
Under IFRS, reversals of impairment losses are allowed and the increase would be booked to the current year’s other comprehensive income.
6. A company consults you about which disclosures are required when preparing statements in accordance with IFRS. Which of the following is a required disclosure on an IFRS Statement of Profit or Loss (I/S)?
A. Gross profit, operating profits, and net profits.
B. Operating expenses, non-operating expenses, and selling and administrative expenses.
C. Finance costs, tax expense, and income.
D. Revenues, cost of goods sold, and advertising expense.
The correct answer is C.
An IFRS Statement of Profit or Loss will present:
- gains and losses from the derecognition of financial assets measured at amortised cost
- finance costs
- share of the profit or loss of associates and joint ventures accounted for using the equity method
- certain gains or losses associated with the reclassification of financial assets
- tax expense
- a single amount for the total of discontinued items
You can read more about the IFRS standards here.
If you are looking for more practice FAR questions for the CPA exam, you can find 500 sample FAR questions that we have compiled over the years.