FAR Study Group July August 2017 - Page 71

Viewing 9 replies - 1,051 through 1,059 (of 1,059 total)
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  • #1619869
    abig
    Participant

    Expenditures in Capital funds are

    DR:Capital outlay (basically expenditure)
    CR: Cash

    In the general fund police cars are
    DR: Expenditure
    CR: Cash

    but the police cars on the govt wide are Capital Outlay?

    Am I seeing this right now?

    #1619887
    Wannafree
    Participant

    @abig , you are right.
    I am giving two more examples of how expenditure JE in Graspp becomes capital outlays in Govtwide JE.
    Fund Balance Reserved
    The two police cars are received with an invoice for $152,000.
    Expenditures 152,000
    Vouchers Payable 152,000

    Govt wide JE
    Vehicles 152,000
    Vouchers Payable 152,000

    A contractor completes the assessment project and is paid $80,000.

    Capital Projects Fund

    Governmental Activities (Govtwide)
    Expenditures 80,000
    Cash 80,000
    Infrastructure Assets 80,000
    Cash 80,000
    In nutshell ,for Govt funds, there is no capital assets ,no depreciation ,all capital and depreciation is taken care of in governmental activities ( govt wide statements ).
    Where you book your expenditure ( graspp ) depends upon source of grants etc not nature of capital or non capital outlays.Major infrastructure and deb services are also expenditure but just better classification (again not capital ).
    In Proprietary Fund and Fiduciary it's just like private for profit.
    Hope I didn't confuse you further.

    #1619906
    mtaylo24
    Participant

    This is only in adaptive mode, not sure If I should be getting gassed up.

    Session Date Session Type Number of Questions Score Time Taken
    9/3/2017 7:48 PM Study Session 20 90% 0:21:12
    9/3/2017 3:41 PM Study Session 20 75% 0:18:25
    9/3/2017 2:19 PM Study Session 20 75% 0:16:46
    9/3/2017 11:11 AM Study Session 20 80% 0:17:15
    9/3/2017 8:25 AM Study Session 20 75% 1:05:04
    9/2/2017 10:30 PM Study Session 20 75% 0:41:03

    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)

    #1619909
    Mscfisher
    Participant

    @mtaylo whoooo hoooo! Yes! Get excited because this is it!

    #1619912
    mtaylo24
    Participant

    Haha, @MSCfisher! Keep in mind this is an extended weekend. I can see my job ruining all of my progress this week LOL.

    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)

    #1619939
    dab88
    Participant

    Leer Corp.’s pretax income in the current year was $100,000. The temporary differences between amounts reported in the financial statements and the tax return are as follows:
    •Depreciation in the financial statements was $8,000 more than tax depreciation.
    •The equity method of accounting resulted in financial statement income of $35,000. A $25,000 dividend was received during the year, which is eligible for the 80% dividends-received deduction.

    Leer’s effective income tax rate was 30%. In its current year income statement, Leer should report a cur­rent provision for income taxes of:

    Incorrect A.
    $26,400.

    B.
    $23,400.

    C.
    $21,900.

    D.
    $18,600.

    You answered A. The correct answer is B.

    The current provision for income taxes is simply the taxable income for the year multiplied by the tax rate for the year. Thus, we need to find the taxable income for the year.

    Start with the pretax income of $100,000, and add $8,000 to it because tax depreciation expense was less than book depreciation. The $35,000 equity method income for financial accounting needs to be subtracted since it is not the taxed amount:
    •$100,000 + $8,000 – $35,000 = $73,000

    The dividends that are taxable are subject to a dividends-received deduction of 80%. Thus, only add in $5,000 of the dividends ($25,000 × 0.20 (1 − 0.80)), because the dividends, though taxable in part, are not financial accounting income when applying the equity method:
    •$73,000 + $5,000 = $78,000

    Thus, taxable income is $78,000 ($100,000 + $8,000 – $35,000 + $5,000) and the current income tax due is $23,400:
    • $78,000 × 0.30 = $23,400
    I think i'm miss reading the question because I thought when financial statement depreciation is more than the tax depreciation it is a tax asset. Can someone try and explain the answer better. I am confused.

    #1619957
    dab88
    Participant

    Does anyone have the aicpa 2017 release questions they can send me I wanted to test myself. Ninja only had the 2016 aicpa release.

    #1620064
    Lentilcounter
    Participant

    Can someone summarize the cost and equity methods for investments?

    This is what I understand. Under cost method, your percentage ownedxdividends are recognized in income. You also recognize the changes in the Fair value of the investment against investment. If dividends are distributed in excess of retained earnings, they are a return of investment reducing it.

    Under the equity method, your percentage of dividends received reduces investment. You recognize your percentage of earnings/loss and it goes into investment as either a plus or minus. If the Fair value option is elected,follow the cost method rules.

    If this is all true, dividends would show up on the income statement for cost method and your equity earnings from the investee right?

    Thanks!

    BEC = 72 (6/08/16)
    FAR = ?
    REG = ?
    AUD = ?

    #1620067
    mtaylo24
    Participant

    ^^^Don't forget about the FV Option.

    Building sessions based on my craplist and not doing too hot. My craplist:

    Installment Method
    Notes Receivable
    Dollar Value LIFO
    Estimating Inventory
    Capitalized Construction Interest
    Nonmonetary Exchanges
    Warranties/Coupons/Deposits/Advances
    Deferred Taxes
    Pensions
    Notes Payable
    ARO
    Sales Leaseback
    Treasury Stock
    Intra-entity Eliminations

    Mod Edit – Closing thread to avoid multiple study groups going at once. September exam takers, please use the new study groups stickied up top.

    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)

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