[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

[Just3Letters]

Kanwal,

I think the answer is B as well. I was considering including PV of the $50,000 to purchase the machine but then I realized that the 50,000 is not a BPO because it approximates fair value. Therefore, it has to be 238,000. Right?

Claudia,

I don't understand how the J/E could be correct. I agree with you that the estimated revenue is debited to close the J/E. Hmmm….Sorry I couldn't help 🙁

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[KJ]

@zyx…Yes it is b.

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

[Claudia408]

So I thought I was feeling good about bonds but couldn't get this calc, can someone help with how they got the interest payments?

Excel City has $1,000,000 of 8%, 10 year general obligation bonds outstanding. The bonds were issue on October 1, 20×8 to finance construction of city park improvements. Interest is payable semiannually on October 1 and April 1. The bonds also require an annual principal payment of $100,000 each April 1. What amount of debt service expenditures should the government report in its Debt Service Fund for the year ended December 31, 20×9?

Answer: 176,000

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Spartans92]

Claudia in regards to your first question when u adopt the budget it's debit estimated revenue and credit appropriation. So the question is asking what do you credit at closing. So debit appropriation and credit estimated revenue for the same amount the actual revenue is a distraction.

BEC- PASS

[Spartans92]

I am trying to fix my messed up sleep schedule. It's 12am and I have been laying in bed since 9pm. Anyone have any cure to this?

BEC- PASS

[Claudia408]

Spartans – ahh yes I totally went backwards! Wth!? Thank you!!

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Claudia408]

Spartans – sleepy time tea? Melatonin? Zquil?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Spartans92]

For your 2nd question it ask for 2009, so debt service records both interest and principal at the time due not necessarily accrue. So you have 1mill 8% semi that's 40k Interest for the first year plus the principal 100k. Now you also made another interest payment on October. Since your principal reduce by 100k you now have 900k x 4% = 36k for the second year in interest. Add 140+36 =176. Sorry typed this on phone. And thanks I'll probably try those tomorrow night.

BEC- PASS

[Spartans92]

That is a hard one. Honestly I stared at it said where is the extra 36k coming from then I realized the principal went down and took 4% and the numbers match so I'm not exact sure if that's how u should do it. I would make my best guess on the exam

BEC- PASS

[Spartans92]

During Year 1, property owned by Arp Co. was acquired by the city in connection with a condemnation proceeding, resulting in a payment of $100,000 to Arp. The property's carrying amount was $70,000. Arp paid $45,000 in Year 1 for replacement property. In Arp's income statement for the year ended December 31, Year 1, what amount of gain should be reported on this involuntary conversion, disregarding income tax considerations?

Can someone tell me why the 45000 is not taken into consideration. Answer is 30,000.

BEC- PASS

[Just3Letters]

Spartans, I thought that you consider the payment as a net against the gain but I guess I was wrong. I googled involuntary conversions and found an explanation from the BDO website with an example:

Note: I think the last line here is the important one. I don't ever remember learning this from Becker.

For example, if you lose a restaurant due to fire damage in 2015 with an asset cost of $500,000 and accumulated depreciation of $250,000, you would record the following journal entry:

Accumulated depreciation $250,000
Gain/loss on disposal of assets $250,000
Building $500,000

If you received insurance proceeds totaling $300,000, you would record the following journal entry:

Cash $300,000
Gain/loss on disposal of assets $300,000

If you are required to or choose to rebuild the restaurant, all costs to rebuild the restaurant using insurance proceeds should be capitalized, even if you do not own the building (lessee). The costs should not be netted against the insurance proceeds. If the cost to rebuild the restaurant was $375,000, you would record the following journal entry:

Building $375,000
Cash $375,000

The important thing to remember is that the loss, the receipt of the insurance proceeds, and the rebuild should all be treated as separate transactions.

– See more at: https://www.bdo.com/blogs/restaurants/august-2015/accounting-treatment-for-involuntary-conversions#sthash.hSReuQfm.dpuf

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Claudia408]

Spartans – Thank you! Dang, you know I should've known the principal is reduced! UGH no many little things I'm not catching!!!

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Memphis1992]

REG - 90 (2/2016)
FAR - 4/2016
AUD - 6/2016
BEC - TBA

[Claudia408]

I always get tripped up with govt CF questions. I looked at a comprehensive CF for govt but I'm just not as familiar w the transactions. When I look at this question, I don't know where to begin. I was thinking bonds could be financing but get confused bc bonds are operating for private. Can someone help summarize govt CF?

The following transactions were among those reported by Corfe City's Electric Utility Enterprise Fund for 2005:
Capital contributed by subdividers $ 900,000
Cash received from customer households 2,700,000
Proceeds from the sale of revenue bonds 4,500,000
In the Electric Utility Enterprise Fund's Statement of Cash Flows for the year ended December 31, 2005, what amount should be reported as cash flows from capital and related financing activities?

Answer 5,400,000

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Just3Letters]

In this question: How does the declaration of a dividend affect “total assets”. I understand that liabilities go up and equity goes down, but assets aren't affected until the dividend is paid. Right?

Correct answer is 875, I got 878.

Mirr, Inc. was incorporated on January 1, year 1, with proceeds from the issuance of $750,000 in stock and borrowed funds of $110,000. During the first year of operations, revenues from sales and consulting amounted to $82,000, and operating costs and expenses totaled $64,000. On December 15, Mirr declared a $3,000 cash dividend, payable to stockholders on January 15, year 2. No additional activities affected owners’ equity in year 1. Mirr’s liabilities increased to $120,000 by December 31, year 1. On Mirr’s December 31, year 1 balance sheet, total assets should be reported at

$885,000
$882,000
$878,000
$875,000

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Author]

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