[jeff]

Welcome to the Q3 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

[Claudia408]

oh yes thanks Jimmy! So what does the Dr to Fund Balance mean here? I understand the Cr to encumbrances is the outstanding PO.

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

[pharaoh]

@Claudia408 – You can say the Fund Balance is the govt version of equity section on regular income statement. You know how at the end of the year you add/close the NI to Retained Earnings. It is the same idea, you close the revenue and expenditures to Fund Balance Account. If you have a sample of a governmental funds balance sheet, you see the Fund Balance has different categories too, assigned, committed, etc based on their restriction/use

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[pharaoh]

I meant the govt version of equity section in regular Balance sheet* ……..sorry brain dead 🙂

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[pharaoh]

@Operation_CPA – Your JE (2) is not right, that's the cost method. In Par, you have to reverse APIC when you purchase

Dr. TS 8,000 (8*1000)
Dr. APIC-CS 1,000 (1*1000)
Cr. Cash 8000
Cr. APIC-TS 1,000 <—-You are going to use this in the final sale of 500 @5

The final sale
Dr. Cash 2,500
Dr. APIC-TS 1,000
Dr. RE 500
Cr. TS 4000

By the way, on your JE (3), the APIC should be CS not TS

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Operation_CPA]

@jimmy

Ahhhhhh I see. Appreciate the help!!

[Claudia408]

Can someone please help with this Pension JE? I understand the debit to OCI but not seeing why the JE is 450,000.

At the beginning of year 1, a company amends its defined benefit pension plan for an additional $500,000 in prior service cost. The amendment covers employees with a 10-year average remaining service life. At the end of year 1, what is the net entry to accumulated other comprehensive income, ignoring income tax effects?

Answer: An adjustment to the terms of a defined benefit pension plan that increases prior service cost by $500,000 also increases the excess of the projected benefit obligation over the fair value of plan assets. It is recognized with an increase, or credit, to the additional liability and a debit to other comprehensive income (OCI). Since it covers employees with an average 10 year remaining service life, it will be amortized at the rate of $50,000 per year with an increase, or debit, to pension expense and a credit to OCI. The net effect on OCI is a debit of $450,000.

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

[cpaMD86]

@claudia408

PSC is an element of Pension Expense that is amortized over the Avg Service Life.

Amortization of PSC:

500,000/10 (Avg Svc Life) = 50,000 is recognized per year as an element of pension expense.

So, the net of PSC,450,000 (500-50), goes to OCI.

FAR: 9/3

[Teal]

Hi everyone! My test is tomorrow. Not sure I am ready, but we will see! Good luck to everyone taking it this week.

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[CPYay]

@Teal Geiger

So is mine! What are your night-before plans? I'm going to do some MCQs on my weak areas, read the text a bit, and stop around 9pm to relax.

[Teal]

@CPYay I took the day off work, so I have being doing multiple choice all day!Was going to do more in my weak areas, but I am feeling burnt out for the day. I might do one more hour and then call it a day. My test is at 12:30 tomorrow, so I'll wake up early and maybe read my notes?

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[memoiree]

For the year ended December 31, 20X1, Tyre Co. reported pretax financial statement income of $750,000. Its taxable income was $650,000. The difference is due to accelerated depreciation for income tax purposes. Tyre's effective income tax rate is 30%, and Tyre made estimated tax payments during 20X1 of $90,000. What amount should Tyre report as current income tax expense for 20X1?

A.
$105,000

B.
$135,000

Correct C.
$195,000

D.
$225,000

Can someone explain why Deferred tax liability is not considered in this problem? Answer is C.

[cpaMD86]

@memoiree

They're asking for current income tax expense. They've already given you taxable income, so all you have to do is multiply it by the enacted tax rate.

PreTax Income
(-) Permanent Differences
__________________________

(+/-) Temporary Differences

___________________________

= Taxable Income

FAR: 9/3

[cpaMD86]

@CPYAY and Teal

Good luck to you both on your exam!

FAR: 9/3

[CPYay]

Thanks! I had testing center nightmares last night haha.. no computers available.. noise everywhere.. even a group of pirates showed up. Then I woke up at 330am and couldn't get back to sleep. Dis gon be gud.

[cpaMD86]

@CPAYay

LOL! That is hilarious. I hope I don't experience anything crazy like leading up to my exam next week.
Back to these MCQs for me…

FAR: 9/3

[Author]

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