Interim Financial Reporting

Question 1

What report are publicly traded companies required to file on a quarterly basis?

Answer 1

Form 10-Q

Question 2

Is GAAP used for quarterly and interim financial statements?

Answer 2

Yes, the same GAAP is applied.

Question 3

For interim financial statements, which is more emphasized: timeliness or reliability?

Answer 3

Timeliness

Question 4

How are accounting changes made in an interim period treated?

Answer 4

Applied using retrospective treatment/application

Question 5

When computing income taxes for interim reporting, what tax rate is used?

Answer 5

The company must estimate the effective annual tax rate that it believes is applicable for that entire year and NOT the quarterly-specific tax rate.

Question 6

If a company has an inventory loss in an interim quarter and doesn’t expect to recover it by year end, how is it handled?

Answer 6

Recognize the loss in that quarter/interim reporting period

Question 7

If a company has an inventory loss in an interim quarter and expects to recover it by year end, how is it handled?

Answer 7

Don’t recognize anything in that quarter or at year end (unless inventory loss isn’t recovered by year end)

Question 8

If a company has an inventory loss in an interim quarter and expects to recover it by year end, but doesn’t recover it by year end, how is it handled?

Answer 8

Recognize the loss at year end

Question 9

If a company recognizes an inventory loss in an interim quarter because it doesn’t expect to recover it by year end, but somehow does recover it in a future quarter, how is it handled?

Answer 9

Add back the amount previously written down in the quarter it occurred, but only up to that amount (cannot exceed the write down amount)

Question 10

For interim financial statements, how does the company recognize depreciation expense?

Answer 10

Allocates across all quarters

Question 11

For interim financial statements, how does the company recognize major expenses?

Answer 11

Recognize in that quarter (unless the benefit can be reasonably assumed to benefit future quarters in which case it is allocated across multiple quarters)

Question 12

For interim financial statements, how does the company recognize discontinued operations?

Answer 12

Recognize in that quarter

Question 13

For interim financial statements, how does the company recognize extraordinary gains and losses?

Answer 13

Recognize in that quarter

Question 14

Who requires that a Form-10Q be provided? Under what regulation?

Answer 14

The SEC under Regulation S-K

Question 15

What financial statements must be included with a Form 10-Q?

Answer 15

1) Interim balance sheet as of end of most recent fiscal quarter
2) Interim statements of income for the most recent fiscal quarter
3) Interim statements of cash flows between preceding most recent fiscal year and end of most recent fiscal quarter
* *A statement of changes in equity MAY also be presented

Question 16

When are Form 10-Qs due?

Answer 16

40 days after the end of the fiscal quarter for accelerated and large accelerated filers and 45 days for everyone else (smaller companies)

Question 17

Does IFRS mandate interim reporting?

Answer 17

No

Question 18

Under IFRS, if interim statements are issued, what statements must be included?

Answer 18

Condensed statements of:

1) Financial Position
2) Profit/Loss and OCI
3) Changes in Equity
4) Cash Flows
* **As well as any selected/applicable notes