[jeff]

FAR Study Group Links and Resources:

1. NINJA Monthly – $67 FAR Course
2. Free FAR Notes
3. FAR Course Comparison
4. How to Pass FAR (with NINJA)
5. How to Pass FAR (in 20 Days)
6. How to Pass FAR (after Failing)

See Also:

• FAR Study Group
• AUD Study Group
• REG Study Group
• BEC Study Group

AUD - 79
BEC - 80
FAR - 76
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Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[SeanW]

I figured out #2. The Allowance is netted against the Deferred Tax Asset similar to how the Allowance for AR is netted against AR. Then to close the allowance once enough time has passed, you can just remove the Asset and related Allowance.

Still looking for assistance with #1 though.

[Stevie]

Struggling with Cash to Accrual/Accrual to Cash. What were some ways that helped you understand this?

Thanks

AUD - 79
BEC - 80
FAR - 80
REG - 81

(>'-')> <('-'<) ^(' - ')^ <('-'<) (>'-')> <('-'<) ^(' - ')^

[Huilly]

@Born to Win,

I believe the correct formula should be C = 10% x (75,000 – C) and then you solve the equation for C.

The rationale being the contribution amount must equals 10 percent of the income after the deduction. And the income after the deduction implies it is equal to 75,000 minus C.

AUD - NINJA in Training
BEC - 89
FAR - NINJA in Training
REG - 90

3P to success: Practice. Patience. Persistence!

[CPA2be]

@MO
I am not 100% sure, but try ASC 808-50. It talks about disclosures related to collaborative arrangements.

AUD - 84
BEC - NINJA in Training
FAR - 92
REG - 91

Consistency is the key!

[Kevin]

Can anyone help this question? I have no idea about why this leasehold improvements is ‘29,000'

During December 2014, costs of $89,000 were incurred to improve leased office space with economic life of 20 years.
The related lease will terminate on December 31, 2030, and is not expected to be renewed.
The office space was renovated on December, 2010 at a cost of $60,000 and was depreciated using double declining balance method.
Prepare proper journal entries for each of the transactions.

The Answer : Debit Credit
Leasehold Improvements 29,000
Accumulated Depreciation 20,634
Loss 39,366 Accounts payable 89,000

I don't know why there is a loss and Accumulated Depreciation. Please help me!!!

BUYAYA

[Elizabeth]

Hi all. I am studying for FAR, and am taking it March 7th for the first time. I am using Becker to study!

I was wondering if anyone could possibly give me a ‘lesson for dummies' on two topics!

1. Leases (Becker Ch. 6 Module 2 (and 1, but I found 2 harder)). They have changed and I do not follow the Becker lecture as compared to the MCQs
2. Not for Profit revenue recognition (Becker Ch. 8 Module 5). What is the best way to think of these?

AUD - 77
BEC - 82
FAR - NINJA in Training
REG - 84

It's a great day to have a great day!

[Elizabeth]

Hi!@syu1087. I try and make T charts for things I am unsure of. I also try to picture what the journal entries would be in my head. For example, if we have sold goods, but not been paid….
Dr: accounts receivable
Cr: sales revenue

Here, there is no cash, but you have to accrue for the revenue. Therefore, that year, revenue would be higher under the accrual method because Net Income is ultimately higher (more revenue is recorded)

AUD - 77
BEC - 82
FAR - NINJA in Training
REG - 84

It's a great day to have a great day!

[jslevin914]

Anyone have any tips on non monetary transactions. Felt they were a lot easier for reg. Any tips would be appreciated

[ZLH123]

Hey Guys,

Does anyone knows if partnership will be included in Far 2019 exam?

Thanks everyone!

[TerriSilva]

guys I'm taking FAR on Thursday for the millionth time (seems like) and I've passed the other 3…question is are the new lease standards now implemented on the exam?

AUD - 79
BEC - 80
FAR - 75
REG - 86

California Licensed CPA as of August 19th, 2019!

 

[nissen]

@mo
I got that same sim. Think we may be disclosing too much info though.

[nissen]

@mo
Leff that sim unanswered though

[nissen]

Good Morning Everybody!
Before I get some serious comments about disclosing the exam in my previous post I just want to tell you all I was joking. Seriously. There’s a huge testbank the questions get pulled from and it’s vitually impossible to get the same questions twice. @mo, that’s way too much info disclosed. That’s not cool. I will say however that the 15-20% governmental on the exam is misleading because my exam was was composed of about 30% governmental. That’s not cool either. Very misleading…was not expecting the amount of governmental questions I got on my exam… definitely a retake for me…

[timmyj]

Question # 587 | Blueprint Area: 2 D : Property, Plant and Equipment

On January 1 ten years ago, Andrew Co. created a subsidiary for the purpose of buying an oil tanker depot at a cost of $1,500,000. Andrew expected to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove underground storage tanks. It was estimated that it would cost $150,000 to dismantle the depot and remove the tanks at the end of the depot's useful life. However, the actual cost to demolish and dismantle the depot and remove the tanks in the tenth year is $155,000. What amount of expense should Andrew recognize in its financial statements in year 10?
A. None, recognized in prior years
B. $5,000 expense
C. $150,000 expense
D. $155,000 expense
You answered D. The correct answer is B.
Obligations for dismantlement, restoration, and abandonment costs are accounted for as asset retirement obligations. Upon initial recognition of a liability for an asset retirement obligation, an entity capitalizes an asset retirement cost by increasing the carrying amount of the related long-lived asset by the same amount as the liability. An entity subsequently allocates that asset retirement cost to expense using a systematic and rational method over its useful life. Application of a systematic and rational allocation does not preclude an entity from capitalizing an amount of asset retirement cost and allocating an equal amount to expense in the same accounting period. The company increased the carrying amount of the depot the $150,000 cost to dismantle and amortized it over the 10 years. In this case, only the extra $5,000 ($155,000 actual cost – $150,000 estimate) would be expensed in year 10.

Editor's Note: The AICPA provided item (b) as the unofficial solution. The editors believe the company could have, and perhaps should have, chosen to expense the $150,000 evenly over 10 years in what is termed an accretion expense. If it had done so, the expense in year 10 would have been $20,000 (the $15,000 original allocation plus the additional $5,000 in actual cost). Given thaqt $20,000 was not an answer option, one must assume that the company did not do so. Candidates need to prepare to answer questions with the best solution choice possible.

-The above is a question from Ninja MCQ's, Why is the depreciation of $150,000 + the $15,000 accretion expense amortized + the $5,000 cost over what was estimated no all included. In the AICPA note and the Editor note (Ninja editor) both ignore depreciation expense (and this is classified as a PPE problem not a AR)/liability problem) so I would think depreciation would at least be considered. How are problems released that have such discrepancies?

[timmyj]

Question #1298, Blueprint Area: Statement of Cash Flows
The following information was taken from the current year finanical statements of Planet Corp.:

Accounts receivable, January 1 $ 21,600
Accounts receivable, December 31 30,400
Sales on account and cash sales 438,000
Uncollectible accounts 1,000
No accounts receivable were written off or recovered during the year. If the direct method is used in the current year cash flows, Planet should report cash collected from customers as

A.
$447,800
B.
$446,800
C.
$429,200
D.
$428,200
You answered: C The correct answer is: D
Explanation:
Planet corp., should report cash collected at $428,200, which is sales for the year reduced by the total increase in accounts receivables (i.e. $438,000 – $9,800).

a. Accounts receivable, net, Dec 31, $30,400

b. Accounts receivable, net, Jan 1, $21,600

c. Net increase in accounts receivable (a-b), $8,800

d. Uncollectible accounts, $1,000

e. Total increase in accounts receivable (c+d), $9,800

The accounts receivables are given at their net amounts. The uncollectible accounts($1,000) is added back to the change in net accounts receivable to bring it to the gross amount. No accounts receivable was written-off during the year allowance for uncollectible accounts will be added back to the account’s receivables, to arrive at total increase in accounts receivable at $9,800.

Dr: Cash (plug) $428,200

Dr: A/R (change) $9,800

Cr: Sales $438,000

Option (a) is incorrect because increase in accounts receivable is added instead of deducting $9,800 (i.e.$447,800 = $438,000 + $9,800). Option (b) is incorrect because net increase in accounts receivable $8,800 is added and uncollectible accounts for $1,000 is not considered (i.e. $446,800 = $438,000 +$8,800). Option (c) is incorrect because this does not consider the provision for uncollectible (i.e. $429,200 = $438,000 – $8,800).

-Here is another Ninja MCQ, how would we know the A/R is reported net in what it is given to us? I have see this questioned listed in other places as well as posted on ninja back in 2016 where the answer was in fact C and not D, with no mention of net A/R or uncollectible accounts. Any help on this or the above would be appreciated.

-On another note, I have both Wiley and Ninja MCQ's and I find many more questions on Ninja with questionable answer than I do on Wiley, I also find many outdated questions asking about extraordinary gains, older net asset classifications for NFP, installment sales, other reveunue methods other than ASC 606, etc. Does anyone else have similar experiences?

[Author]

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