[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

[MaLoTu]

Paras- Is that the whole question? I am actually not there in my studies yet. I have been through the materials twice before this and still don't recall the particular application you are asking for.

[KJ]

Tully Corporation purchased a large machine for copying and binding and placed it in service on July 1, 20X3. This machine cost $62,000, and its useful life is expected to be 40,000 hours, or 5 years. The salvage value on the machine is $2,000.

What is the depreciation for the year ended December 31, 20X4, for the copying and binding machine, using the sum-of-the-years’-digits method?

A. 12,000
B. 14,000
C. 16,000
D. 18,000

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

[Just3Letters]

Kanwal,

SYD Base = [N* (N+1)] / 2
= 5 * (5+1) / 2
=5 * (6) / 2
= 15

for 2014:
4/15 * 60,000 = 16,000

The answer is C. Correct?

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

[KJ]

No just3 unfortunately it is D. 18,000. I calculated the same as you did. I do not understand why they calculated Year 2 depreciation as below:

Year 1 – 60,000 x 5/15 x 6/12 = $10,000

Year 2

Jan 1 20×4 – June 30 20×4 = 60,000 x 5/15 x 6/12 = 10,000

July 1, 20×4 – Dec 31 20×4 = 60,000 x 4/15 x 6/12 = 8,000

Year 2 Depreciation $18,000.

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]

I guess is it because it was placed in service in July year 1?

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]

Why is my posts not showing after last one on Pg. 34?

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]

NVM, its showing now!!

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

[ImCPA]

Hello Everyone: I just found the below link in one of the other groups.. It's a good compilation of all Journal entries at one place. Hope you find it useful..

https://www.principlesofaccounting.com/illustrative%20entries/entrieslist.htm

FAR - 85 (5/10/2016)
AUD - 89 (7/12/2016)
BEC - 9/07/2016
REG - TBD

[Just3Letters]

Hey Kanwal,

I was originally thinking the middle of year PIS date mattered but then I convinced myself that it would only affect year 1.

I guess the thought process is…

Year 1 = July 1 Year 1 – July 1 Year 2

That encompasses half of year 2

Year 2 = July 1 Year 2 – July 1 Year 3

The other half of year two

So take half of each I guess…

That is super tricky 🙁

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

[Paras316]

Yeah Malutu that was a complete question. One more time – Tribley Inc. has an operating leverage of 8.0. If the company's sales increase by 19%, its net operating income should increase by about:

A. 152.0%
B. 19.0%
C. 8.0%
D. 42.1%

Please someone help!

[MaLoTu]

Paras- Is it a?

[Just3Letters]

I think this question is more BEC-esque (but then again of course I'll see it on my test haha)

But operating leverage is the ratio of fixed assets/total costs

I'm not totally sure of what “8.0” is… I'm guessing, for example:

Fixed Assets/Total Costs = 8000/1000=8.0

In this case, Fixed assets are a very significant portion of costs, so the operating leverage is very high

But that's as far as I can get you. I don't know how this ties in with income haha

Sorry!

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

[MaLoTu]

Just3 – that was my thoughts exactly! This is a BEC type question.

[Just3Letters]

This question is confusing to me. It first says that 5% are estimated uncollectible. Then it says that 90% is going to be collectible. What???

Halderman County levies an imposed nonexchange form of tax in the year prior to the year of its intended collection and use. An enforceable legal claim does not arise until the period after the period of its intended collection and use. The following facts apply:

-On September 1, 20X1, the county levied $2 million of tax for FY 20X2—50% of the tax is due on January 15, 20X2, and the remainder is due July 15, 20X2.

-It is estimated 5% of the levy will be uncollectible.

-An enforceable legal claim for the September 1, 20X1, levy does not attach until January 15, 20X3.

-It is estimated 90% of the September 1, 20X1, levy will be collected during the period January 1, 20X2, through February 28, 20X3. The balance will be collected at a later date, or go uncollected.

-The County uses an “availability period” equal to two months following the close of the fiscal year, and has a fiscal year-end of December 31.

How much revenue would be recognized at the entity-wide level for FY 20X2?

The answer is 1,900,000 but I'm not sure why.

Thanks!

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

[MaLoTu]

The terminology … 5% totally noncollectable, 90% will be collected during Jan and Feb, 5% remaining will be collected sometime after.
Cant do the problem right now, but that may be the issue for you.

[Author]

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