FAR Study Group – Q1 2018 - Page 22

Thank you Sona & JayJack.

@Cpanda, to add to Anyatver’s post, SCF is required in commercial, NFP, and government accounting. All three treat principal paid on capital debt as part of financing activities. However in government accounting, it’s specified in capital financing activities, since govt. has 4 types of activities (additional “noncapital financing”) as compared to the other 2 with only 3 types of activities. The other difference in govt. is that, interest and dividends are classified under investing activities.

Are there any Sims or research on GOV. & NFP???

Can anyone explain this question on NFP?

United Together, a labor union, had the following revenues and expenses for the year ended December 31, Year 1:
Receipts:
Per capita dues $680,000
Initiation fees 90,000
Sales of organizational supplies 60,000
Nonexpendable gift restricted by donor for loan purposes for 10 years 30,000
Nonexpendable gift restricted by donor for loan purposes in perpetuity 25,000
Expenses:
Labor negotiations $500,000
Fundraising 100,000
Membership development 50,000
Administrative and general 200,000
Additional information:
The union's constitution provides that 10% of the per capita dues are designated for the Strike Insurance Fund to be distributed for strike relief at the discretion of the union's executive board.
In United Together's statement of activity for the year ended December 31, Year 1, what amount should be reported under the classification of contributions – without donor restrictions?
A. $55,000
B. $25,000
C. $0
D. $30,000
Explanation
Choice “A” is correct. $55,000.
In United Together's statement of activity, the amount that should be reported under the classification of “contributions – with donor restrictions” would include the nonexpendable gifts restricted by the donor for loan purposes for 10 years. Funds restricted for loans in perpetuity and donations restricted in perpetuity or whose restrictions are temporary in nature would be classified as increased to net assets with donor restrictions.

I thought the answer would be $0 because the contributions are classified as “with donor restrictions:.

@shawn0216

Becker right?

The correct answer 100% is $0.

The question is incorrectly worded. I emailed Becker about it saying that the answer and question directly contradict and this was their reply.

“As the question is written the answer should be $0. There was a mistake made when loading the question and it was supposed to ask for the “with donor restrictions”. This has been submitted to the Curriculum for correction. It will be posted to the errata site and the software corrected in with a future update. ”

In a NFP there are exactly two classifications of net assets.

Contributions with donor restrictions
Contributions without donor restrictions

I would disregard that question and move on to the next one as it is incorrect.

@sona

The question is OK… not the best.

Cancer Educators, a not-for-profit entity, incurred costs of $10,000 when it combined program functions with significant fundraising functions. Which of the following cost allocations might Cancer report in its statement of activities?

So we know that when you combined Program functions with Fundraising functions the total costs equal $10,000.00

A cost can only be a program cost if it is directly related to the mission of the NFP. Lets say the NFP Organization's mission is to educate children. A program cost would be teachers salaries or educational materials. ANY other cost that does not directly work towards their mission is a support cost.

A.
Program services: $0; Fundraising: $0; General services: $10,000 – Can't be this answer because the question told us that when we combined program costs and fundraising costs the total was $10,000… Program and Fundraising are both ZERO.

B.
Program services: $0; Fundraising: $6,000; General services: $4,000 – Can't be this answer because the question told us that when we combined program costs and fundraising costs the total was $10,000… Program is zero?

C.
Program services: $6,000; Fundraising: $4,000; General services: $0 When we combine program and fundraising, total cost is $10,000. This one works.

Incorrect D.
Program services: $10,000; Fundraising: $0; General services: $0 – Can't be this answer because the question told us that when we combined program costs and fundraising costs the total was $10,000… Fundraising is zero?

Again I do not love this question but when you do process of elimination the best answer is C. of $6k Program & $4k Fundraising.

I keep hearing and reading about people getting tested heavily on Gov/NFP MCQs. Does anyone know if this is the same for the simulations as well?

@shawn0216-gov't SIMS are unlikely. I would recommend checking out another thread on here called FAR SIMS straight from AICPA blueprint. According to a webinar back in Q417, participants were told that any task on the blueprint labeled “analysis” category is a fair game for a SIM. I can attest that it's true having taken it twice. That thread actually mapped the Becker SIMS to the blueprint to help focus your studies. Having said all that, government is very heavily tested in MCQ, the 5-15% is bs, like all the other breakdowns…You just never know what type of test you will get so I would strongly recommend studying government/NFP accounting.

@shawn0216, insight is all I got:) LOL!