[jeff]

Welcome to the Q3 2017 CPA Exam Study Group for FAR. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your FAR exam.

The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

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

[Mscfisher]

@iwannabeacpa
I will take a shot at explaining it…though not entirely sure here.
I always plug number in to help me understand. Let's say the book value of this asset is 700,000 and the tax basis of the asset is 450,000. The difference being 250,000. Remember depreciation is an expense and helps the lower taxable income. So the way I read this is that this company took too much expense $250,000 worth and that will have to be added back to the net income in the future which means in the future they will have to pay more hence it is a tax liability.

[IwannabeaCPA2017]

@Mcfisher, now that makes ense if it was the FUTURE and makes sense since we do use future enacted tax rate.. ugh, I was thinking more about current year and that what makes me think if I paid more now and less in future it will be a DTA. But obvious it was in the future. Honestly, in reality working is much more less complex lol. These questions are all about interpreting. Thanks anyways!!

Guess the whole point here was FUTURE.. because had it said tax > book depreciation that would create a DTL as well. More deductions now lower income, more taxes in future.. Or would it be future deductible which is DTA? Am I just overthinking??

[mtaylo24]

@Sally yup, email sent

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)

[Ne’O]

Everyone warned about time on FAR.
So I practiced time on FAR, mostly speed getting through MCQs. They are worth 50% of the exam, so I think 90 minutes is more realistic than speed demons who say they did it in 60 to 70.

Still, try to shave up to 10% off MCQs and get it down to 80-85 minutes.

Mtaylo wrote:
MCQ 1 – 45
MCQ 1 – 45
2 Sims – 30
3 Sims – 60
3 Sims – 60

However possible, you have to get 5 to 10 more minutes for the DRS. They can give you 6 to 8 related documents to piece together the solutions, and flitting back n forth to them on the little Prometric monitors is quite the challenge. [If they'd even up grade to a 21″ monitor, I'd be happy].

I actually like DRS questions because it is akin to what I do about 5 to 10 hours per week as the accounting part of our company. Just piecing together that number of documents via a tab function on a monitor about 1/2 the size most of us work with today WITH A TIME CONSTRAINT, is why FAR really becomes a battle against the clock.

Ne'O

Newbie CPA Candidate

[Pawn Maker]

IwannabeaCPA2017 I know what you mean, I was never able to figure them out…I have a little table I found in some other thread that seems to make these easy.

DTA DTL
Revenue B<T B>T
Expense B>T B<T

With your question you just need to figure out they are saying that tax depreciation expense is greater than book depreciation expense, and know to use next year's tax %.

Mtaylo You said it…3 weeks to get ready is killing me. I am so damn stressed out…

[SallyCPA]

Anyone else hate bonds and deferred gross profit/installment questions? BTW don't sweat DTLs and DTAs, I might of gotten one MCQ on my last test.

[Pawn Maker]

Oh yeah. And I really, really hate running into out of date questions on Wiley. I just came across another deferred tax liability question which wants you to have current and non-current deferred tax liabilities…

[IwannabeaCPA2017]

haha right sally! I never even seen 1 the past 2 tries and yes I hate bonds and was lucky to not see any on 2nd attempt but was killed on my first time. Why is FAR so complicated.. I honestly think if it were broken down into 2 section its much more manageable similar to intermediate 1 and 2 in college. I have a feeling I will see a lot of bonds, leases and Cash flow.. % of completion and completed contract could be a good SIM to ask. with so few days left and so much to study it is pretty stressful.

[IwannabeaCPA2017]

Anyone know what section is Cash flows in in Ninja MCQ. I couldn't find a particular topic titled that? All I see is Statement of Cash Flow under the NFP.. But I want it for Business entity. Thanks!

[IwannabeaCPA2017]

Need some help on interpreting this Question:
On January 1, 20X1, Bay Co. acquired a land lease for a 21-year period with no option to renew. The lease required Bay to construct a building in lieu of rent. The building, completed on January 1, 20X2, at a cost of $840,000, will be depreciated using the straight-line method. At the end of the lease, the building's estimated market value will be $420,000. What is the building's carrying amount in Bay's December 31, 20X2, balance sheet?

So I get the whole idea of capitalizing over lesser of useful vs lease term.. The useful life is 20 years but not sure if its derived from 21 lease term – 1 year gone by = 20 years left. I know this is simple math but after so many MCQ I feel stupid for even asking this. LOL

[abig]

For Governmental,

Can anyone explain the difference between Capital Outlay and expenditures?

The 2 confuse me.

[Wannafree]

@abig,Expenditure includes Capital expenditure and that is known as capital outlays.
If you let me know where you get confused then I can give the details accordingly.
This may help.
https://nces.ed.gov/pubs2004/h2r2/ch_5_3.asp

[abig]

@WannaFree

So in Grassp Funds its expenditures but its recorded as capital outlays? Isn't there a difference somewhere when its expenditures vs capital outlays?

[Wannafree]

@abig,got your question. Graspp there are every expenditure is non capital or expenditure except capital Project and Debt services.If you add all line items of capital project it's not total capital outlay.Why ?Some small capital is shown as expenditure in General fund (not capital )e.g. Police cars are shown as expenditure(not expense , not capital assets so no depreciation ) in fund accounting.In Govtwide recon ,this police car is added to capital project fund to arrive at total capital outlays.
So the car expenditure was expenditure in fund accounting but capital outlays (capital expenditure ) in Govtwide recon statement.
So how to distinguish ? Function and objects.
Expenditures generally are shown by function and object with the current operating expenditures presented apart from debt service and capital expenditures. Some governments break the debt service expenditures into their principal and interest components. It should be noted that smaller capital expenditures may be included in the functional categories, so the line “capital expenditures” may not represent the sum total. One can generally determine the total amount of capital expenditures from the information in this statement's reconciliation.
Please note ,some expenditure ( not all ) of fund will become capital in reconciliation.

[abig]

Can you try to explain the first part? I got lost reading the part before the bold.

I am aware of expenditures in Grassp funds,

DR: expenditures
Cr: cash (or interfund transfer)?

[Author]

Replies