[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

[ahugemistake]

Scheduled september 3rd, this is getting painful

FAR - 78*
AUD - 66, 79
REG - 73, 76
BEC - 79

[KJ]

Thanks Jmc0434!!. I realized after I posted. Just need to read the question carefully!!!

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

[jolien]

Hi everyone,

I'm studying the Tax Income section in Becker and came across this question that I don't quite get.

Venus Corp.'s worksheet for calculating current and deferred income taxes for Year 1 follows:

Year 1
Pretax income $ 1,400
Temporary differences:
Depreciation (800)
Warranty costs 400
Taxable income 1,000
Loss carryback (1,000)
Enacted rate 30%

Year 2
Pretax income –
Temporary differences:
Depreciation (1,200)
Warranty costs (100)
Taxable income (1300)
Loss carryback 1000
Loss carryforward 300
Enacted rate 30%

Year 3
Pretax income $ 1,400
Temporary differences:
Depreciation 2,000
Warranty costs (300)
Taxable income 1,700
Loss carryback 0
Loss carryforward (300)
Enacted rate 25%

Venus had no prior deferred tax balances. In its Year 1 income statement, what amount should Venus report as:
Current income tax expense?

a) $0
b) $420
c) $300
d) $350

Answer: Choice “c” is correct, $300 current income tax expense (taxable income of $1,000 x 30%).

My question: How come the loss carryback in year 1 is not accounted for? Taxable income = $1000 – 1000 (loss carryback) = $0. Therefore, answer would be (a). Am I missing something? According to Becker's answer, it looks like the Loss Carryback only generatesTax benefit, but not directly deducted from current year taxable income. Is that right?

Thank you for your help!

[syuanmeihong]

hello!

I just met a problem with the exercise below. Hope someone can help me resolve it!!!

The fund financial statement display total fund balances for all governmental funds of $500,000. Other information as following.

Capital asset: $600,000; Accumulated Depreciation: $250,000
Infrastructure(Bridge, Road): $1,500,000; Accumulated Depreciation: $850,000
Bond Payable: $800,000

*Use modified approach to report the infrastructure

Question: Net position associated with the governmental activities in the governmental-wide financial statement?

The answer is 500,000+350,000-800,000=50,000

I am wondering why not 500,000+350,000-800,000+1,500,000=1,550,000?? I understand that under modified approach, the infrastructure does not have to be depreciated. But does that mean that the infrastructure does not to be capitalized as an asset on the governmental-wide financial statement?????

Thanks!

[jmc0434]

@jolien – Good question.

The way I interpret the question was since this question asked “what is the current income tax expense in reported in Year 1 income statement” then the answer should be (TI @ year 1 x current rate = 1000 x 30% = 300) since Year 2 loss has not yet occurred.

Truly I could not recall how NOL should be treated so I had to pull out the Becker book. So it seems when NOL occur they are recorded in the period in which they occurred. So if we look at Year 2 as an example I would assume the carryback and the carry forward entries would be the following in Year 2:

Carryback:
Dr. Tax Refund Receivable 300
Cr. Tax Benefit 300

Carryforward
Dr. Deferred Tax Asset (which will decrease future income tax expense) 90*
Cr. Tax Benefit 90

*YR2 carryforward x YR2 enacted rate = 300 x .3 = 90

The tax benefit will deduce the loss on the YR2 financial statements.

I hope this helps!

BEC - 79
AUD - 89
REG - 80
FAR - 7/19/16

[steph]

Does anyone have any advice about extra content I can buy/review/find online for understanding pensions? I feel like the info in Becker is inadequate to explain all the journal entries. I'm gonna try my old intermediate textbook later but currently wondering what other people did to master this section

AUD - Passed in May
BEC - Passed in June
FAR - Waiting for score
REG - Planning it for Q4
We can do this ninjas!

[steph]

Does anyone have any advice about extra content I can buy/review/find online for understanding pensions? I feel like the info in Becker is inadequate to explain all the journal entries. I'm gonna try my old intermediate textbook later but currently wondering what other people did to master this section

AUD - Passed in May
BEC - Passed in June
FAR - Waiting for score
REG - Planning it for Q4
We can do this ninjas!

[jmc0434]

Please tell me I am not the only one struggling with Bonds. I am getting almost every question incorrect in the Becker software! It is VERY frustrating especially with my exam around the corner!

BEC - 79
AUD - 89
REG - 80
FAR - 7/19/16

[cpaMD86]

It's normal to try and think back on topics and completely blank out, right? I'm taking the approach of watching all of the lectures (Roger) while taking notes. Once I do that I am going all in on MCQ….I start to panic a bit when I can't remember things!

FAR: 9/3

[jeff]

test

[Operation_CPA]

@jmc0434

Know your bond amortization table like the back of your hand, and really nail down journal entries. A lot of times with the journal entries the answer falls in your lap. Keep pushing!

[livealittle]

The fair value for an asset or liability is measured as:
a. The appraised value of the asset or liability.
b. The cost of the asset less any accumulated depreciation or the carrying value of the liability on the date of the sale.
c. The price that would be paid to acquire the asset or received to assume the liability in an orderly transaction between market participants.
d. The price that would be received when selling an asset or paid when transferring a liability in an orderly transaction between market participants.

I think I put this in the Reg group when I was trying for the Far group.

not sure I can navigate in this new forum.

BEC - 8/8/16
REG - 66, 77
AUD - 81
FAR - 9/8/16

[pharaoh]

@livealittle – is it d?

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

[Teal]

Aww, what happened to the signatures with our test scores? Anyway, QUESTION: I know extraordinary gains were eliminated, but they were eliminated for Government accounting and IFRS too right? Thanks!!!

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

[Teal]

Also, are prepaid taxes a current asset? I am pretty sure they are, just wanted to be sure!

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

[Author]

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