[jeff]

Welcome to the Q4 2016 CPA Exam Study Group for FAR.

If this is your first post in the study group – please post your target exam date (just the time frame to preserve your anonymity), and your past history with this exam (optional, of course).

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

[emichelle2321]

@onthewaytocpaMom – I haven't even been doing the sims. From everything I've heard its better to do those at the end? I dont know. I am giving myself about 3 weeks to review if I can stay on schedule, but I too am concerned with forgetting all the stuff I've learned so far because my test isn't until December 8th. That being said, I don't think its possible at all for me to be getting through this material any faster than I am w/ my job and schedule. I need some inspiration!!! Only way I will move on to F5 on Tuesday is if I power through probably all day/night tomorrow and Monday night…I really don't want to to get behind. We can do it!

[Rachell Samuels]

FAR October 19, 2016

Filed twice by 10 points and 9 points.

[OdellBj]

@livealittle basically, the $100,000 pre-tax cash basis is the starting point. Receivables do not affect cash basis, so that has no effect on it, however, receivables affect accrual basis income so accrual income rn is $110,000 ($100,000+$10,000). The payment of the $6000 payable decreases cash since you're paying it off, therefore, cash basis income is $94,000 ( $100,000-$6000). Payment of $6000 has no effect on accrual basis because these are the journal entries that go with accrual basis :

when expense was incurred When cash payment is made
Dr. Expense $6,000 Dr. Payables 6,000
Cr. Payables 6,000 Cr. Cash 6,000

As you can see, the expense has already been incurred so it wont have an effect on the accrual basis income. Therefore, cash basis income is $94,000 and accrual basis income is $110,000.

Hope this helps.

[Josh]

@Rachell Samuels – that's close; I missed FAR by 11 points last time. That's the closest I've been to FAR; I hope I can make some improvements still.

I'm not sure what I'm struggling with in governmental accounting. It's my weakest area. 87% adaptive learning trending 81% but 69% in governmental. Am I the only one struggling with it? Maybe, it's because that's the FAR class I missed? Would you all like a governmental Ninja MCQ?

[Claudia408]

I always struggle with the revenue recognition questions. I thought of this one completely backwards! I think that if Card will buy a minimum of 100,000 units from Hart then how is that a loss? Wouldn't the loss be anything they can't sell? Please help!

On January 1, 20X1, Card Corp. signed a 3-year, noncancelable purchase contract, which allows Card to purchase up to 500,000 units of a computer part annually from Hart Supply Co. at $.10 per unit and guarantees a minimum annual purchase of 100,000 units. During 20X1, the part unexpectedly became obsolete. Card had 250,000 units of this inventory at December 31, 20X1, and believes these parts can be sold as scrap for $.02 per unit. What amount of probable loss from the purchase commitment should Card report in its 20X1 income statement?

Answer:

Minimum purchase commitment for 20X2 and 20X3
(100,000 units x $.10/u x 2 years) $20,000
Less scrap recovery (100,000 units x $.02 x 2 years) 4,000
——-
Probable loss from purchase commitment $16,000
=======

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

[livealittle]

it's a loss because the part is now obsolete and they can't sell it for they could originally.

It's already a loss because there isn't a market for it and even if they sell it for scrap, they will never recover their cost, much less turn a profit.

does that help?

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

[Claudia408]

livealittle – yes, thank you i can see that a little better now. Hart's entire product is now obsolete and they can only get scrap dollars for it. so as for the 100,000 units as a loss when they got $20,000 for it…. despite getting $20,000 for it, it doesn't matter bc it's part of the entire product loss that they wouldn't recover the cost of all of 500,000 units? basically the whole thing is a loss?

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

[emichelle2321]

Work has been so insane and I have totally fallen behind my study schedule which is making me even more anxious about this damn thing than I was to start. I find it really hard to effectively study for more than 3-4 hour chunks, but I think I need to figure out how to study longer on weekends. Does anyone have any tips to avoid burnout?? or just something to make me not feel like im screwing myself……

[Jsn3004]

State and local governments have various sources of revenue. When revenues are received from charges to users for services provided, these revenues are classified as:

A.
program revenues.

B.
general revenues.

C.
general revenues and program revenues.

D.
specific revenues.

The correct answer is A.
Program revenues are derived directly from the program itself or from parties outside the reporting government's taxpayers or citizenry, as a whole; they reduce the net cost of the function to be financed from the government's general revenues. Revenues derived from those who purchase, use, or directly benefit from the goods or services of a program, even those beyond the reporting government's boundaries, are always considered program revenues.

My question is, how are we supposed to know that these revenues are derived from a program when the question didn't state that's where the revenues were derived from. I figured the answer would have been general revenues since all revenues are general revenues unless they are related to a program.

[Alejandro Garcia]

Hey everyone,

Taking my second attempt at FAR next Monday 10/17. Wondering if anyone has some sort of concise “study guide” cheat that they wouldn't mind letting me have? I already have Becker, NINJA MCQ, and NINJA notes and a ridiculous amount of legal pads. Trying to review out as much information as possible.

[lilitvar]

HI fellow FAR warriors,
I am taking FAR on 10/17 and its my first try for any part of the Exam. Wishing everyone good luck and lots of patience!

[Claudia408]

can someone please help talk me through the imputed interest of this problem and the JE to record the note?

My thoughts: Is 17,360 is interest for 2 years of the note? If this is true, why couldn't the 2013 portion of interest simply be 17,360/24 =723.33×9= 6,510
JE on day 1:
Dr Note Rec 82,640
Dr Amort Exp 2,000
Cr Patent 40,000
Gain 44,640

On April 1, 20X3, Kern sold a patent to Frey Corp. in exchange for a $100,000 noninterest-bearing note due on April 1, 20X5. There was no established exchange price for the patent, and the note had no ready market. The prevailing interest rate for this type of note was 10% on April 1, 20X3. The present value of $1 for two periods at 10% is 0.8264. The patent had a carrying amount of $40,000 on January 1, 20X3, and the amortization for the year ending December 31, 20X3, would have been $8,000. Kern is reasonably assured of collecting the note receivable from Frey.

Answer:
Face amount on April 1, 20X3 $100,000

Deduct imputed interest ($100,000 – $100,000(.8264)) 17,360

Net carrying value on April 1, 20X3 $ 82,640

Add 20X3 interest earned ($82,640 x 10% x (9/12)) 6,198

Long-term receivable on December 31, 20X3 $ 88,838

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

[Claudia408]

Forgot to mention previous post is from NINJA Sim #4 and the question asks for LT portion of the note

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

[Claudia408]

Ok wait, I think I figure it out… the interest is based on the new carrying values, right?

why can't we edit our posts anymore!??

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

[jonm857]

Reading through Becker notes… what does the “U or I” notes mean in the text again? Cannot remember right now…

B - 81
A - 87
R - 73
F - July 5th

[Author]

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