[jeff]

FAR Resources:

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

FAR 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

FAR Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[nbad311]

HELLO AGAIN. I hate that I am back in this thread but know I'm in good company! 😀

I actually just got my score card via email. I got weaker in every single thing except Specific Transactions/Events & Governmental. Feeling a bit proud that I stuck with Gov't stuff the week before my exam (I am terrible at it and HATE IT) and it seemed to have paid off, sorta! I need to spend good time studying NFP stuff this time around. I personally think it's weird that that one section alone can be up to 12%.

REG - 65, 70, 80!
BEC - 35, 62, 79!
AUD - 73, 75!
FAR - 65, 73, 70, 75! DONE.

[Anonymous]

Would someone please help me understand reciprocal and non-reciprocal transfers in government scenarios? The way I'm thinking about them reciprocal payments are dollars that the giver expects to receive back and non-reciprocal payments are money the giver doesn't expect to receive back. This makes sense in my head but then the questions don't work out in this way. And what to eliminate vs. not eliminate is also confusing me. Any advice here will be much appreciated!

[Anonymous]

Would someone please help me understand reciprocal and non-reciprocal transfers in government scenarios? The way I'm thinking about them reciprocal payments are dollars that the giver expects to receive back and non-reciprocal payments are money the giver doesn't expect to receive back. This makes sense in my head but then the questions don't work out in this way. And what to eliminate vs. not eliminate is also confusing me. Any advice here will be much appreciated!

[NYCaccountant]

Wow, I don't believe Wiley covers that at all DJN. Now I have something to research in regards to governmental.

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

[NYCaccountant]

Wow, I don't believe Wiley covers that at all DJN. Now I have something to research in regards to governmental.

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

[Anonymous]

@NYCaccountant – I'm so glad to see you in this thread! I also never got around to saying in the last thread before it was shut down what a great resource you are. You always answer people's questions and you're so thorough. You certainly helped me a time or two!

[Anonymous]

@NYCaccountant – I'm so glad to see you in this thread! I also never got around to saying in the last thread before it was shut down what a great resource you are. You always answer people's questions and you're so thorough. You certainly helped me a time or two!

[NYCaccountant]

Oh wait, Wiley does cover this. Rule of thumb, the internal service fund is established to perform services for other government funds. This is part of the proprietary fund, which means it uses accrual accounting and the services performed for other government funds is basically revenue and not a inter-government transfer. So the services performed will be paid for out of the general fund. Entry below

Expenditures Dr. 5,000

Due to Internal Service Fund Cr. 5,000 For the general fund

And the entry for the internal service fund would be similar to an entry for a regular business, see below:

Due from general fund Dr. 1,000 Receivable

Operating Revenues Cr. 1,000

Transfers between funds are non- reciprocal because you don't have to perform any services for it, and will not have to pay it back, or pay for it. The government is simply transfering cash in between funds in order to better serve the public.

That's how I remember it anyway, but I may be wrong, so someone please correct me if I am. Also, loans would be reciprocal as well, if memory serves me correct.

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

[NYCaccountant]

Oh wait, Wiley does cover this. Rule of thumb, the internal service fund is established to perform services for other government funds. This is part of the proprietary fund, which means it uses accrual accounting and the services performed for other government funds is basically revenue and not a inter-government transfer. So the services performed will be paid for out of the general fund. Entry below

Expenditures Dr. 5,000

Due to Internal Service Fund Cr. 5,000 For the general fund

And the entry for the internal service fund would be similar to an entry for a regular business, see below:

Due from general fund Dr. 1,000 Receivable

Operating Revenues Cr. 1,000

Transfers between funds are non- reciprocal because you don't have to perform any services for it, and will not have to pay it back, or pay for it. The government is simply transfering cash in between funds in order to better serve the public.

That's how I remember it anyway, but I may be wrong, so someone please correct me if I am. Also, loans would be reciprocal as well, if memory serves me correct.

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

[Anonymous]

So basically loans and service payments are reciprocal and transfers are not. Becker also talks about interfund reimbursements, which *sound* like they should be reciprocal (reimbursements, so money goes “back and forth”), but they are really payments of expenses by one fund for another fund.

BTW, in a service payment scenario does that mean that an internal service fund has to be involved for it to be reciprocal? What about an enterprise fund, e.g., if a utility provides electricity to a governmental unit.

[Anonymous]

So basically loans and service payments are reciprocal and transfers are not. Becker also talks about interfund reimbursements, which *sound* like they should be reciprocal (reimbursements, so money goes “back and forth”), but they are really payments of expenses by one fund for another fund.

BTW, in a service payment scenario does that mean that an internal service fund has to be involved for it to be reciprocal? What about an enterprise fund, e.g., if a utility provides electricity to a governmental unit.

[RandomAlt]

My whole story is floating around here in various postings, but long story short, I am scheduled to take FAR on October 7th…the very last day of my NTS! I am using CPAexcel, and started studying around Sept 1st (so I have about 5 weeks total)…

I posted the following in the last FAR study group, but it was around a day or two before it got closed, so I am reposting it here:

---

Question: An investor purchased a bond as a long-term investment between interest dates at a premium. At the purchase date, the cash paid to the seller is:

A. The same as the face amount of the bond.

B. The same as the face amount of the bond plus accrued interest.

C. More than the face amount of the bond.

D. Less than the face amount of the bond.

I got the question correct (C), mostly by creating a JE with simple numbers…however, I want to make sure I did the JE correctly. I can find example problems with accrued bond interest from the investees side, but not from the investors side.

So, if you could, just let me know if my JE below is correct:

(DR)Bond Investment 100,000

(DR)Accrued Interest Rec 5,000 <— Not even sure what the correct name for this is

(DR)Bond Premium 15,000

(CR)Cash 120,000

FAR - [10/07/2013 --> 66] [07/07/2014 --> 86]
BEC - [08/31/2014 --> 86]
AUD - [11/24/2014 --> 88]
REG - [02/14/2015 --> 92]

[RandomAlt]

My whole story is floating around here in various postings, but long story short, I am scheduled to take FAR on October 7th…the very last day of my NTS! I am using CPAexcel, and started studying around Sept 1st (so I have about 5 weeks total)…

I posted the following in the last FAR study group, but it was around a day or two before it got closed, so I am reposting it here:

---

Question: An investor purchased a bond as a long-term investment between interest dates at a premium. At the purchase date, the cash paid to the seller is:

A. The same as the face amount of the bond.

B. The same as the face amount of the bond plus accrued interest.

C. More than the face amount of the bond.

D. Less than the face amount of the bond.

I got the question correct (C), mostly by creating a JE with simple numbers…however, I want to make sure I did the JE correctly. I can find example problems with accrued bond interest from the investees side, but not from the investors side.

So, if you could, just let me know if my JE below is correct:

(DR)Bond Investment 100,000

(DR)Accrued Interest Rec 5,000 <— Not even sure what the correct name for this is

(DR)Bond Premium 15,000

(CR)Cash 120,000

FAR - [10/07/2013 --> 66] [07/07/2014 --> 86]
BEC - [08/31/2014 --> 86]
AUD - [11/24/2014 --> 88]
REG - [02/14/2015 --> 92]

[Anonymous]

Thanks NYCaccountant! Makes sense now.

I have one more question with leases…

From Wiley, module 13 E, number 47.

On December 31, year 1, Lane, Inc. sold equipment to Noll, and simultaneously leased it back for twelve years. Pertinent information at this date is as follows:

Sales price $480,000

Carrying amount 360,000

Estimated remaining economic life 15 years

At December 31, year 1, how much should Lane report as deferred gain from the sale of the equipment?

a. $0

b. $110,000

c. $112,000

d. $120,000

The answer is D. My question is that I thought you need to know the present value of the minimum lease payments in order to test if it is a major or minor sales leaseback? And that you can only defer the gain when it is a major leaseback and the PV of the min lease payments are at least 90% of the sales price? I'm just not sure how you would know how to answer without that information. Is there some other rule I'm missing?

[Anonymous]

Thanks NYCaccountant! Makes sense now.

I have one more question with leases…

From Wiley, module 13 E, number 47.

On December 31, year 1, Lane, Inc. sold equipment to Noll, and simultaneously leased it back for twelve years. Pertinent information at this date is as follows:

Sales price $480,000

Carrying amount 360,000

Estimated remaining economic life 15 years

At December 31, year 1, how much should Lane report as deferred gain from the sale of the equipment?

a. $0

b. $110,000

c. $112,000

d. $120,000

The answer is D. My question is that I thought you need to know the present value of the minimum lease payments in order to test if it is a major or minor sales leaseback? And that you can only defer the gain when it is a major leaseback and the PV of the min lease payments are at least 90% of the sales price? I'm just not sure how you would know how to answer without that information. Is there some other rule I'm missing?

[Author]

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