FAR Study Group Q1 2015 - Page 37

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  • January 25, 2015 at 11:44 pm #654695
    Determined CPA
    Participant

    CPAHOPEFUL11 – im not sure what you're asking. Are you asking about how the transactions are presented?

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 25, 2015 at 11:53 pm #654696
    Anonymous
    Inactive

    No, like reimbursements aren't presented on the Gov-Wide FS but quasi-external transactions are. How about operating transactions and loans?

    January 26, 2015 at 12:13 am #654697
    excel monkey
    Participant

    A couple of points to clarify:

    1) Cumulative dividends are backed out for EPS even if they are not declared because the preferred stockholders have earned them, even if the company has not declared them. With cumulative preferred stock, the dividend paid does not matter, only the dividend the stockholder earned in that period (in this case the 10,000). So in the problem, the 16,000 they paid would have been, at least partially, from prior periods.

    2) Non-cumulative preferred dividends are backed out in the period they are declared, when they are paid is irrelevant. If the stock in the problem had been non-cumulative, nothing would have been backed out of net income since there was no date of declaration given. They would have been backed out of net income, for EPS, in the period they were declared.

    3) The reason we have to back out the declared dividends is because they reduce retained earnings directly, they never hit the income statement so they don’t affect net income. They reduce earnings in the period of declaration, not they period in which they are paid.

    Date of declaration:

    Dr. Retained earnings

    Cr. Dividends payable – Preferred

    Date of payment:

    Dr. Dividends payable – Preferred

    Cr. Cash

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 26, 2015 at 12:17 am #654698
    Determined CPA
    Participant

    Ok, now that makes sense! Thank you!! You really have a great understanding of this – super jealous and can definitely see you doing very well on this exam.

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 26, 2015 at 12:22 am #654699
    excel monkey
    Participant

    The gain is subtracted in the operating section because it was included net income on the income statement, and is a non-cash item, just like depreciation expense (just subtracted instead of added). If you don't back the gain out of operating cash flows, you have overstated your cash flows from operations.

    The entire amount of the cash proceeds from the sale of the equipment is included in the investment section. In this problem, we have to calculate the amount of cash we got, so we add the gain to the difference of the cost and accumulated depreciation.

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 26, 2015 at 12:40 am #654700
    Determined CPA
    Participant

    thank you again.

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 26, 2015 at 1:25 am #654701
    excel monkey
    Participant

    You're welcome, even though no thanks are necessary. I enjoy accounting questions and helping people (I ran study groups for all my undergrad accounting classes), so this is fun for me. Plus my wife doesn't understand any of this, so I can't talk about it with her. She claims to hear Charlie Brown's teacher whenever I try to talk accounting with her, lol.

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 26, 2015 at 1:53 am #654702
    Determined CPA
    Participant

    When is your test?

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 26, 2015 at 1:55 am #654703
    Determined CPA
    Participant

    And I feel the same with my husband. He's a construction worker and calls his w-2 a tax return. Opposites attract I suppose lol

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 26, 2015 at 3:10 am #654704
    excel monkey
    Participant

    I'm still waiting on my state BOA to process my transcripts. I just (finally) got my Bachelor's in December. I'm hoping to sit by the end of this window, if not it will be April 1.

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 26, 2015 at 9:17 pm #654705
    Determined CPA
    Participant

    Is this a mistake or am I missing something?

    Lino Co.’s worksheet for the preparation of its statement of cash flows included the following:

    December 31 January 1

    Accounts receivable $29,000 $23,000

    Allowance for uncollectible accounts 1,000 800

    Prepaid rent expense 8,200 12,400

    Accounts payable 22,400 25,400

    Lino’s net income is $150,000. What amount should Lino include as net cash provided by operating activ­ities in the statement of cash flows?

    Net income $150,000

    Increase in accounts receivable ($23,000 – $29,000) (6,000)

    Increase in allowance for uncollectible accounts

    ($800 – $1,000) 200

    Decrease in prepaid rent expense ($12,400 – $8,200) 4,200

    Increase in accounts payable ($25,400 – $22,400) 3,000

    Cash provided by operating activities $151,400

    Why is there an INCREASE in AP? Didn't AP go down??

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 26, 2015 at 9:32 pm #654706
    Anonymous
    Inactive

    According to what you have there AP definitely went down. That's how I originally calculated it to (as if AP went down). Going from 25,400 to 22,400 is a decrease. That's pretty basic math (25,400 > 22,400). Where did you find this question?

    January 26, 2015 at 9:39 pm #654707
    Determined CPA
    Participant

    Ninja and I got it wrong bc I picked 145,400, which is what the answer would be if it was accounted for as a decrease in a current liability. its question 1658

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 26, 2015 at 9:48 pm #654708
    Anonymous
    Inactive

    Is there a search function in NINJA to find particular questions? I want to see this question and the explanations. I can't see how this is right.

    January 26, 2015 at 9:52 pm #654709
    Determined CPA
    Participant

    After I gave you the ? number I tried to search for it but I don't know how. I can only find it bc its part of my last test. hmm…Im just wondering bc its odd no one else has come across this question and posted their concern. that's why I was wondering if I was wrong.

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

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