[jeff]

FAR Resources:

Free FAR Notes & Audio – https://www.another71.com/cpa-exam-study-plan

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

[ZSRizvi]

@NYC

Is there a specific problem that gives you that scenario? As in, here's an asset's FV and then the PV of the lease pmts; give the J/E?

Direct financing leases are recorded at the FV of the asset given up (sold). If you use the PV of the lease pmts, it would also include interest, right? Wouldn't that overstate the value of the asset?

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[NYCaccountant]

@ ZSR No, not actually. I was wondering. Sorry @ DJN I was talking from the lessor perspective. @Elia you recorded the lease receivable net of the interest, I just separated it out. The lease would be recorded at the correct amounts in both instances, just different journal entries. I know for sure the lessee either uses the present value of the payments or the fair value of the asset – if the present value is more than the fair value, you have to use fair value. The lessee uses the lower of either the implicit rate (if known) or the their incremental borrowing rate to discount the payments to present value.

Thanks everyone! I was just wondering. I always use the fair value of the asset, but it was just something that crossed my mind.

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

[NYCaccountant]

@ ZSR No, not actually. I was wondering. Sorry @ DJN I was talking from the lessor perspective. @Elia you recorded the lease receivable net of the interest, I just separated it out. The lease would be recorded at the correct amounts in both instances, just different journal entries. I know for sure the lessee either uses the present value of the payments or the fair value of the asset – if the present value is more than the fair value, you have to use fair value. The lessee uses the lower of either the implicit rate (if known) or the their incremental borrowing rate to discount the payments to present value.

Thanks everyone! I was just wondering. I always use the fair value of the asset, but it was just something that crossed my mind.

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

[Anonymous]

@NYC, I just remembered you aren't using Becker so my “OWNS” comment probably made no sense to you. Sorry about that. I was originally writing to ZSRizvi.

[Anonymous]

@NYC, I just remembered you aren't using Becker so my “OWNS” comment probably made no sense to you. Sorry about that. I was originally writing to ZSRizvi.

[Anonymous]

Good note I forgot about that little tibit

“I know for sure the lessee either uses the present value of the payments or the fair value of the asset – if the present value is more than the fair value, you have to use fair value”

Do you guys think its best to the amort schedule then do the jnls or just depends on the question. Because yesterday I had a difficult with one of the Wiley sims looked like something from space.

Here are the heading columns from the questions. I didn't know where to start.

Interest payment, Interest expense, Increase/(Decrease) CA of Bonds, Unamortized Disount or Premium, CA amount of Bonds, Face amount of Bonds and Interest rate.

Then 30 minutes later, started with the columns that looked familiar then made progressed once I started to realise that just moving around the columns can confuse me.

[Anonymous]

Good note I forgot about that little tibit

“I know for sure the lessee either uses the present value of the payments or the fair value of the asset – if the present value is more than the fair value, you have to use fair value”

Do you guys think its best to the amort schedule then do the jnls or just depends on the question. Because yesterday I had a difficult with one of the Wiley sims looked like something from space.

Here are the heading columns from the questions. I didn't know where to start.

Interest payment, Interest expense, Increase/(Decrease) CA of Bonds, Unamortized Disount or Premium, CA amount of Bonds, Face amount of Bonds and Interest rate.

Then 30 minutes later, started with the columns that looked familiar then made progressed once I started to realise that just moving around the columns can confuse me.

[Anonymous]

@Eliabraham – I HAVE to do the columns in MY order for it to make sense!

Carrying amt — Effective interest — Face interest — Amt to amortize — New carrying amt (then take this number down to the beginning of the next row and start all over)

Anything other than this and I don't stand a chance.

[Anonymous]

@Eliabraham – I HAVE to do the columns in MY order for it to make sense!

Carrying amt — Effective interest — Face interest — Amt to amortize — New carrying amt (then take this number down to the beginning of the next row and start all over)

Anything other than this and I don't stand a chance.

[Anonymous]

@DJN I know what you mean, If I saw these conlumns in the exam and I only had 10 minutes to go I would have freaked out and probably messed it up.

[Anonymous]

@DJN I know what you mean, If I saw these conlumns in the exam and I only had 10 minutes to go I would have freaked out and probably messed it up.

[Anonymous]

Gov't question: Gem City's internal service fund received $50,000 cash from the general fund to capitalize this fund. The $50,000 should be reported in Gem City's internal service fund as a credit to:

a. Transfers

b. Contributed capital

c. Revenues

d. Accounts payable

The answer is a. Transfers, but shouldn't it be a DEBIT to Transfers? Isn't the main budget:

DR: Estimated Revenues

DR: Estimated Other Financing (TRANSFERS IN)

DR: Budgetary Control (if negative)

---

CR: Appropriations Control

---

CR: Estimated Other Financing (TRANSFERS OUT)

---

CR: Budgetary Control (if positive)

[Anonymous]

Gov't question: Gem City's internal service fund received $50,000 cash from the general fund to capitalize this fund. The $50,000 should be reported in Gem City's internal service fund as a credit to:

a. Transfers

b. Contributed capital

c. Revenues

d. Accounts payable

The answer is a. Transfers, but shouldn't it be a DEBIT to Transfers? Isn't the main budget:

DR: Estimated Revenues

DR: Estimated Other Financing (TRANSFERS IN)

DR: Budgetary Control (if negative)

---

CR: Appropriations Control

---

CR: Estimated Other Financing (TRANSFERS OUT)

---

CR: Budgetary Control (if positive)

[NYCaccountant]

@ DJN Internal service funds do not have budgets. The only two funds that are required legally to have budgets are the general fund and special revenue fund. The entry would be:

Cash Dr.

Transfer Cr.

The whole budgetary process is generally just for the the general and special revenue fund.

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

[NYCaccountant]

@ DJN Internal service funds do not have budgets. The only two funds that are required legally to have budgets are the general fund and special revenue fund. The entry would be:

Cash Dr.

Transfer Cr.

The whole budgetary process is generally just for the the general and special revenue fund.

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

[Author]

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