[jeff]

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

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

[Cruzer]

@Sticky Nicky correct. Bonds in particular.

[wanttochangejobbypassingcpa]

Does anyone know if it's request to put zero on the extra line for SIm questions?

[Cruzer]

Is it safe to assume to use the effective interest method of premium/discount amortization vs straight line if not stated in a bond payable calculation?

[GiniC]

@sticky nicky – you've got me stumped. Did you send it to the Ninja Support email?

[GiniC]

Stuck on a Governmental question:

XYZ City School District has a separately elected governing body that administers the public school system. The district's budget is subject to the approval of the city council.

Is it presented discretely or blended?

Answer is Discrete, with explanation that the school district is a separate legal entity. Is there something in that fact pattern that makes it a separate legal entity???

[TiredofCoffee]

Hi all,

I took FAR yesterday and I am wondering whether I should keep studying in case of a repeat. I know I made some dumb mistakes but confirmed it is not a complete lack of knowledge, but a lack of confidence. Should I wait til I get my score to change topics? Thanks!

FAR: 73, 74, score on the way
REG: 69, next
AUD: in training
BEC: in training

[Anthony]

@carmensd Do you have another exam lined up before the end of the Q1? If you do, I would personally move on.

I won't lie, but I made some pretty stupid mistakes on yesterday exam also. But who knows, maybe we've passed.

[Namstut]

@GiniC, this question confused me as well. I have been reading and re-reading the explanation trying to see what I was missing! Glad it's not just me.

Explanation to the correct answer: South City School District meets the test of component unit of the City: It is financially accountable to the City. Thus, its financial data needs to be reported with the City's financial data. However, since the school district is not substantially the same as the City, because it is a legally separate entity, and since the school district does not exclusively service or benefit the City itself, the financial data should be reported using the discrete presentation method.

But maybe the explanation to the incorrect answer makes more sense?

South City School District meets the test of component unit of the City: It is financially accountable to the City. Thus, its financial data needs to be reported with the City's financial data. However, since the school district is not substantially the same as the City and since the school district does not exclusively service or benefit the City itself, the financial data should be reported using the discrete presentation method. The discrete presentation is either in condensed financial statements with the notes to the reporting entity's financial statements, or in combining statements in its general purpose financial statement. In this response, the word only made this response incorrect.

Another confusing part is that School Districts are listed under Special Purpose Local Governments (pg. 6 of Becker), assuming the entities meet the SELF criteria. So we should just KNOW that School Districts are separate legal entities… I guess in this question since it has to have its budget approved by the City it is not considered to be fiscally independent, therefore, it does not meet the SELF test.

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[Sticky Nicky]

cruzer..you use effective interest method,,,if they are asking to use str8 line then they are testing a different concept like BIC or gain on retirement,,something like that

[GiniC]

@Namstut –

There were several questions that specifically stated that the budget had to be approved by the city, and the answer explanations said that made them fail the “fiscally independent” part of the SELF test so they were not Primary Governments, and that seems to hold for this one too.

I took a different approach this morning – I Googled the definition and legal status of “school district” – and apparently we are supposed to know that ALL school districts are separate legal entities (not school departments though). Therefore it does fail the blended criteria by way of the “not a separate legal entity” test. One more thing to know…

[Sticky Nicky]

the whole blended and discrete component units confuses the heck outta me,,as do alot of areas of GASB,,,i gotta drill into it harder these last few days,,,probably gunna go over gov't again, cash flows, consolidations, GAAP vs IFRS, and disclosures since i heard they were heavily tested recently

[Sticky Nicky]

when are journal entries not required? like in the stockholders equity section?

[Sticky Nicky]

i thought bad debts were not included in net patient service revenues?

Hospital, Inc., a not-for-profit entity with no governmental affiliation, reported the following in its accounts for the current year ended December 31:

Gross patient service revenue from all services provided
at the established billing rates of the hospital (note
that this figure includes charity care of $25,000) $775,000
Provision for bad debts 15,000
Difference between established billing rates and fees
negotiated with third-party payers (contractual adjustments) 70,000

What amount would the hospital report as net patient service revenue in its statement of operations for the current year ended December 31?

A.
$665,000

Incorrect B.
$680,000

C.
$705,000

D.
$735,000

Nongovernmental not-for-profit hospitals deduct charity services, bad debt, contractual adjustments, and policy discounts from gross patient service revenues to determine net patient service revenues.

$775,000 – $25,000 – $15,000 – $70,000 = $665,000

[Sticky Nicky]

another one that stumps me, since when do NFP's use funds like this?

A not-for-profit hospital issued long-term tax-exempt bonds for the hospital’s benefit. The hospital is responsible for the liability. Which fund may the hospital use to account for this liability?

A.
Enterprise

B.
Specific purpose

C.
General

D.
General long-term debt account group

Unless specifically designated for a defined purpose, hospital debt is used for the general benefit of the entity and is secured with a pledge of collateral (such as a building or major equipment) that would have the item classified as a general fund obligation rather than a specific-purpose obligation. Debt for an enterprise fund can only be classified in such a fund if the debt incurred for that enterprise activity is secured solely by the revenues of that fund.

[cdn]

My question: why we do not include unexpected loss- because is not recognized in current year???
I try to make sense to some questions as answers are very poorly made with low level of explaining it.

This is my last exam and taking it 2nd time in 2 weeks; my average in MCQ ninja is 55% – feeling very bad. If fail I loose my credit for REG. God please help and give me brightness in next two weeks 🙂

The following information pertains to Lee Corp.’s defined benefit pension plan for the current year:

Service cost $160,000
Actual and expected gain on plan assets 35,000
Unexpected loss on plan assets related to
a disposal of a subsidiary 40,000
Amortization of prior service cost 5,000
Annual interest on pension obligation 50,000

What amount should Lee report as pension expense in its current year-end income statement?

Answer:180,000

To compute the pension expense, add the service cost, subtract the expected rate of return on plan assets, add the amortization of prior service cost, and add the interest cost on the pension obligation:

$160,000 – $35,000 + $5,000 + $50,000 = $180,000

[Author]

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