FAR 16 Blake Cubria CPA

Question 1

When can Long-lived assets that are impaired be written back up (restored) to the amount they were written down by?

Answer 1

When they are Held for disposal ONLY, can only be written back up by the amount asset was written down by

When held for continued use cannot be written back up

Question 2

When would a seller book a transaction as a financing arrangement?

Answer 2

When the repurchase price = or > original sale price and expected market value price

Question 3

Does a company incur interest expense during a construction period?

Answer 3

No $0 expense can capitalize interest, takes the lesser of actual interest or avoidable interest

Question 4

What would cause a decline in a bonds’ market value?

Answer 4

Interest rates have increased making the bond less attractive to investors compared to original issuance

Question 5

What concept is the justification of determining periodic deferred tax expense based on?

Answer 5

Recognition of assets and liabilities

Question 6

What are the three categories that Gov’t wide statements should classify its net position?

Answer 6

How Gov’t F/S should classify its Net Assets:

1. Net Investment in Capital Assets
2. Restricted
3. Unrestricted

Question 7

What should the separate columns show in Gov’t wide F/S?

Answer 7

Separate columns: Gov’t activities, business-type activities, and discretely presented component units

Question 8

In the Statement of activities for Gov’t wide F/S what are the three categories that make up program revenue?

Answer 8

Program revenues include: Charges for services, Operating grants & contributions, and Capital grants & contributions

Question 9

What line item would not impact the computation of net program expenses classified by function on the Gov’t wide F/S?

Answer 9

Franchise Fees - Displayed after computation of net program (expenses) revenues for all programs by function

Question 10

What is the acronym for program revenues that would be reported on a Gov’t wide F/S of Activities?

Answer 10

Program revenues directly associate with a program or function. “SOC” away these Revenues.

S - Charges (FOR SERVICES)

O - Operating Grant and Contributions

C - Capital Grants & Contributions

Question 11

Where would fixed assets be displayed (recorded) of a Gov’t unit when not accounted for in fiduciary or proprietary funds?

Answer 11

Considered a general capital asset and recorded on the Governmental activities column of the Gov’t Wide statements of net position

Question 12

How are expenses reported on a Gov’t wide F/S?

Answer 12

by function

Question 13

A Gov’t-wide statement of net position must include and distinguish between what two types of activities?

Answer 13

Distinction between transaction from:

1. Governmental funds (GraSSP) + Internal Service funds
2. Business-type activities: Enterprise Funds

Question 14

What are the requirements when using modified approach for Gov’t infrsastructures?

Answer 14

Describe assessed condition of infrastructure (updated once every three years) and the estimated annual amount to maintain and preserve the condition level establish and disclosed

Question 15

What is an example of current and non-current liabilities that would be reported in the Gov’t activities column of the Gov’t wide statement of net position?

Answer 15

General obligation bonds + Compensated absences + salaries Payable

Question 16

When using the modified approach by Gov’t what is expensed and what is capitalized regarding infrastructure and additions?

Answer 16

Infrastructure expenditures are reported as expenses

Outlays that result in additions or improvement is Capitalized

Question 17

What is the equation for a sale and disposal of a fixed asset? How are asset disposals classified in the Gov’t wide F/S? How are the asset disposals accounted for?

Answer 17

Sales price of Asset - (Historical cost - A/D) = Net Book Value reported as an adjustment in the Reconciliation (Subtraction)

Assets disposed is recorded at the Carrying book value, recorded at Gain or Loss

Account for asset disposals as proceeds classified as “other financing sources” or a “Special item” depending on materiality

Question 18

How are interfund receivables and payables treated when preparing Gov’t wide F/S for a Gov’t entity?

Answer 18

Reported as INTERNAL BALANCES

ELIMINATED from individual fund activities - SUM TO $0

Question 19

What type of revenue is a tax levied by the city Gov’t for improvements to roads? How would it be reported in the statement of activities?

Answer 19

Non exchange revenues in support of Gov’t activities

By type of Tax in General Revenues

Question 20

is fiduciary fund activity included in Gov’t Wide presentation?

Answer 20

No, displayed in the fund F/S

Question 21

When bonds are issued for benefitting an enterprise fund by servicing the debt owed by revenues earned where will it not be accounted and where will it be accounted?

Answer 21

Non-current liabilities not accounted in: the Governmental activities column of the Gov’t wide statement of net position

Accounted in: Individual enterprise funds & in the business-type activity column of the Gov’t wide F/S

Question 22

How would an asset obtained through a lease agreement contract where transfer of ownership occurs during the year be reported on the Gov’t wide statement of net position?

Answer 22

As A General Capital Asset

Question 23

What is the equation to solve for Total Net position on the Gov’t wide F/S?

Answer 23

Capital Assets (+)
Accumulated Dep (-)
Restricted Assets (+)
Liabilities (-)
= Total Net Position

Question 24

Gov’t that do not use the modified approach would record infrastructure assets in which way?

Answer 24

Capitalize and depreciate them over their useful life

Question 25

What salary rate is used to calculate compensated absence liability in a Gov’t wide F/S?

Answer 25

Salary Rate At the Balance Sheet date

Question 26

How is other acquired property (through forfeiture) capitalized as, that is not a gift?

Answer 26

Recorded at the lower of cost or market

Question 27

How would interest income of a long term investment be classified on the STMT of $ flows in a enterprise fund?

Answer 27

On Investment activities section

Question 28

What is the equation for the STMT of financial position for Fiduciary funds?

Answer 28

Assets & Deferred OUTFLOWS - Liabilities & deferred INFLOWS = Net Position

Question 29

What are some cashflows from noncapital financing activities for a proprietary fund?

Answer 29

$ receipts from grants and subsidies to decrease operating deficits - not used for capital purposes

money received or paid that related to borrowing not connected to the acquisition, construction or improvement of capital assets

Property taxes not used for capital purposes

Cash paid to funds other than interfund services

Question 30

What statistics are used as criteria to identify the determination of major funds required for reporting in a Gov’t fund F/S?

Answer 30

Aggregate Revenues or Expenditures/Expenses

Aggregate Assets or Liabilities

Question 31

What is the Acronym for a discrete Component unit?

Answer 31

S - Separately

E - Elected

L - Legally separate

F - Financially independent