[jeff]

Welcome to the Q2 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

[KJ]

NFP question, I was thinking D too but I am having a second thought. If the donor intents to make contribution it will be considered a temporary restricted assets. The question is asking when it will be recognized. The revenue will be recognized when it actually happens which will be in the period it is received at fair value. So answer B? Don't know.

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[MaLoTu]

@kanwal – this is a direct quote from the Becker text (F9-53) – Unconditional Promises: An unconditional promise to give (also known as a pledge) is a contribution, and is recorded as revenue at its fair value when promise is made.

[JT]

I had this same issue when I seen this problem.

I think it has something to do with the term “intention” in D.

I think promises to give=pledges to give BUT intention to give does not mean it's a promise to give or a pledge to give. I could be wrong on this though.

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

[JT]

On another note, to recap something's, (I want to make sure I'm understanding this correctly);

Acquisition cost-fees for accountants and legal services are expensed against the r/e of the acquired company (reduces it)

Bond issue cost-are initially expensed then amortized using straight line

Stock registration cost-deducted from stock proceeds

Please let me know if I'm wrong.

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

[SONA]

@Just3letters

What would you suggest for sims? I am doing ninja sims + MCQs.

Any suggestions?

[patelhj1]

Any help with understanding this question is appreciated.

A not-for-profit voluntary health and welfare organization received a $500,000 permanent endowment. The donor stipulated that the income must be used for a mental health program. The endowment fund reported $60,000 net decrease in market value and $30,000 investment income. The organization spent $45,000 on the mental health program during the year. What amount of change in temporarily restricted net assets should the organization report?

a. $425,000 increase.
b. $75,000 decrease.
c. $0
d. $15,000 decrease.

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[SONA]

Is the answer 0?

[MaLoTu]

Patel, I literally almost posted that question earlier. It is because the funds are permanently restricted then reclassed into unrestricted. There are not temporary restricted assets, if I remember the problem correctly. The answer is zero.

[patelhj1]

The answer is 0.

Let me get this straight.. The 500,000 is permanent

The 30,000 income is restricted and gets reclassified as unrestricted to pay for expenses
30,000 income – 45,000 expense = 15,000 Loss + 60,000 Endowment Loss = 75,000 Loss Year End

Don't we classify the 30,000 income from temporarily restricted to unrestricted? I guess I dont understand what the question is really asking…

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[MaLoTu]

The 30k was temporarily restricted and then released from restriction which netted out to zero.

[JT]

My understanding is that the 60k change does not get reclassified. Permanently restricted assets is 440k.

The temporary restricted assets initially went from beginning $0, to +30k. Then once 45k was spent (which came out of unrestricted) 30k was reclassified from temp. restricted to unrestricted because it met the requirements for reclass. This means that unresticted is at -15k and temp restricted is back to $0.

In all, temp restricted went from $0 to $30k to $0.

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

[patelhj1]

Got you!!! Make sense now… I think I was making it way more complicated than it needed to be.

Thank you @MaLoTu and @Dab

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[SONA]

@Kanwal78 Bond Issuance cost

ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts; the recognition and measurement guidance for debt issuance costs were not affected by the amendments. Amortization of debt issuance costs also shall be reported as interest expense; issue costs will no longer be reported in the balance sheet as deferred charges

[KJ]

The answer is 0.

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[KJ]

@ MaLoTu

This is what I got.

Unconditional contributions, whether promised or received as cash, are recognized as revenue in the period received. Contributions revenue should be measured at fair value, not donor's book value. Donor intentions to give, rather than unconditional promises, are not considered revenue.

FASB ASC 958-605-25-2 and 30-2

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[Author]

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