Far 17

Question 1

What are the 4 parts of the Gov’t entities combined statement of $ flows?

Answer 1

Operating

Non-Capital financing

Capital and related financing

Investing activities

Question 2

What do capital financing activities include?

Answer 2

acquiring and disposing of capital assets and any related debt

borrowing $ for capital acquisitions and repaying amounts borrowed (including interest)

capital grants, special assessment levied for capital acquisition

Question 3

What does non capital financing include?

Answer 3

borrowing $ for other than capital expenditures, such as tax anticipation notes

cash receipts from grants or subsidies,

property taxes

operating grants

Question 4

When amortization and interest expense is not recorded for a premium bond, what is the effect on interest expense and bond carrying value?

Answer 4

Both interest expense and carrying value will be overstated

Question 5

For troubled debt restructuring what is the equation for real estate to report pretax gain or loss?

Answer 5

Carrying amount of liability liquidated - FV of real estate transferred = Gain or Loss

Question 6

When reconciling Gov’t funds to net position in the Gov’t wide F/S, what is the ACRONYM?

Answer 6

FUND BALANCE +

+ C - Capital Assets Net of
- A - Accumulated Depreciation
- N - Non-current Liabilities
+ S- Service (internal service fund) Net Position

Question 7

What is the acronym for the Reconciliation of the change in fund balance in Gov’t fund F/S to the Change in net position for Gov’t activities? CPAS RIDES stand for?

Answer 7

+ Change in Governmental Fund Balance (beg amount)

+ C - Capital outlay
+ P - Principal pmts on debt
- A - Asset Disposals

• S- Source (uses) financing

+ R - Revenue (accrual)
- I - Interest Expense (accrual)

• DE - Depreciation Expense

+ S - Service (internal) net income

= Change in Net position in Gov’t wide F/S

Question 8

How to solve a city’s measurable but unavailable taxes at end of year 1 when given Financial position and Operating Activity?

Answer 8

Operating Activity: Tax Revenues

Tax Revenue - Gov’t wide F/S - Fund F/S = measurable but unavailable tax amount

Question 9

What is the J/E to recognize tax revenues on the Gov’t wide F/S that has been previously deferred on Gov’t fund F/S in accordance with modified accrual accounting?

Answer 9

Dr Deferred inflows
Cr Tax Revenue

Question 10

What is the J/E when reconciling Fund F/S to Gov’t wide F/S for a Capital Acquisition? Modified - Accrual basis Adjustment

Answer 10

Dr Capital Asset
Cr Capital Outlay Expense

Dr Depreciation Expense
Cr Accumulated Depreciation

Question 11

What is the J/E when reconciling Fund F/S to Gov’t wide F/S for a Leased property that transfers ownership at the end of a lease? Modified - Accrual basis Adjustment

Answer 11

Dr Capital Assets
Cr Capital Outlay expenditures

Dr Other Financing sources
Cr Lease Liability

Question 12

When selling Equipment and a G or L arises using the Direct method is operating section of cash flow affected?

Answer 12

No, G or L is not recorded in operating section, Investment section would show the actual cash received from selling the asset

Question 13

How do you measure if convertible bonds are dilutive? What would be an example equation?

7% convertible bonds, issued @ par, Each $1,000 bond convertible into 40 shares. 30% tax rate. With basic EPS = $1.29

Answer 13

If Dilutive: Converted Price Per Share < Basic EPS

Calc: [$1,000 * .07 * (1-.30)] = $49. $49/40shares = $1.225/share

$1.225<$1.29 - So Dilutive

Question 14

NFP’s statement of $ flows, what are the different parts?

Answer 14

Operating, investing and financing

Question 15

Non-operating interest bearing notes are reported at what value at the balance sheet date? Ex: Company has a N/P for a contest winner.

Answer 15

At the Present value of future cash flows

Will create a discount on the N/P

Question 16

what is the calculation for calculating the temporary difference?

Answer 16

DTL or DTA/ Tax Rate = Temp Difference

Question 17

What type of financial instrument issued by a public company should be recorded as a liability on date of issuance?

Answer 17

C/S that contain an unconditional redemption feature

b/c there is an obligation of a cash outflow in future that Co has NO ability to prevent

Question 18

How are refundable security deposits treated and recorded? How much of deposit will be recorded as refundable?

Answer 18

Deposit is not revenue upon receipt, costs are only RECOGNIZED AS INCURRED

Full amount

Question 19

For indirect method of cash flows, what is added and subtracted from Net Income?

Answer 19

When Current Assets decrease and current Liabilities increases these are added back to N.I.

Increases in CA and Decreases in CL are subtracted from N.I.

Loss on sale is added back

Gain on sale is subtracted

Question 20

Where would a NFP record a contribution that is for the construction of a new building on the cash flow statements?

Answer 20

Restricted Contribution, in financing section

Question 21

LIFO Perpetual

LIFO Periodic

Answer 21

Use Purchase date leading up to sale

Determine COGS price at end of month

Question 22

Foreign Currency Translation

Answer 22

Subs Functional currency is its Local currency - reported in OCI

Subs F/S translated to reporting currency

Question 23

ReMeasurement

Answer 23

If Subs functional currency is not the same as its local currency - Functional currency may be reporting currency or other currency

F/S remeasured into functional currency

Reported on I.S.

Question 24

Private purpose trust fund

Answer 24

Principal and income Benefits specific individuals, private organizations and other governments

$ held on behalf of state by operation of law

Question 25

What kind of change occurs when Fair value turns into Equity method due to the more purchases of stock?

Answer 25

When significant influence occurs, no retroactive adjustment is required

Question 26

Periodic Inventory disidvantage

Answer 26

COGS amount used for Financial reporting purposes includes both the cost of Inventory sold & Inventory shortages

-Determined only by Physical count that happens annually

Question 27

What affect do stock splits have on past outstanding stock?

Answer 27

Retroactive application, must be adjusted for prior years

Question 28

What is the J/E for a liquidating Dividend? 80% distribution of earnings & 20% liquidating

Answer 28

Liquidating Dividend affects APIC

Dr R/E 80%
Dr APIC 20%
Cr Cash 100%

Question 29

What gives Rise to a DTA?

What is the J/E?

Answer 29

Taxable Income > Book Income

Dr Income Tax Expense (Plug)
Dr DTA (multiply temporary difference * future enacted tax rate)
Cr Income Tax Payable (Taxable income * current year tax rate)

Question 30

What is the J/E for a stock Dividend when Declared?

What is the J/E for income earned closed to R/E at year end?

Answer 30

All Dividends Decrease R/E

Dr R/E
Cr Dividends Payable

Dr Income Summary
Cr R/E

Question 31

What does the Amortization schedule look like for an Operating Lease?

Answer 31

Date Lease Expense (Straight Line) Interest (% on Liability) Amortization of ROU Asset CV of ROU Asset
(CV of ROU Asset * %)