[jeff]

Welcome to the Q1 2017 CPA Exam Study Group for FAR. 🙂

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

[A1lessio]

Time to bang out 4 hrs of studying after a solid 10 hour workday!

AUD (08/02/2016)

[Anonymous]

@NYaccounting. That's a tough one. I think maybe there are some permanent differences that decrease the allowable future deduction to 300K.

[Operation_CPA]

State University received two contributions during the year that must be used to provide scholarships. Contribution A for $10,000 was collected during the year, and $8,000 was spent on scholarships. Contribution B is a pledge for $30,000 to be received next fiscal year. What amount of contribution revenue should the university report in its statement of activities?

The answer is $40,000.

My question: Contribution A is a cash collection so that can be considered revenue because it is received. However, the $30,000 – isn't that a conditional pledge that cannot be recorded as revenue until it is earned? My only guess would be the fact that the question stem asks for contribution revenue. Whether the pledge has a condition is irrelevant possibly?

[runegoblet3xx]

Actually, it doesn't look like its a conditional pledge according to the question. It doesn't say anything specifically that “this must be done” in order to receive the contribution.

Therefore, unconditional pledges are recognized in current year as contribution revenue.

I hope that helps!!

[Cjsr]

@NYaccounting – The question just asks about the service cost component, which is 300k, so tax effect is 90k. Isn't it kind of strange to phrase a question this way? Instead of just asking a question about temporary tax differences? So this becomes a question where you have to think about tax differences AND about where the various parts of pension-related accounts end up on the balance sheet, two completely separate topics in my head.

BEC. 83. 9 Jan 2016
REG. 83. 30 Jan 2016
AUD. 92. 27 May 2016

Becker FastPass with in-class videos

[Spartans92]

Finally made my ninja purchase for FAR! Not too many days left but let's go!!!

BEC- PASS

[Spartans92]

Hey guys, are CD's considered as Cash or cash equivalent? I thought I remember in becker somewhere that CD doesn't fall under the category. Thanks

BEC- PASS

[Mscfisher]

Anyone doing warly morning study sessions? I'm scheduled for feb 25 though i really want to puah it earlier to i can celebrate my sons bday stress free the weekend of the 20th. I was insanely sick for a week so not onlt couldnt i go to work but i was so drugged up i couldnt atudy either! Anyway back at it. I'm using flashcards to help me. Redoing wach chapter. Becker mcqs and ninja.

[mckan514w]

good morning @mscfisher I am almost always an early morning studier.. my brain seems to work best at this hour. Hope you are feeling better. I am living in fear of either getting sick or being snowed in at test date. I just pushed my back to the 24th but like you ideally I would love to be able to move it forward again. GOOD LUCK!

@spartan CD's that mature within 3 months are considered cash / cash equivalents- so watch your dates! (and I believe it is from purchase to maturity- so if it is December 31 balance sheet and you have one bought 1/1/x1 maturing 1/1/x2 for 200 and one bought 11/1/x1 maturing 1/1/x2 for 300- only the one for 300 would be considered cash / cash equivalent because its maturity is within 3 months thus “highly liquid” )

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[GiniC]

I study in the mornings but not as early as mscfisher and mckan514 – usually around 7 AM

[Anonymous]

Another caveat with cash and cash equivalents. For-profit and not-for-profit entities can classify equivalents with an original maturity date of three month or less. For example if the reporting date is 12/31/16 and the cash equivalent was for a 6 month CD maturity in January 2017 – it would not be considered a cash equivalent. It has to have original 3 maturity date or less.

For governmental accounting, cash equivalents can have maturities longer than 3 months so long at they mature 3 months after the reporting balance sheet date.

[Spartans92]

Thanks guys. heres another question Im not really understanding because of the wording.
Lano Corp.'s forestland was condemned for use as a national park. Compensation for the condemnation exceeded the forestland's carrying amount. Lano purchased similar, but larger, replacement forest land for an amount greater than the condemnation award. As a result of the condemnation and replacement, what is the net effect on the carrying amount of forestland reported in Lano's balance sheet?

a.
The amount is increased by the excess of the replacement forestland's cost over the condemned forestland's carrying amount.
b.
The amount is increased by the excess of the replacement forestland's cost over the condemnation award.
c.
The amount is increased by the excess of the condemnation award over the condemned forestland's carrying amount.
d.
No effect, because the condemned forestland's carrying amount is used as the replacement forestland's carrying amount.

I thought B was the answer because we look at the gain or loss based on how much we got vs the carrying amount. So I thought the proceed is the award and the Carrying is how much we replacing for.. But that's incorrect. The answer is A. Appreciate the help.

BEC- PASS

[Anonymous]

The best way to approach these questions is to assign values based on the facts, as follows:

Replacement cost of new property 1,200,000
Condemnation award 1,000,000
Carrying amount of old property 800,000

A gain would have been recognized on the condemnation and would not have affected the basis in the new property. It's an entirely separate transaction.

[mckan514w]

Oh I am so horrible at these condemnation questions- but I think it essentially should be recorded as two separate transactions so making up numbers
thus the condemnation would be

DR Cash 200
CR Land 100- Carry amount
CR Gain on Condemnation 100

Then your new purchase would be
DR Land @ Purchase Price 300
CR Cash 350

So essentially netted together your land account has increased by the amount you paid for the new land less the carry amount of the old land. Or 300 – 100.

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[mckan514w]

Okay Gelim is seriously kicking my A$$!!! Sorry just needed to rant 🙂

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Author]

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