[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

AUD - 79
BEC - 80
FAR - 76
REG - 92

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

[Jsn3004]

I don't know if this is an error or not but I'd think the answer would be A since I thought this would be a transaction gain and the question is asking for a translation gain. The explanation in Ninja just does the math, it didn't actually explain as to why we use those numbers. The answer in the problem is B.

On October 1 of the current year, a U.S. company sold merchandise on account to a British company for 2,000 pounds (exchange rate: 1 pound = $1.43). At the company's December 31 fiscal year-end, the exchange rate was 1 pound = $1.45. The exchange rate was 1 pound = $1.50 on collection in January of the subsequent year. What amount would the company recognize as a gain (loss) from foreign currency translation when the receivable is collected?

A.
$0

B.
$100

C.
$140

D.
$(140)

FAR: Pass
BEC: Pass

[se7en.14]

On January 1, Year 1, SouthEast Co. entered into a 10-year lease for a chemical plant. The annual mini­mum lease payments are $100,000. In the notes to the December 31, Year 2, financial statements, what amounts of subsequent years’ lease payments should be disclosed?

The lessee in a lease context must make disclosures as to future required payments under the lease. One must disclose the payments required under the lease for the next 5 years (here that is 5 × $100,000, or $500,000), as well as disclosing the total amounts to be paid thereafter or $300,000 (the 3 remaining years’ obligations at $100,000 a year).

Is that 5 year disclosure a rule? I don’t recall seeing this unless I skipped over it in Becker. Does anyone know?
Thanks.

.

[Bnots]

@se7en.14

I don't know whether it's mentioned in Becker, but yes it is a reporting requirement.

ASC 840-20-50-2 provides the guidance for the disclosure by lessees for operating leases, and ASC 840-30-50-1 provides the same for capital leases.

They both specify that, in addition to some other things, the lease payments in aggregate and for each of the succeeding five years be disclosed.

ASC 840-20-50-4 and ASC 840-30-50-4 specify the same from the lessor side, in terms of future rents or minimum lease payments to be received, if leasing is a significant part of the firm's business in terms of revenue, net income, or total assets.

[mikeyrockz]

@Stephen Calvo

The correct answer is actually B not C.

110,000$ + 150,000$ = 260,000$

260,000$ * .15 = 39,000$

October sales tax would have already been paid in November.

1100$+1200$+1800$ = 4100$

4100$ * 2 = 8200$

Occupancy fees are paid quarterly so October, November and December are included.

[GeauxAwayCPA]

Can anyone help me with the below question I encountered in NINJA? I've read all the explanations and links and tried to apply numbers to see if I could make sense of it, but it's still not making sense..

Which of the following would be added back to net income when reporting operating activities' cash flows by the indirect method?

A. Excess of treasury stock acquisition cost over sales proceeds (cost method)
B. Bond discount amortization
C. Both excess of treasury stock acquisition cost over sales proceeds (cost method) and bond discount amortization
D. Neither excess of treasury stock acquisition cost over sales proceeds (cost method) nor bond discount amortization

The answer is B and the explanation is below:

FASB ASC 230-10-55-1 describes the indirect method briefly as follows:

Quote

Given sufficiently detailed information, major classes of operating cash receipts and payments may be determined indirectly by adjusting revenue and expense amounts for the change during the period in related asset and liability accounts.

Thus, bond discount amortization would be deducted from interest expense to compute the amount of cash paid for bond interest. The net effect would be to add this amortization amount to net income (as a noncash expense).

The excess of treasury stock acquisition cost over sales proceeds is not an income item; rather, the excess is an equity item debited to contributed capital from treasury stock transactions

Licensed CPA in Texas trying to start up my own tax practice

[Operation_CPA]

@GeauxAwayCPA

The formula for the indirect method is as follows:

..NI
+ Depreciation / Amortization (discount)
+ Loss
– Gains / Amortization (premium)
Δ Assets
Δ Liabilities

= CFO

The question asks you what would be added back to net income when reporting operating activities under the indirect method. Out of all those answer choices, letter B identifies what is added back into NI (using the indirect method formula).

FAR - 76 (Lost credit), 76
AUD - 80
BEC - 76
REG - 75

Truly I tell you, if you have faith as small as a mustard seed, you can say to this mountain, "Move from here to there," and it will move. Nothing will be impossible for you.

[happygal]

Can someone please explain where the 120,000 comes from in this problem. I understand that the 2011 balance is 100,000 and we treat that as the beginning balance + 611,000 which were 2012 credit sales and then we subtract 591,000 since we recovered that amount.

In its Dec 31, 20X1, B/S, Fleet Co. reported AR of $100,000 before allowance for uncollectible accounts of $10,000. Credit sales during Year 2 were $611,000, and collections from customers, excluding recoveries, totaled $591,000. During Year 2, accounts receivable of $45,000 were written off and $17,000 were recovered. Fleet estimated that $15,000 of the accounts receivable at December 31, Year 2, were uncollectible. In its December 31, Year 2, balance sheet, what amount should Fleet report as accounts receivable before allowance for uncollectible accounts?

100,000
+611,000
Less 591,000
20,000

Dec 31, balance before write offs 120,000
Less accounts written off 45,000

Balance in AR at Dec 31, 2012 75000

THANKS! 🙂

[Operation_CPA]

When you guys supplement w/ other test banks such as Wiley or Ninja, do you notice some of the questions relate to details that were left out in your normal review course? I am going through the Wiley Test bank for my final review (Becker user) and it has been great reinforcement thus far, but some small details I did not remember reading in Becker or hearing in the lecture. Is this normal?

FAR - 76 (Lost credit), 76
AUD - 80
BEC - 76
REG - 75

Truly I tell you, if you have faith as small as a mustard seed, you can say to this mountain, "Move from here to there," and it will move. Nothing will be impossible for you.

[GeauxAwayCPA]

@happygal Not sure what the question is? Sounds like you figured out the where the $120,000 came from but that's your question? 🙂 It's just the T account changes of the account from what I can tell.

@Operation_CPA I have definitely noticed that. I've also read some reviews that say specifically that different review courses choose to focus on different things and not every detail is included. I literally just did a practice question 5 minutes ago asking about Articulation and financial statements and I definitely don't remember reading about that(and this is my 2nd time going through the material since I'm retaking FAR).

Licensed CPA in Texas trying to start up my own tax practice

[Anonymous]

Can someone explain this to me please….Correct Answer is A

The Town of Starbuck's general fund received a notice of a federal grant award for an expenditure-driven (reimbursement) grant in the amount of $2,000,000. Included with the notice was an advance of $1,000,000. During the year, the Town incurred $1,400,000 of program expenditures of which $800,000 were considered eligible qualifying expenditures. No additional money had been received from the grantor during the year.

What would be the amount of revenues reported at the entity-wide level?

A.
$800,000

B.
$1,000,000

C.
$1,400,000

Incorrect D.
$2,000,000

[Operation_CPA]

@GeauxAwayCPA

Good to know. Becker F1 is incredibly easy so I guess it's just one of those things you have to accept and trust the review program that you DO use and hope it pays off on exam day.

FAR - 76 (Lost credit), 76
AUD - 80
BEC - 76
REG - 75

Truly I tell you, if you have faith as small as a mustard seed, you can say to this mountain, "Move from here to there," and it will move. Nothing will be impossible for you.

[happygal]

oh i was just giving the answer in the ninja book solutions on the bottom, i still don't understand how the 120,000 is calculated. thanks in advance!

[pharaoh]

@happygal – it is the 100,000 + 611,000 -591,000=120,000. It looks like unnecessary confusing step to me

AUD - 93
BEC - 79
FAR - 84
REG - 83

Roger & Ninja MCQ

DONE

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

[pharaoh]

@KING – Because it is “reimbursable” grant which means you have to the expenditure to be eligible for the revenue from the grant, that's why the question says “$800,000 were considered eligible qualifying expenditures” That's your revenue, the rest will be sitting as deferred or something until you spend money as expenditure and then receive the “reimbursement” as your revenue. I HATE govtal so much 🙂

AUD - 93
BEC - 79
FAR - 84
REG - 83

Roger & Ninja MCQ

DONE

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

[happygal]

THANKS @ThePharaoh yeah i agree

[Author]

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