CPA FAR Cheat Sheet

Financial Reporting

30-40% of exam
Financial Statements Governmental (GASB) Not-for-Profit SEC & Interim Reporting Segment Reporting

Select Balance Sheet Accounts

30-40% of exam
Inventory PP&E & Depreciation Intangibles & Goodwill Bonds & Debt Equity & EPS

Select Transactions

25-35% of exam
Revenue Recognition Leases Business Combinations Deferred Taxes Pensions & Stock Comp

Quick Facts

Exam FAR
Credential CPA (AICPA/NASBA)
Time 4 hours
Format 50 MCQ + 7 TBS
Score Weight 50% MCQ / 50% TBS
Pass 75 of 99
Level CPA Core section
Blueprint Jan 1, 2026

GASB 54 Fund Balance Order FI

Nonspendable, restricted, committed, assigned, unassigned
Nonspendable: not in spendable form Restricted: externally imposed limits Committed: self-imposed by board Assigned: intended use, less formal Unassigned: General Fund residual only

Governmental Funds vs Government-wide FI

Fund statements

Modified accrual basis used
Current financial resources focus
Five fund balance categories

Government-wide statements

Full accrual basis used
Economic resources measurement focus
Net position categories reported
Fund view vs entity view

Held-for-Sale vs Discontinued Ops FI

Sale probable within one year → Classify held for sale
Held for sale asset → Stop depreciating, lower of cost
Major strategic shift disposed → Report discontinued operations
Minor component disposed → Report in continuing operations

Core Financial Statements FI

Balance Sheet Point-in-time position
Income Statement Period performance result
Statement of Cash Flows Operating, investing, financing sources
Statement of Equity Owners' claims rollforward
OCI Unrealized gains, translation, pension
Discontinued Operations Major strategic shift disposal
Error Correction Restate prior periods
Subsequent Events Recognized vs disclosed only

Governmental (GASB) Accounting FI

Modified Accrual Governmental funds basis
Full Accrual Government-wide basis
Fund Balance Categories Nonspendable to Unassigned
Encumbrances Committed but unspent
General Fund Only fund with Unassigned
GASB 34 Government-wide reporting model
GASB 54 Fund balance classifications
MD&A Required supplementary analysis

Not-for-Profit (ASC 958) FI

With Donor Restrictions Time or purpose limited
Without Donor Restrictions Board-designated or unrestricted
Functional Expenses Program vs support activities
Natural Expenses Salaries, rent, supplies
Contributions Unconditional means recognize now
Conditional Promise Barrier plus release condition
Endowment Donor-restricted, often permanent

SEC & Interim Reporting FI

Form 10-K Annual SEC report
Form 10-Q Quarterly SEC report
Regulation S-X SEC financial statement rules
Interim Reporting Integral part of year
Segment Reporting CODM operating segments
10% Test Reportable segment threshold

Treasury Stock Method Steps BA

Assume exercise, use proceeds to buy back shares
Assume options are exercised Proceeds buy back shares Net incremental shares added Only if dilutive to EPS

FIFO vs LIFO BA

FIFO

Oldest costs expensed first
Higher net income, rising prices
Approximates current balance sheet value

LIFO

Newest costs expensed first
Lower taxes, rising prices
LIFO conformity rule required
Cost flow assumption differs

Inventory Method & LCM Picker BA

Using LIFO or retail method → Apply LCM test
Using FIFO or weighted avg → Apply LCNRV test
Prices rising, want higher NI → Choose FIFO
Prices rising, want lower taxes → Choose LIFO
Costs fluctuate frequently → Choose weighted average

Inventory Costing BA

FIFO Oldest costs expensed first
LIFO Newest costs expensed first
Weighted Average Blended unit cost
LCM LIFO/retail replacement cost floor
LCNRV Other methods net realizable value
NRV Selling price minus costs
LIFO Conformity Tax LIFO requires book LIFO

LCM vs LCNRV BA

LCM (LIFO/retail)

Compares to replacement cost
Floor and ceiling limits apply
Market-bounded test

LCNRV (other methods)

Compares to net realizable value
No floor or ceiling
Simpler one-step test
Method used drives which test

PP&E & Depreciation BA

Straight-Line Equal expense each year
Double-Declining Balance Accelerated, ignores salvage initially
Units of Production Usage-based expense
Impairment Test Carrying value vs fair value
ARO Future retirement cost liability
Held for Sale Stop depreciating, lower of
Componentization Depreciate significant parts separately

Basic vs Diluted EPS BA

Basic EPS

NI minus preferred dividends
Weighted average shares outstanding

Diluted EPS

Adds dilutive potential shares
Treasury stock method for options
If-converted method for bonds
Actual vs potential shares

Intangibles & Goodwill BA

Finite-Life Intangible Amortize over useful life
Indefinite-Life Intangible No amortization, test impairment
Goodwill Never amortized, test yearly
Qualitative Test Optional goodwill impairment screen
Quantitative Test Compare fair value to carrying
Research Costs Expense as incurred
Development Costs Capitalize if criteria met

Bonds & Long-Term Debt BA

Bond Premium Issue price above face
Bond Discount Issue price below face
Effective Interest Method Required amortization approach
Carrying Value Face plus/minus unamortized amount
Debt Issuance Costs Contra-liability, amortized
Convertible Debt No bifurcation (ASU 2020-06)
Troubled Debt Restructuring Modification or settlement gain

Investments & Receivables BA

CECL (ASC 326) Lifetime expected credit losses
AFS Debt Securities Fair value through OCI
Equity Method 20-50% significant influence
Fair Value Option Elect FV for eligible assets
Equity Securities FV through net income
Allowance Method Estimate uncollectible receivables

Equity & EPS BA

Treasury Stock (Cost) Contra-equity, no gain/loss
Basic EPS NI minus preferred div/shares
Diluted EPS Add dilutive potential shares
Treasury Stock Method Options/warrants dilution calc
If-Converted Method Convertible bonds/preferred dilution
Antidilution Test Exclude if EPS increases

ASC 606 Five Steps TR

Contract, obligations, price, allocate, recognize
1: Identify the contract 2: Identify performance obligations 3: Determine transaction price 4: Allocate the price 5: Recognize revenue earned

Finance vs Operating Lease TR

Finance lease

Meets 1 of 5 criteria
Interest plus amortization expense
ROU asset amortized separately

Operating lease

Meets none of 5 criteria
Single straight-line lease expense
Total cost recognized evenly
Ownership-like vs rental-like cost

Lease Classification (OWNES) TR

Ownership transfers by end → Finance lease
Written bargain purchase option → Finance lease
Term ~75% or more of life → Finance lease
PV ~90% or more of FV → Finance lease
Specialized asset, no alt use → Finance lease
None of above criteria met → Operating lease
Term 12 months or less → Short-term expense election

Revenue Recognition (ASC 606) TR

Step 1 Identify the contract
Step 2 Identify performance obligations
Step 3 Determine transaction price
Step 4 Allocate price to obligations
Step 5 Recognize revenue when satisfied
Principal Controls good, recognize gross
Agent Arranges only, recognize net
Over Time Input/output progress method

OWNES Lease Criteria TR

Ownership, written option, ninety percent, economic life, specialized
O: Ownership transfers W: Written bargain option N: Ninety percent of FV E: Economic life ~75% S: Specialized asset

Equity Method vs Consolidation TR

Equity method

20-50% ownership stake
Significant influence, not control
One-line investment balance

Consolidation

Over 50% control or VIE
Line-by-line combination of accounts
NCI reported separately
Influence vs control test

Revenue Timing & Principal/Agent TR

Control transfers over time → Recognize over time
Control transfers at delivery → Recognize point in time
Entity controls good/service → Principal, recognize gross
Entity arranges for others → Agent, recognize net fee
Variable consideration exists → Constrain estimate to probable

Leases (ASC 842) TR

Finance Lease Meets 1 of 5 criteria
Operating Lease Meets none of 5 criteria
ROU Asset Right-of-use, both types
Lease Liability PV of lease payments
Short-Term Election 12 months or less, expense
Sale-Leaseback Sale plus leaseback of asset
Finance Expense Interest plus amortization split

DTA vs DTL Direction TR

Deduct now equals DTA; taxed now equals DTL
Warranty expense now = DTA NOL carryforward = DTA Accelerated depreciation = DTL Prepaid income received = DTL

Permanent vs Temporary Differences TR

Permanent differences

Never reverses over time
Municipal bond interest example
Affects effective tax rate only

Temporary differences

Reverses in future periods
Creates a DTA or DTL
Depreciation timing is common example
Permanent skips deferred tax

Consolidation Model Picker TR

Entity is a VIE → Apply VIE model
Power plus absorbs losses/benefits → Consolidate as primary beneficiary
Over 50% voting control → Consolidate under voting model
20-50% ownership, influence → Equity method
Under 20%, no influence → Fair value or AFS

Business Combinations & Consolidation TR

Acquisition Method Only method allowed (ASC 805)
Goodwill Price paid minus fair value
Bargain Purchase Gain recognized immediately
NCI Reported at fair value
VIE Model Power plus losses/benefits test
Voting Model Over 50% ownership control
Primary Beneficiary Consolidates the VIE

Income Taxes (ASC 740) TR

Temporary Difference Creates DTA or DTL
Permanent Difference Affects ETR only
DTA Future deductible amount
DTL Future taxable amount
Valuation Allowance MLTN not realizable
UTB Uncertain tax position reserve
NOL Carryforward Offsets future taxable income

Pensions & Stock Compensation TR

PBO Projected benefit obligation
Funded Status Plan assets minus PBO
Service Cost Only operating-income component (ASU 2017-07)
OPEB Other postretirement benefits
Grant-Date Fair Value Stock comp measurement date
Vesting Period Expense recognized over service

Common Traps

LCM ≠ LCNRV Method Scope

LIFO/retail: apply LCM test ≠ FIFO/avg: apply LCNRV test

Permanent ≠ Temporary Tax Differences

Permanent: no deferred tax impact ≠ Temporary: creates DTA or DTL

Equity Method ≠ Consolidation Scope

20-50%: one-line equity balance ≠ Over 50%: full line consolidation

Finance Lease ≠ Operating Lease

Finance: interest plus amortization expense ≠ Operating: single straight-line expense

Fund Basis ≠ Government-wide Basis

Funds: modified accrual basis ≠ Government-wide: full accrual basis

Basic EPS ≠ Diluted EPS

Basic: actual shares outstanding only ≠ Diluted: adds potential dilutive shares

Goodwill ≠ Identifiable Intangibles

Goodwill: never amortized, tested yearly ≠ Intangibles: amortized if finite life

VIE Model ≠ Voting Model

VIE: power plus risk test ≠ Voting: over 50% ownership test

Last Minute

1. Weights: 30-40 / 30-40 / 25-35
2. ASC 606: 5 steps to revenue
3. ASC 842: 5 criteria means finance
4. LIFO/retail uses LCM; others LCNRV
5. Book-first expense creates a DTA
6. Book-first income creates a DTL
7. Goodwill tested yearly, never amortized
8. Diluted EPS adds convertibles, options
9. GASB 54: 5 fund balance types
10. NFP: with vs without donor restriction
11. Test VIE model before voting model
12. TBS equals 50% of FAR score
13. Pass score is 75 of 99

CPA FAR Financial Accounting & Reporting

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