FAR Study Group October November 2013 - Page 57

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  • October 1, 2013 at 4:30 pm #476767
    Anonymous
    Inactive

    Can I please revisit the damn Statement of Cash Flows for a minute…

    At it's most basic level, let me see if I understand direct vs. indirect:

    Indirect you start with net income and adjust for changes in assets (inverse) and liabilities (regular direction)

    Direct is changes in actual cash, so either cash you got or you didn't

    Am I thinking about this the right way?

    October 1, 2013 at 4:30 pm #476832
    Anonymous
    Inactive

    Can I please revisit the damn Statement of Cash Flows for a minute…

    At it's most basic level, let me see if I understand direct vs. indirect:

    Indirect you start with net income and adjust for changes in assets (inverse) and liabilities (regular direction)

    Direct is changes in actual cash, so either cash you got or you didn't

    Am I thinking about this the right way?

    October 1, 2013 at 4:39 pm #476769
    NYCaccountant
    Participant

    @ DJN Remember only the operating section of the cash flow statement using the indirect method reconciles from net income. For the other two sections (Investing and Financing) there really is no difference. I look at it this way:

    Direct – I work from the income statement to the balance sheet. So I'll work from the expense to the amount on the balance sheet.

    Indirect – I work from the balance sheet to the income statement.

    This works for me when I'm doing these problems.

    So for example I might have an expense of 5,000 on my income statement and I want to know how much cash I spent for that expense. I look to see if I had accrualed a portion of the expense and work from there. If I have a 5,000 expense and I look and see that I accrual 3,000 of it, that means that I must have paid 2,000 cash for this expense

    FAR - 93
    REG - 87
    BEC - 84!!!!
    AUD - 99!!!!!! CPA exam complete.

    October 1, 2013 at 4:39 pm #476834
    NYCaccountant
    Participant

    @ DJN Remember only the operating section of the cash flow statement using the indirect method reconciles from net income. For the other two sections (Investing and Financing) there really is no difference. I look at it this way:

    Direct – I work from the income statement to the balance sheet. So I'll work from the expense to the amount on the balance sheet.

    Indirect – I work from the balance sheet to the income statement.

    This works for me when I'm doing these problems.

    So for example I might have an expense of 5,000 on my income statement and I want to know how much cash I spent for that expense. I look to see if I had accrualed a portion of the expense and work from there. If I have a 5,000 expense and I look and see that I accrual 3,000 of it, that means that I must have paid 2,000 cash for this expense

    FAR - 93
    REG - 87
    BEC - 84!!!!
    AUD - 99!!!!!! CPA exam complete.

    October 1, 2013 at 4:44 pm #476771
    Anonymous
    Inactive

    Woah NYC… You have much more intuitive feel for this than I do…

    October 1, 2013 at 4:44 pm #476836
    Anonymous
    Inactive

    Woah NYC… You have much more intuitive feel for this than I do…

    October 1, 2013 at 5:02 pm #476773
    Anonymous
    Inactive

    @NYC thanks. Am I right saying that it is OCI – PSC (Pension Service Cost). I just dont want to forget that element.

    October 1, 2013 at 5:02 pm #476838
    Anonymous
    Inactive

    @NYC thanks. Am I right saying that it is OCI – PSC (Pension Service Cost). I just dont want to forget that element.

    October 1, 2013 at 5:05 pm #476775
    Anonymous
    Inactive

    by the by. I am copying your explanations to word. You deserve a double Hiya.

    Steps to calculating Lower of Cost or Market? Go!! just struggled with a couple of mcqs.

    October 1, 2013 at 5:05 pm #476840
    Anonymous
    Inactive

    by the by. I am copying your explanations to word. You deserve a double Hiya.

    Steps to calculating Lower of Cost or Market? Go!! just struggled with a couple of mcqs.

    October 1, 2013 at 5:18 pm #476777
    Anonymous
    Inactive

    Review NFP Journals:

    Contribution Temporary Restricted 1/1/Year1. Apple donated $100,000 to Orange.Org to use towards thumb research in Year 2.

    Dr Cash $100,000

    Cr Contribution Temporary Restricted – Purpose $100,000

    This entry would be recorded in the Statement of Activities Under Revenues Section – Contributions and Temporary Restricted column.

    End of the year journal entry 12/31/Year1:

    Dr Contribution Temporary Restricted – Purpose $100,000

    Cr Temporary Restricted Net Assets $100,000

    Year 2 entry $80,000 was used towards research:

    Dr Temporary Restricted Net Assets $80,000

    Cr Unrestricted Net Assets $80,000

    Pay expenses:

    Dr Expense $80,000

    Cr Cash/Unrestricted $80,000

    Is the last entry correct? Because the Temporary Retricted Net Assets would be decreased by $80k

    October 1, 2013 at 5:18 pm #476842
    Anonymous
    Inactive

    Review NFP Journals:

    Contribution Temporary Restricted 1/1/Year1. Apple donated $100,000 to Orange.Org to use towards thumb research in Year 2.

    Dr Cash $100,000

    Cr Contribution Temporary Restricted – Purpose $100,000

    This entry would be recorded in the Statement of Activities Under Revenues Section – Contributions and Temporary Restricted column.

    End of the year journal entry 12/31/Year1:

    Dr Contribution Temporary Restricted – Purpose $100,000

    Cr Temporary Restricted Net Assets $100,000

    Year 2 entry $80,000 was used towards research:

    Dr Temporary Restricted Net Assets $80,000

    Cr Unrestricted Net Assets $80,000

    Pay expenses:

    Dr Expense $80,000

    Cr Cash/Unrestricted $80,000

    Is the last entry correct? Because the Temporary Retricted Net Assets would be decreased by $80k

    October 1, 2013 at 5:27 pm #476779
    NYCaccountant
    Participant

    I think you have to reclass the cash first from temporary to unrestricted and then pay it out of unrestricted.

    Cash – Unrestricted Dr. 80,000

    Cash – Tem Restricted Cr. 80,000

    Expenses Dr. 80,,000

    Cash – Unrestricted Cr. 80,000

    Becauses expenses are only paid out of unrestricted assets.

    Lower or cost or market –

    Selling price – cost to sale = NRV (Ceiling)

    NRV- Normal profit marging = Floor

    Replacement costs.

    You look at these three components and the number in the middle is your market price.

    You compare your market price to the historical cost of the inventory and choose the smaller number.

    FAR - 93
    REG - 87
    BEC - 84!!!!
    AUD - 99!!!!!! CPA exam complete.

    October 1, 2013 at 5:27 pm #476844
    NYCaccountant
    Participant

    I think you have to reclass the cash first from temporary to unrestricted and then pay it out of unrestricted.

    Cash – Unrestricted Dr. 80,000

    Cash – Tem Restricted Cr. 80,000

    Expenses Dr. 80,,000

    Cash – Unrestricted Cr. 80,000

    Becauses expenses are only paid out of unrestricted assets.

    Lower or cost or market –

    Selling price – cost to sale = NRV (Ceiling)

    NRV- Normal profit marging = Floor

    Replacement costs.

    You look at these three components and the number in the middle is your market price.

    You compare your market price to the historical cost of the inventory and choose the smaller number.

    FAR - 93
    REG - 87
    BEC - 84!!!!
    AUD - 99!!!!!! CPA exam complete.

    October 1, 2013 at 6:49 pm #476781
    Anonymous
    Inactive

    @NYC and DJN – Thanks! You guys have a solid grasp of most concepts and I am sure you will rock on your exam.

    As the day approaches, the anxiety keeps on building up. It seems like no matter how well you are prepared, there is always that skeptic mind that surfaces.

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