[jeff]

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

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

[demarcon]

Maybe someone can help with this on government. When a government plans to honor an outstanding encumbrance (aka a reserve for encumbrance) do you not close the encumbrance out at year end by crediting it, and leaving the reserve open?

According to Gleim the entry is

Dr. Fund Balance – unreserved
Cr. Fund Balance – committed/assigned

They don't touch the word encumbrance. I wonder if Roger is wrong on how he closes out the books.

[GiniC]

In Governmental, the following three transactions were made from the general fund:

Transfer to a debt service fund…..$ 100,000
Payment to a pension trust fund…….500,000
Purchase of equipment……………..300,000

What amount should be reported for the general fund as other financing uses in its governmental funds statement of revenues, expenditures, and changes in fund balances?

The answer was $100,000. I understand that the transfer/debt item is OFS, but I thought the payment to a pension trust fund would also be a transfer out. Anyone know when a transfer to a different fund is NOT considered OFS? Is it because the pension trust is one of the fiduciary funds rather than governmental?

[demarcon]

@GiniC the payment to a pension trust fund is a quasi-external transfer. It's an expenditure to the General Fund. The key word is payment and not transfer.

[Sticky Nicky]

i think the reserve account stays open dunno why they credit committed though thats diff

[GiniC]

@demarcon Thanks – I keep doing that, reading into the fact pattern. Grr.

On your encumbrance question – Becker closes out encumbrances with two entries

DR Budgetary control
…CR Encumbrance (for the same amount originally debited)
This seems to dump the encumbrance amount into the Unassigned component of the fund

then
DR Unassigned fund balance
…CR Restricted/committed fund balance
to put the encumbered amount into a protected component of the fund.

It sounds like we are using different names for the fund components. We use

Unassigned
Assigned (earmarked but not approved)
Not Spendable (for inventories/supplies etc.)
Committed (by authorization of the highest government entity)
Restricted (by an external authority, like law, bond covenant, etc.)

[Sticky Nicky]

gini go on to next years entries for me,,,,when you get the order

[GiniC]

@Sticky Nicky Not sure what you mean – my Becker hasn't touched subsequent year entries in any detail, just mentions that everything rolls over.

[Sticky Nicky]

hmm Roger goes into the JE for receiving the items in the subsequent year after you closed out encumberance prior

[GiniC]

@sticky nicky – THAT one we have in Becker too – but not in reference to reserves, it refers to a capital purchase made in Y1 but received in Y2. Following the close-out I had above, in Y2 we record receipt of the item (a fire truck in our example):

DR Expenditure – prior year . Actual amount of purchase
…CR Vouchers payable (for cash). . . . . Same amount

As with yours, no mention of the committed balance. There must be some standard practice or something to pull funds from the right component of the fund balance. I'm not sure I understand how things flow in here, it's too “loose” for my liking. I can't make T accounts and watch the money travel as I can in accrual accounting.

[ng3926a]

How's everyone doing on the IFRS items? I've been working on the F10 mcqs on Becker related to IFRS and I'm really hoping all the questions I get are Lcnrv, OCI and cash flow questions…

[mtaylo24]

@Nat, I plan to do an intense IFRS session next week. I think it's only like 90 questions in Gleim, I just have to carve out time to knock it out… Was saving it for FINAL final review, along w/ the sims.

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[mckan514w]

@mtaylo have you done the gleim SIMS yet? Started those today- am rather annoyed that you can't “pick and choose” on them- or if you can I can't figure out how to do it- it seems like you have to do the entire study section???

@Nathalia for the first time ever I am actually feeling pretty confident (or at least not like total CRAP) on the IFRS stuff… slight nuances but I feel like I am finally “getting it”… they just require memorization for the most part. I found it helped me going through to note exactly why / how it is different than GAAP

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

[demarcon]

@mtaylo24 Where do you see the IFRS questions in Gleim? Are they in the book or in the software?

[mckan514w]

@demarcon on the software you can use the customized study session to segregate out the IFRS questions

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

[demarcon]

Ah ok, I missed that. Thanks! Gonna go through that before my exam tomorrow.

[Author]

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