[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

[JT]

I had the same issue when I was around 1000 questions. I switched it to “troubled/missed last time” and basically broke through a hump and my trending and average has improved. I would say play with the filter a little but not too much.

Good luck with ur studies.

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

[Soon2beCPA]

Thanks Jtgebrey – I'll try playing with the filters…hopefully I'll also break through this hump soon!

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

[JT]

Ninja mcq question that confuses me and seems kind of contradictory.

Question 1,
During the current year, Knoxx County levied property taxes of $2,000,000, of which 1% is expected to be uncollectible. The following amounts were collected during the current year

Prior-year taxes collected within the first 60 days of
the current year $ 50,000
Prior-year taxes collected between 60 and 90 days
into the current year 120,000
Current-year taxes collected in the current year 1,800,000
Current-year taxes collected within the first 60 days
of the subsequent year 80,000

Correct answer is

1980000

Question 2,
following information pertains to Comb City:

Year 3 real estate property taxes assessed and collected
in Year 3 $14,000,000
Year 2 real estate property taxes assess in Year 1 and
collected in Year 3 1,000,000
Year 3 sales taxes collected by merchants in Year 3 but not
required to be remitted to Comb until January of Year 4 2,000,000

For the year ending December 31, Year 3, Comb should recognize revenues of:

Correct answer is
17000000

The part that seems contradictory is in question 2, I don't know why you would include the 1000000.

My understanding is that property taxes are included in revenue when measureable/assessed. The 1000000 should be included in either yr 1 or 2 but instead it is included when collected. If that's the case, why are we including the 120,000 in revenue for question number 1?

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

[Spartans92]

Foy Corp. failed to accrue warranty costs of $50,000 in its December 31, Year 1, financial statements. In addition, a $30,000 change from straight-line to accelerated depreciation was made at the beginning of Year 2. Both the $50,000 and the $30,000 are net of related income taxes. What amount should Foy report as prior period adjustments in Year 2?

a.
$0
b.
$50,000
c.
$80,000
d.
$30,000

Answer is B. Why is it not D. I know this is an estimate so should account for prospectively (not having to restate prior period). Thats why I thought the 50K didn't matter because it was in year 1. Can someone explain this? Becker gave a huge explanation and I am still confused. Thanks

BEC- PASS

[KJF1031]

@Spartan

Failing to accrue warranty costs is an error correction not a change in estimate, therefore it requires a prior period adjustment.

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

[JT]

I get crossed up on this question too.

I this the “failed to accrue” constitutes a “calculation error” and NOT a change in estimate which is a prior period adjustment to RE.

My understanding is that Accounting principle changes are adjustments to prior periods but a change in depreciation is NEVER a change in principle,…its a change in estimate.

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

[marqzho]

Spartans92

Fail to accrued warranty cost – Error – Reinstate all prior period / adjust the amount in prior period adjustment if error was made in the year that was not presented

Change in depreciation – change in accounting estimate – adj current and the future

REG 90
FAR 95
AUD 98
BEC 84

[marqzho]

In year 2

Dr. Receivable Current XXX
Cr. Revenue XXX
Cr. Deferred Revenue 1,000,000

In Beg. of Year 3
Dr. Deferred Revenue 1,000,000
Cr. Revenue 1,000,000

Since question doesn't mention how much Year 3 collection is already included in Year 2 Revenue per the 60 days rule, I'll just assume none of them are recorded in Year 2.

That's my understanding

REG 90
FAR 95
AUD 98
BEC 84

[Spartans92]

I see. I did not fully understand the “fail to accrue” part of the question. Thanks for the explanation it makes much more sense now!

BEC- PASS

[JT]

Anyone understand this question… Seems like a calculation error…

E & S Partnership purchased land for $500,000 on May 1, 20X1, paying $100,000 cash and giving a $400,000 note payable to Big State Bank. E & S made three annual payments on the note totaling $179,000, which included interest of $89,000. E & S then defaulted on the note. Title to the land was transferred by E & S to Big State, which canceled the note, releasing the partnership from further liability. At the time of the default, the fair value of the land approximated the note balance. In E & S's 20X4 income statement, what should the amount of the loss be?

A.
$279,000

B.
$221,000

C.
$190,000

D.
$100,000

The correct answer is c.

I don't understand the answer though.

E & S, however, must record a gain or loss on the disposal of an asset (the land). Since the fair value of the land approximated the balance due on the note, the fair value must have declined from the purchase price (which is also the carrying value since land is not depreciable); therefore, the loss must be in the amount already paid on the purchase, or, $190,000 (the $100,000 payment and the $90,000 payments made on principal of the note (total payments – interest = $179,000 – $89,000 = $90,000)).

My point is that there are 3 payments of $90k that goes to principle plus the original 100k. That leaves the FV at 130. What am I doing wrong here? I read this answer elsewhere and it seems 190 is correct. I'm completely not sure why.

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

[marqzho]

Jtgebrey

my little advice. Put all in JE

Purchase of Land
Dr. Land 500
Cr. Cash 100
Cr. NP 400

Payment
Dr. Interest expense 80
Dr. NP 90
Cr. Cash 179

Default
Dr. NP (net) 310
Dr. Loss (PLUG) 190
Cr. Land 500

REG 90
FAR 95
AUD 98
BEC 84

[JT]

Thank you for your response.

My question is how did you get 310?

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

[marqzho]

Purchase of Land
Dr. Land 500
Cr. Cash 100
Cr. NP 400<——————————————-

Payment
Dr. Interest expense 80
Dr. NP 90<——————————————-
Cr. Cash 179

Default
Dr. NP (net) 310
Dr. Loss (PLUG) 190
Cr. Land 500

—————————
Cr. NP 400
Dr. NP 90

So net NP is 310

REG 90
FAR 95
AUD 98
BEC 84

[JT]

There were 3 payments made for $90k. That should leave the total outstanding on the note as $130k(=$400-270) since there were 3 payments at 90k each. Right?

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

[marqzho]

it said 3 payments totaling $179 including interest for $89

So $90 is the principal payment on the note instead of $270

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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