[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

[PleaseDontDeleteThanks]

Yo Jeff, Ninja appears wrong on this question: “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.
Incorrect B. temporarily restricted net assets.
C. restricted net assets.
D. restricted retained earnings.

You answered B. The correct answer is C.

Nongovernmental not-for-profit doesn't have a net asset designation of “restricted net assets”

Governmental foundations have restricted, but nongovernmental do not.

FAR 72, 89
BEC 80
REG 90
AUD 79

[Anonymous]

ughhh I am on my last couple of days of review exam is on 2/29. I am sure we all are on the same boat.. frustrated as hell @#$ i feel like i forget everything and my mind is so sick of this exam that my scores are just awful… end of rant.

[odela2428]

Marqzho

Thank you..i graduated 15 yrs ago..and been out in acctg field for 8yrs..but will give it a try..thnks

[cgartime]

@PleaseDontDeleteThanks
For my understanding, Non Profit does have restricted asset. Also, the fund is not restricted for use, but it is time restricted to following year. Please let me know if I am wrong.

[Track55]

Hello. I don't get this question:

During the year, Bay Co. constructed machinery for its own use and for sale to customers. Bank loans financed these assets both during construction and after construction was complete. How much of the interest incurred should be reported as interest expense in the year-end income statement?

The explanation was: Once an asset is complete, and ready for use OR sale, then any interest incurred after that is an interest expense, not capitalized.

Well then if that's the case then both situations should have the same answer too. Instead MCQ gave this as the correct answer: Interest incurred for machinery for own use: interest incurred after completion; Interest incurred for machinery held for sale: all interest incurred.

That's not the same answer for both. Is the MCQ answer wrong? Thank you.

AUD - 74, 99 !!
REG - 74, 92
BEC - 83
FAR - 73, 86

Studying for Ethics exam

California candidate
Business and Industry

[marqzho]

Here is what Roger's book said:

Capitalize interest cost when:
1. For own use
2. Asset manufactured for resale resulting from a special order (Ships)

Do NOT capitalize interest if:
1. After Completion
2. Inventory manufactured in the ordinary course of business

And Here what FASB said:

To qualify for interest capitalization, assets must require a period of time to get them ready for their intended use. Examples are assets that an enterprise constructs for its own use (such as facilities) and assets intended for sale or lease that are constructed as discrete projects (such as ships or real estate projects). Interest capitalization is required for those assets if its effect, compared with the effect of expensing interest, is material. If the net effect is not material, interest capitalization is not required. However, interest cannot be capitalized for inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis.

So to your question:
interest expense incurred:
Own use <- After completion
Held for sale<- All

REG 90
FAR 95
AUD 98
BEC 84

[Track55]

Hello. This is another questions that seems contradictory. If a donor donates a building to a non-profit and does not restrict it, it should be unrestricted assets. The explanation for question 1368 says that it would be temporarily restricted if the charity had an accounting policy that implies a time restriction on the useful life.

However the box says that only a donor can restrict, and that board of director decisions cannot restrict an asset.

So which is it? Can a charity have an accounting policy that temporarily restrict assets? Thanks for help!!

AUD - 74, 99 !!
REG - 74, 92
BEC - 83
FAR - 73, 86

Studying for Ethics exam

California candidate
Business and Industry

[ktang4]

This is a random question, but I recently failed AUD and so I am applying for a NTS. This process takes forever so I was wondering if I have FAR scheduled for after busy season, can I pay for both AUD and FAR incase I don't pass the FAR exam (which is very likely from what I have heard)? I would rather just pay for FAR now so I don't have to wait for the NTS later when I inevitably fail.

[marqzho]

Track55

My understanding is, only donor imposed or restricted by external party can be temporary unrestricted asset. Its own accounting policy is just like board designated or director decision all should be classified as unrestricted.

REG 90
FAR 95
AUD 98
BEC 84

[kelly017]

Can someone explain this problem?

On March 1, Year 1, Somar Co. issued 20-year bonds at a discount. By September 1, Year 6, the bonds were quoted at 106 when Somar exercised its right to retire the bonds at 105. The amount is material and considered to be unusual in nature and infrequently occurring with respect to Somar Co. How should Somar report the bond retirement on its Year 6 income statement under U.S. GAAP?

a.
A gain in continuing operations.
b.
A loss in continuing operations.
c.
A gain in other comprehensive income.
d.
A loss in other comprehensive income.

[marqzho]

kelly017

If Ans is B, then keep reading lol

When you retire the bond, here will be the JE

Dr. Bond 100
Dr. Loss (PLUG)
Cr. Discount Unknown
Cr. Cash 105

Since Bond is carried at amortized cost instead of Fair Value, the quoted price is useless here

Hope that help !

REG 90
FAR 95
AUD 98
BEC 84

[chvzgrca]

On page 91 in FAR 2, why is the bonus $4,762 and not $5k. Case A. Appreciate help in advance Thank you.

[marqzho]

chvzgrca

would you mind put all the info up here instead?

REG 90
FAR 95
AUD 98
BEC 84

[chvzgrca]

Example H & J partner agree to share all profits and losses
a. 5% bonus on income (after bonus) to H as managing partner (not applicable in net loss situations)

Step 1:

Bonus to H
B= 5% ($100K B)
= $4,762

[marqzho]

B = ($100k – B) *5%
B = ($100k – B) / 20
20B = 100k – B
21B = 100k
B = 4762

Bonus can't be 5000 because 5% * (100k – 5k) ＝4750

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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