[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

[Juliemiddle]

Help…I got this answer right b/c I guessed. My question: I thought Governmental Funds used current financial resources focus only. I didn't think you could carry a L/T asset (or L/T liabilities) in any Governmental Funds…where am I confused?

A local citizen donated land and an office complex to a city with the stipulation that net income from the office complex be used help finance the operations of a teenage alcohol and drug treatment center. At the time of donation, the property's fair market value was $800,000. The donor paid $500,000 for the land and house twenty years ago. The city spent $125,000 to upgrade the office complex. The city would capitalize the land and office complex in its permanent fund at:

A. $0

B. $500,000

C. $625,000

D. $925,000

ANSWER: D

Permanent Funds account for the receipt of the endowment principal that is donated to a government and is to be held in trust for the benefit of the government (or of its citizenry as a whole) as revenue. The property should be capitalized at $925,000-fair market value at the time of donation ($800,000) plus the cost of improvements ($125,000) made by the city. Earnings from the office complex would usually be transferred to and expended through a Special Revenue Fund.

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

CPAExcel, Ninja Audio (all sections)

[rbozung]

@ Julie Middle. Thanks, but I still don't understand. A deferred tax asset or liability is calculated each year and there is an income tax difference each year so I don't see how you can assume that it will reverse only in 2005 and apply the 25% rate rather than two years at the 30% and the last year at the 25%. I understand the 2nd part of my question now, though.

Also, for your questions about LT assets, I believe that only in the general fund are fixed assets/LT assets recorded as expenditures. This question asks about the Permanent Fund (another governmental fund) which is made up an endowment principal which is to remain intact. I believe this is what they mean by “capitalize”. The JE when endowment principal is recd is to DR. Cash/securities and CR. Revenue.

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

[Juliemiddle]

@rbozung – thanks, I thought it was no capitalized assets for any of the Governmental Funds.

For your question, I hope someone can explain this better, but I'll attempt…

-You can agree that at 12/31/2005, there is a temporary Revenue difference of $650k, right? For tax purposes, you haven't recognized $650k of Book revenue yet, so you know you will owe that in the future.

-At 12/31/2005, you also know that the future rate will be 25%

-You have to apply the FUTURE rate b/c that's when the taxes will be paid…in the future.

I think you're getting hung up on the idea of the JEs that you would make in 2003 and 2004, assuming you don't know the future rate. For this particular question, it's irrelevant. But, it would look like this:

2003:

$300k x 30% = $90k

Deferred Tax Liability Balance = $90k

2004:

$200k x 30% = $60k

Deferred Tax Liability Balance = ($90k + $60k) = $150k

2005:

$150k x 25% = $37.5k

$500k x -5% = -$25k (to reduce the tax rate of previous years' liabilities)

Deferred Tax Liability Balance = ($90k + $60k + $37.5k – $25k) = $162.5k

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

CPAExcel, Ninja Audio (all sections)

[rbozung]

@juliemiddle. Thanks. That does help when you lay it out by year!

Regarding my comment about capitalization, I am not positive either so I am going to read over my governmental section in my Wiley book now. What is funny, is that I took FAR in 2010 and did really well in in the governmental and NFP portion and not well enough in the other sections. Now, I keep doing well in the other sections and cannot seem to grasp governmental accounting and all of the journal entries. This is supposed to be the easy stuff, but when you are used to accounting for entries according to GAAP and then have to get use to GASB it can be a challenge. Also, my Becker professor in 2010 was awesome in how he explained Governmental Accounting and the CPA excel professor did not explain it in a way that was conducive to how I learn :/ I was literally falling asleep during the lectures compared to laughing at the pneumonics that the Becker professor came up with. Amazing how much one retains depends on the professor's style of teaching.

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

[HP_OKC]

Question:

FIXED ASSETS

New equipment was purchased by Hunter at a list price of $94,000, with credit terms of 2/10, n/30. Payment was made within the discount period and included $7,800 sales tax in addition to the net purchase price. Hunter also paid delivery charges of $940 and labor costs of $1,380 for installing the new equipment. During installation, an employee punctured several containers with a forklift, causing damage to the equipment. Cost to repair the damage was $1,960.

The total cost of equipment is _______________.

I have calculated this to be $102,240 before the damage to the containers, but am not sure whether or not to include the $1,960 in the cost of the equipment.

AUD - 88
REG - 63, 77
BEC - 74, 73, 85
FAR - 70, 73, 84

OK Candidate

Ethics Passed

[Juliemiddle]

I agree with your amount…$102,240. The repair fee wouldn't be capitalized b/c it sounds like the repair is restoring the equipment, but not extending the life of the equipment or making it more productive.

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

CPAExcel, Ninja Audio (all sections)

[HP_OKC]

That's what I was thinking, but I then I thought since it happened during installation, that it could be added to installation charges because it would have to be repaired in order to be sold.

AUD - 88
REG - 63, 77
BEC - 74, 73, 85
FAR - 70, 73, 84

OK Candidate

Ethics Passed

[Juliemiddle]

More Govt. Accounting help… I chose ‘B' because I thought the $14M would be listed as Current Liabilities, but I'm wrong. Why is it not a Current Liability?

A government has the following debt:

Capital lease liabilities that mature in more than one year (General Fund department leases)-$2,000,000.

Net pension liability associated with general government employees-$4,000,000.

General government bonds that mature in the next fiscal year-$14,000,000.

What amount of debt should be reported in the long-term liabilities in the government-wide financial positions?

A. $2,000,000

B. $6,000,000

C. $18,000,000

D. $20,000,000

All of the items listed are Unmatured Long-Term Liabilities of the general government that will not be recorded in any of the Governmental Funds but will appear as liabilities in the Government-Wide Statement of Net Position.

Correct answer: D

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

CPAExcel, Ninja Audio (all sections)

[cpaherewego]

@Juliemiddle – I think it would be long term debt because it is not maturing until the next fiscal year.

FAR - 10/13(retake)
AUD - TBD
BEC - TBD
REG - TBD

You can do anything you put your mind too!!!

[Juliemiddle]

Does GASB not have Current Maturities of L/T debt, like FASB?

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

CPAExcel, Ninja Audio (all sections)

[cpaherewego]

The only portion of the LTD that would be on the statement would be the interest/principal that is currently due. The remaining amount would not show up (or be recorded) any where but the Government-Wide financial statements.

It is a difficult concept for me to wrap my head around because I was so used to normal business accounting where anything that is due within a year is current liability. When I was watching the Becker review he said to think of it like a mortgage payment. The only thing we as individuals think about it that monthly payment. We don't care what the balance is on the mortgage, we only care that we pay $1200 per month. Government general funds work in about the same way, the current only cares about what is going out now, not what the balance is.

Does that help???

FAR - 10/13(retake)
AUD - TBD
BEC - TBD
REG - TBD

You can do anything you put your mind too!!!

[Juliemiddle]

I think so 🙂 Thank you @cpaherewego

For anyone that cries at the thought of Govt. accounting like me, I saw someone post this on another thread…it's helpful for understanding Fund vs. Govt-Wide JEs

https://sites.google.com/site/farnotes/gas-34/journal-entries–fund-based-vs-government-wide

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

CPAExcel, Ninja Audio (all sections)

[cpaherewego]

@Juliemiddle – I cry daily over Govt accounting – i am doing well on the MCQ's except govt. 70's on most things, but 42 on govt section.

FAR - 10/13(retake)
AUD - TBD
BEC - TBD
REG - TBD

You can do anything you put your mind too!!!

[cpaherewego]

@Juliemiddle – thank you for reposting that link. it really breaks it down!!

FAR - 10/13(retake)
AUD - TBD
BEC - TBD
REG - TBD

You can do anything you put your mind too!!!

[rbozung]

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

[Author]

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