[jeff]

SO I know every test is different but does anyone have any insight on what has been heavily tested recently? I take the exam Monday and I need to narrow my focus….Thanks!

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

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

[Anonymous]

Hi everyone! I've been studying for FAR and came across a few inconsistencies in gov. accounting. can someone please clarify? So far, I've come across the following:

1.The governmental entity includes levied taxes in revenue in the year it is enforceable.

2.And then I came across another MCQ that said taxes levied are included in revenue for the year it is meant to be used (for example, tax is levied in 2001, to be used for 2002, then its included in 2002 revenue.)

3.And then I came across another question that said that taxes collected in the first 60 days of the following year can be included in current year revenues and the remaining amounts to be collected in the following year would be part of the following year's revenues.

Can anyone clarify why the revenue treatment for levied taxes are different?

Thanks.

POSTED 41 MINUTES AGO # EDIT

[Anonymous]

So can anyone answer what do you know when the P/S or C/S you issued increases in value at fair value? Do you make any JE or is it irrelevant?

[Juliemiddle]

@CPAHopeful – you carry your C/S and P/S at historical value…so whatever the FV was at the time of issue. Don't adjust it for changes in FV.

@CPA2014Dream – A reduction of a Discount INCREASES your note's carrying value, which it sounds like you already know. I'm not sure what the question was, but the calculations look like:

DR – Note Receivable – $200k

CR – Discount – $50k

Net Note Balance = $150k

At the end of yr. 1, $150k x 10% = $15k…

DR – Discount – $15k

CR – Interest Revenue – $15k

Net Note Balance = $150k + $15k = $165k

At the end of yr. 2, $165k x 10% = $16.5k

Net Note Balance = $165k + 16.5k = $181.5k

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[Juliemiddle]

Oh, I meant to mention, don't forget to check the AICPA's website for their sample exams. I've heard that a few people have lucked out and seen the same question on their real exam. I haven't had that luck, but it can't hurt!

And for any newbies, it's especially helpful to work the sample TBS's and review their feedback…you can see the difference on how they expect you to answer vs. how you have to answer on your review course material (for CPAExcel, you have to enter something in every box or it'll be counted wrong)

https://apps.aicpa.org/CBTeSampleTest/SampleTestStart.html?cm_mmc=AICPA-_-CPAExam-_-exam_tutorial_parallel-_-CBT-e+sample+tests+and+tutorial

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[Anonymous]

@julie why are we just multiplying the discount by the interest rate? I thought we were supposed to amortize the discount out and the amortization of the discount increases the CV, using the effective interest method. There is something I am missing as I would have set up an effective interest table:

200 (face) – 50 (disc) = 150 (CV) * 10% = 15 (interest) – 10 (payment) = 5 discount amortization

150 + 5 = 155 CV

Or wait…does that only apply to the person paying the note? I'm so confused!!

[Juliemiddle]

You're close!

Where are you getting the $10k payment from? This is a “non-interest” bearing note, which means that the payee isn't paying any interest to the Note maker.

So, to stay in line with you amortization schedule thought-process…

Interest Revenue = $15k

Interest Payment = $0

$15k – $0 = $15k amortization of discount

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[Anonymous]

Thanks Julie!

[rbozung]

Question:

The correct answer is C. I answered B. I do not understand why you add the 50k and subtract the 5k service fee. The question even states that the interest earned in the escrow account reduces future escrow payments (which would reduce the liability).

Kent Co., a division of National Realty, Inc., maintains escrow accounts and pays real estate taxes for National's mortgage customers. Escrow funds are kept in interest-bearing accounts. Interest, less a 10% service fee, is credited to the mortgagee's account and used to reduce future escrow payments.

Additional information follows:

Escrow accounts liability, 1 January, 2004

$700,000

Escrow payments received during 2004

$1.58mn

Real estate taxes paid during

$1.72mn

Interest on escrow funds during 2004

50,000

What amount should Kent report as escrow accounts liability in its December 31, 2004 balance sheet?

A. $510,000

B. $515,000

This entry subtracts, rather than adds, the interest earned from the escrow liability. When interest is earned, the liability to the mortgagee increases, because the interest is the property of the mortgagee.

C. $605,000

The following equation is used to explain the changes in the escrow liability and the ending balance (31 December, 2004):

Beginning + Payments – Real estate + Interest – 10% (interest) = Ending

Balance Received Tax Payments Balance

$700,000 + $1.58mn – $1.72mn + $50,000 – $5,000 = $605,000

The interest increases the liability, because it is an amount owed to the mortgagee. This debt is extinguished by crediting the receivable from the mortgagee. The 10% fee reduces the portion of the liability owing to interest.

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[rbozung]

Question:

The correct answer is C. I answered B. I do not understand why you add the 50k and subtract the 5k service fee. The question even states that the interest earned in the escrow account reduces future escrow payments (which would reduce the liability).

Kent Co., a division of National Realty, Inc., maintains escrow accounts and pays real estate taxes for National's mortgage customers. Escrow funds are kept in interest-bearing accounts. Interest, less a 10% service fee, is credited to the mortgagee's account and used to reduce future escrow payments.

Additional information follows:

Escrow accounts liability, 1 January, 2004

$700,000

Escrow payments received during 2004

$1.58mn

Real estate taxes paid during

$1.72mn

Interest on escrow funds during 2004

50,000

What amount should Kent report as escrow accounts liability in its December 31, 2004 balance sheet?

A. $510,000

B. $515,000

This entry subtracts, rather than adds, the interest earned from the escrow liability. When interest is earned, the liability to the mortgagee increases, because the interest is the property of the mortgagee.

C. $605,000

The following equation is used to explain the changes in the escrow liability and the ending balance (31 December, 2004):

Beginning + Payments – Real estate + Interest – 10% (interest) = Ending

Balance Received Tax Payments Balance

$700,000 + $1.58mn – $1.72mn + $50,000 – $5,000 = $605,000

The interest increases the liability, because it is an amount owed to the mortgagee. This debt is extinguished by crediting the receivable from the mortgagee. The 10% fee reduces the portion of the liability owing to interest.

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[Juliemiddle]

@rbozung – It looks like you just misunderstood the info. regarding the interest. It states:

->Interest, less a 10% service fee, is CREDITED to the mortgagee's account

Translation: the Interest earned increases the funds available for the mortgagee's taxes, which means it INCREASES the escrow account liability (In other words, the interest earned on that account belongs to the mortgagee, not the Kent Co.). But, what does belong to Kent Co. is the 10% of the interest that they DEDUCT as their service fee.

So, Increase the liability acct. for the interest earned on the mortgagee's funds – LESS service fees.

DR – Cash – $50k

CR – Escrow Liability – $50k

DR – Escrow Liability – $5k

CR – Service Fees Revenue – $5k

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[Anonymous]

@julie OMG DUH. WTF i really need to read these questions!! That will be the death of me :(((( Thank you!!!!!

[rbozung]

At JulieMiddle. Yes, I was reading it from National Realty's perspective for some reason 🙂 Thanks!

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[CPA50]

Warranty liability Q???

If Estimated warranty costs for year 1 will be 2%, Year 2 will be 4%, do you add them together to get 6% for the calculation?

That's what the answer was, but I was doing each year separately. So confused….

Any ideas where I can find the answer?

AUD - 80
BEC - 77
FAR - 80
REG - 80

3 years

+ 16 tests

+ 2 expired sections

= DONE FOREVER!

AUD 88 (expired), 80 retake
FAR 64,69,67,73,67,73,73,73, August 3
REG 75 (expired) September 7
BEC 72, 77

The adventure continues...

[Peterman25]

Yes – remember that those are warranty COSTS and not the LIABILITY. The liability is accrued at the time of purchase so you accrue the full 6% regardless of when expenses happen.

BEC 7/14 - PASS
FAR 10/14 - PASS
AUD 1/15 - PASS
REG 4/15 - PASS

AZ license - Official 8/20/2015

[Anonymous]

The following information is relevant to one of the City of Mullins' General Fund's derived tax revenues:

Fiscal year-end June 30

Beginning receivables $450,000

Beginning deferred revenues 100,000

Beginning allowance for doubtful accounts 50,000

Receipts 1,250,000

Ending receivables 600,000

Receivables collected 6/30 – 8/30 125,000

Ending allowance for doubtful accounts 60,000

The City of Mullins considers derived tax receivables collected within 60 days after the close of the fiscal year to be “available.” Furthermore, the City wrote off $30,000 of receivables as uncollectible during the year.

What would be the amount of deferred revenues reported at the fund level for year-end?

A.

$415,000

B.

$475,000

C.

$540,000

D.

$600,000

Anyone have an easy way to solve something like this?

[Author]

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