[jeff]

Welcome to the Q2 2017 CPA Exam Study Group for FAR. 🙂

[Cruzer]

Which of the following best describes a situation in which an unconditional contribution should be recognized as revenue by a private not-for-profit organization?

A.In the period when cash or other assets are received at the carrying value on the books of the donor

B.In the period received at fair value

C.In the period in which the donor states its unconditional promise to make the contribution and at the carrying value on the books of the donor

D. In the period in which the donor states its intention to make the contribution and at fair value

Answer is B. I chose D. The wording of “donor intentions to give” and “unconditional promises” to me is super confusing. I always thought that unconditional promises were recognized as revenue in the period the donor made the intention to give, not the period actually received. Can someone make sense of this or am I completely missing something?

[CPAIN2K17]

In its cash flow statement for the current year, Ness Co. reported cash paid for interest of $70,000. Ness did not capitalize any interest during the current year. Changes occurred in several balance sheet accounts as follows:

Accrued interest payable 17,000 decrease
Prepaid interest 23,000 decrease

In its income statement for the current year, what amount should Ness report as interest expense?
$ 30,000
$ 64,000
$ 76,000
$110,000

Anybody have any help on how to understand this problem? The correct answer is 76,000. You deduct the decrease in accrued interest payable and add the decrease in prepaid interest… but I don't understand why? Can anyone explain?

[mtaylo24]

@cpain2k17, Why would it be the other way? I'm guessing that you picked $64,000?

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[sydalexomar]

Took the FAR exam today. I had all SIMS that I had to make adjusting entries to the Income statement, stockholders equity and OCI. NOT EASY. Definitely recommend being comfortable with all adjusting entries and transactions that affect consolidated statements. VERY time consuming and impossible to be thorough and actually finish this exam. I wish they wouldn't include pretest questions…it is hard enough as it is to manage your time when you sit for this exam. Can anyone confirm how many of the TBS questions are pre-tested?

[HoldMyBeerCPA]

I think there's only one pre-test question. I had quite multiple DRS/research questions

@CPA2K a quick and dirty way of doing cash to accrual questions is a follows:

Step 1: Credit/Debit the increase/decrease in cash (in this case you would credit cash for $70k)

Step 2: Debit/Credit the increase/decrease in balance sheet accounts (in this case we credit the decrease in prepaids of 23k and debit the decrease in AP of 17k)

Step 3: Plug your expense figure

So in this example:

Debit: AP – $17k
Credit: Cash – ($70k)
Credit: Prepaids – ($23k)
Debit: Plug/Balance Interest Expense – $76k

[Wannafree]

Hey Omar , all SIMs had AJE or just 4 SIMs with AJE? Do you have to calculate the amount and pass Adjustment ? I want to know how long it took you to read the whole question ,calculate the amount and pass AJE ? In one SIM just one AJE or many JEs ? Last time I couldn't nail the SIM due to lack of time hence asking questions related to time.Any tips how to improve the time management in SIM is appreciated.

[mtaylo24]

We cut checks for +$70 this year no questions.

Dr. Int exp 70k
Cr. Cash 70k

Decrease in prepaid meant we expensed 23k pre-paid in prior periods

Dr. Int exp 23k
Cr. Prepaid 23k

Decrease in accrued interest liability means we are reversing a prior accrual, the actual pmt is in the 70k

Dr. Accrued Interest Liab 17k
Cr. Int Exp 17k

Original prior year entries

for ppd

Dr. Ppd
Cr. Cash

accrued Liab

Dr. Int exp
Cr. Accrued Int liab

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Anonymous]

Can anyone who has taken the new exam comment on whether on not the 15 minute break was useful or not? I plan on bringing and snack and recollecting myself and can see it being beneficial. Let me know what you guys thought who have already taken the exam.

[Anthony]

Very useful. Took a restroom break and got a few sips of water before dealing probably the hardest part of the exam, sims. While it is 15 minutes, it takes a few minutes to sign out and back in. So keep that in mind when watching the 15 minutes.

[Wannafree]

@Anthony how long it took you to solve AJE SIM ? Do you have to type the Accounts Dr cr or drop down from list are there and you just type the amount ?
I am just guessing if it is AJE then it shouldn't take much time but if you have to do retrospective correction for 3 years to get RE and if you have to pass the AJE for retained earnings ,it will take time.I hope they don't ask to prepare the Stmt of change in equity after that .Your input will help and appreciated.

[aatoural]

Happy Mothers Day Everyone/Happy Mothers' Day for your wives!!

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Anthony]

@WannaFree All sims that have require journal entries will have drop downs with the accounts and you'll have to enter the amount. They will never ask you to type the accounts in.

Gleim has several sims that have adjustment journal entires, but I don't remember the topic section where it is.

Not saying that you will get a sim on it, but there is a chance that you will have to prepare a statement of changes in equity with supporting documents because the exams has a way of stabbing you in the back with topics where you're weak in. Trust me..they will slam you with topics that don't want and never give you topics that you want.

[Wannafree]

Thanks Anthony for your input,it's a big relief (drop down ) otherwise I would have named APIC instead of “APIC for TS”.I am bad in naming ledgers.
Somehow I had this feeling that in new format they will insist on FS ,either create new FS or correct the given one because Becker's has changed chapter 1 and 2 and given 5 complete FS so I am practicing (based on my guess ) to prepare the 5 FS and cash flows from trial balance.That will take care of AJE.
Calculating the RE ,SE ,Goodwill ,amortization of Intangibles ,amortization of notes payable and Pension etc and taking it all the way to FS.
In Consolidation ,doing elimination and then making FS and cash flows.Calculation of Goodwill and then CAR IN BIG mnemonic JE. Inventory calculation as per Dollar LIFO and as per IFRS. Calculating R&D as per US GAP and IFRS. Just somehow feel (based on last exam )they will definitely ask a SIM on Consolidation and create my own SIM from Textbook.Any other area you think I am missing to give my focus ? NFP and Govt I am comfortable including JE and Govt wide recon.
I am doing good in MCQ so this time SIM and SIM.
Want to pass FAR this time as vacation and life are put on hold.wanna be free.Your guidance is truly appreciated.

[aatoural]

Guys any study tips of all the rules for R&D. I cannot get it straight keep getting confused on those.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Wannafree]

US GAP :incurred ,expense.
Acquired :if alternative future use ? capitalize.
IFRS : Distinction is made between R and D
R expense .Charge all research cost to expense. [IAS 38.54]
D:
Development costs are capitalized only after technical and commercial feasibility of the asset for sale or use have been established. This means that the enterprise must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits. [IAS 38.57]

[Author]

Replies