[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for FAR.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[marqzho]

Cash = %face + Accrued Interest – BIC

=) unless they try to trick you

REG 90
FAR 95
AUD 98
BEC 84

[KJF1031]

In its December 31, Year 1, balance sheet, Fleet Co. reported accounts receivable of $100,000 before allowance for uncollectible accounts of $10,000. Credit sales during Year 2 were $611,000, and collections from customers, excluding recoveries, totaled $591,000. During Year 2, accounts receivable of $45,000 were written off and $17,000 were recovered. Fleet estimated that $15,000 of the accounts receivable at December 31, Year 2, were uncollectible. In its December 31, Year 2, balance sheet, what amount should Fleet report as accounts receivable before allowance for uncollectible accounts?

Answer is D. $75,000

The calculation is:

Beg A/R 1/1/X2 100,000
+ Credit Sales 611,000
+ Recoveries 17,000
– Collections (591,000)
– Collections-Rec (17,000)*******
– Write-off A/R (45,000)
= End Bal-12/31/X2 75,000

I understand the calculation besides what I starred**. Why do we subtract the collection recovery? We added it already.

BEC: Passed (8/31)
AUD: Passed (11/20)
FAR: Passed (2/26)
REG: 5/22

[Andyred04]

@kjf think of collection of receivables as two simple entries as shown below:

We must first reverse the “write-off” entry with:

A/R XX
Allowance XX

Then we must record the collect of the receivable with cash:

Cash XX
A/R XX

Hope this help 🙂

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[Anonymous]

I just completed all ten Becker chapters (lectures/MCQs/Sims) for FAR and I have two weeks to go before my exam. I don't think Becker is very clear on the best way to study over the next two weeks. I was thinking about taking the first ‘final exam' to see where I stand, then rework all the MCQ and Sims, then take the second ‘final exam' the day before the actual exam. Anyone have any study suggestions for me over the next two weeks? Thanks!

[JT]

Ninja-mcq's are pretty good. I haven't taken FAR yet but I found success with them for reg and BEC.

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[Andyred04]

@dhums15 MCQs, MCQs, MCQs and a few SIMs to get the hang of what they're going to look like. That was my approach to the last few weeks leading up to this past Friday when I took FAR. I felt very comfortable with the MCQs. Good luck!

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[jason49760608]

Dhums,

I would suggest working all the ‘choice' MCQs from Becker. Meaning star the good ones which represent the most consolidated example of all the concepts related to a particular study point. Re-work them until you know completely why the right answer is correct and wrong answers are wrong.

I have four or five note books with all the more complex number-based problems worked out where I go over them and make notes, highlight et cetera to more thoroughly delineate the way the answer is derived.

AND…I listen to Jeff's FAR stuff. Honestly, I find that Becker kinda blows. I don't think the lectures are worth a damn. Just work the questions would be my advice.

Aud 74, 70, 78
BEC 76
Reg 83
FAR - February 27, 2016

[Kemi22]

I still don't understand why the answer to this MCQ is not B:

A donor gives $10,000 to a nongovernmental, not-for-profit organization with instructions that it must be used to fund the organization’s general operating expenses during the following fiscal year. The donation will increase the organization's:

A. unrestricted net assets.

B. temporarily restricted net assets.

C. restricted net assets.

D. restricted retained earnings

ANSWER EXPLANATION: Only restrictions imposed by donors or grantors are considered restrictions in accounting for not-for-profit organizations. Donor and grantor restrictions may be time restrictions or use restrictions. Restrictions that can be satisfied by the passage of time or by the use of resources for a certain purpose (to finance expenses of a specific program or to construct a building, for example) are called temporary restrictions. Since the donor’s instructions will be satisfied in the following year, the donation is considered a time-restricted donation, and is classified as restricted net assets.

How is it different from this situation (future repairs to building/equip):

A nongovernmental, not-for-profit organization provided the following data in regard to $500,000 of donations received during the year:

Purchase of investments to be held in perpetuity at
the donor's request $100,000
Future repairs to the organization's building and
equipment at the donor's request 250,000
General operations at the discretion of the board of
directors 100,000
Specific program services as indicated by the donor 50,000

In order to properly reflect receipt of the donations, net assets should increase in the amount of:

A. $400,000 unrestricted and $100,000 permanently restricted.

B. $150,000 unrestricted, $250,000 temporarily restricted, and $100,000 permanently restricted.

Correct C. $100,000 unrestricted, $300,000 temporarily restricted, and $100,000 permanently restricted.

D. $100,000 unrestricted and $400,000 permanently restricted.

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[Galyna]

On January 1, Year 1, JCK Co. signed a contract for an eight-year lease of its equipment with a 10-year life. The present value of the 16 equal semiannual payments in advance equaled 85% of the equipment's fair value. The contract had no provision for JCK, the lessor, to give up legal ownership of the equipment. Should JCK recognize rent or interest revenue in Year 3, and should the revenue recognized in Year 3 be the same or smaller than the revenue recognized in Year 2 under U.S. GAAP?

Year 3 revenues
recognized Year 3 amount recognized compared to Year 2
a.
Rent The same
b.
Interest Smaller
c.
Interest The same
d.
Rent Smaller Explanation

Choice “b” is correct. The lease is a capital lease (lease term is 80% of asset life). Interest revenue is recognized for a capital lease, based on the discount rate times the carrying value of the lease receivable. As time passes, the lease receivable decreases and interest revenue recognized also decreases.

Why it is not choice a?

To be a sales/ direct type lease it has to meet all three criteria like transfer of ownership and two more. Well, the question specifically says that the ownership is not transferred, so it’s operating lease and the rent revenue in equal payments should be recognized. No? Thanks for your help

Bec - 74; 81
Reg - 76
Far - study now
Aud - later

[Kemi22]

Galyna, it is a capital lease with the question stating: “eight-year lease of its equipment with a 10-year life” which is over 75% of the lease term. Even if just 1 out of the 4 criteria is met, it will be considered a capital lease. All 4 criteria do not have to be met every time.

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[marqzho]

kemi22

I will say answer should be B for the first question. There is no “restricted net asset” but temp restricted and perm restricted.

REG 90
FAR 95
AUD 98
BEC 84

[JT]

A ninja mcq question that I don't understand.

information pertains to Smoke, Inc.’s, investments in marketable equity securities, classified as available-for-sale:

On December 31 of the current year, Smoke has a security with a $70,000 cost and a $50,000 fair value. (No Market Adjustment account exists.)
A marketable equity security costing $50,000, has a $60,000 fair value on December 31 of the current year. Smoke believes the recovery from an earlier lower fair value is per­manent.
What is the net effect of the above two items on the balances of Smoke’s Market Adjustment account for available-for-sale marketable equity securities as of December 31 of the current year?

The answer is….Creates a $10,000 credit balance

My question is why isn't it a debit of 10,000?

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[marqzho]

Dr. OCI 20000
Cr. AFS 20000

Dr. AFS 10000
CR. OCI 10000

net effect : Cr. AFS 10000

REG 90
FAR 95
AUD 98
BEC 84

[Kemi22]

@ marqzho: I also answered B for that question but Ninja says the answer is C. Left me perplexed.

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[Soon2beCPA]

Quick question for everyone using NINJA MCQs for FAR:
Is your study technique generally to go through each section until you've answered all the questions in the test bank then to go back and do the “Missed Last Time Seen” questions until you get them all right? I've been using the NINJA test bank for the past 2 months and I still seem to be struggling. My average right now is 51% and my trending is only 63.60%. I'm trying to stick to pounding multiple choice questions, but my scores don't seem to be getting much better! Could you share your techniques for getting your scores up and actually absorbing everything? I have 45 days before test date so I need to switch up what I'm doing soon so I can pass this!

BEC - 11/2015 - 82
FAR - 10/1/2016
AUD - 6/4/2016 - 80
REG - 12/10/2016

[Author]

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