[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[ChristieF]

I think we seriously need to invest in some RTMFQ!! Bracelets haha…, even if we can only use then while we study, maybe it'll get it through our brains! 🙂

[NJPRU]

Woot! Let's get this party started!

On a side note, I think my coworkers have figured out that asking me “What are you doing this weekend” is a bad idea. lol

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[jrosen92770]

I am hoping to make it tonight as well.

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Anonymous]

Can someone please help me understand this?

Orleans Co., a cash basis tax payer, prepares accrual basis financial statements. In it's year 3 balance sheet, Orleans deferred income tax liabilities increased compared to year 3. Which of the following would cause the increase in deferred income tax liabilities?

i. An increase in prepaid insurance

ii. An increase in rent receivable

iii. An increase in warranty obligations

The answers are i and ii. I just want to make sure my understanding is correct. So for prepaid insurance, under the cash basis you would record that as an expense. More expense paid now means less taxable income which results in a DTL. How about the rent receivable? Under cash basis you won't recognize the increase as revenue. Why does it result in DTL?

[jrosen92770]

perbaps because you wilk not recognize revenue until next year until it is received

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[jrosen92770]

sorry for mispell hanging at chili's drinking a stella

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[NJPRU]

I'm doing taxes tomorrow. 🙁 sorry cracked.

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[Anonymous]

Thanks jrosen – I wish would be at chillis instead working on deferred taxes 🙁 No problem NJPRU. Let me know if you can explain it after your review. If I figure out before then, will put it down here.

[jrosen92770]

I am sure Cpamommy has an answer.

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Tncincy]

How are you all doing with ratios? Heavily tested?

It begins with a 75
Been here too long as a cheerleader....ready to pass

[jrosen92770]

tncincy – I have only done a few ratios. I am only up to chapter 4

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Anonymous]

Thanks for the vote of confidence @JRosen. I actually got this question wrong yesterday so I do know the answer now. Prepaid insurance is paid for now and deductible now for tax purposes, lowering the taxable income now, creating a deferred tax liability because you'll have higher taxable income later in the period that it is expensed in the financial statements, but not recognized as an deductible expense for taxes. Rent Receivable is considered income now for the income statement, but not recognized as income for tax purposes until you receive the money. When the money is received in a later period you will pay more taxes on it than what you will have in your books because it was counted as income in a prior period on your income statement. With deferred taxes you just need to remember that you typically recognize everything for the books when it is incurred/earned and you recognize it for tax purposes when it is paid/received. Anything that creates higher taxable income later will result in a DTL. I hope that helps.

[Anonymous]

Dahlia, Inc. signed a lease to rent equipment on July 1, year 1. On January 1, year 3, Dahlia decides that the equipment is no longer needed, and the company pays a $20,000 penalty to cancel the lease. How should the cancellation be reported on Dahlia’s financial statements?

A. Defer recognition of the loss until the end of the normal lease term.

B. Compare the termination costs to the present value of avoidable lease payments and recognize the difference as a loss at the date the equipment ceases to be used.

C. Recognize the cost of termination at the fair value at the date the agreement is terminated.

D. Amortize the loss over the remaining term of the lease

[jrosen92770]

is it c

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Anonymous]

Yes sir!

[Author]

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