FAR Deck #3

Question 1

Gov Cash Flow from noncapital financing activities include?

Answer 1

1) Proceeds or payments related to borrowing, not related to acquisition, construction or improvement of capital assets
2) Grants and Subsidies cash receipts
3) Property taxes not designated for capital purposes
4) Cash paid to other funds

Question 2

What is the JE to initially record a NFP budget?

Answer 2

DB Estimated Revenue
CR Appropriations Control
CR Budgetary Control

Question 3

What is included in Comprehensive Income?

Answer 3

PUFI
Comprehensive income equals NI + OCI
OCI = Pension adjustments, unrealized G/L on AVS debt securities and hedges, foreign currency items, and instrument-specific credit risk.

Question 4

What is the JE to record when stock options are granted and then exercised?

Answer 4

DB Compensation Expense
CR APIC

DB Cash
DB APIC (reversing out initial entry)
CR Common Stock
CR APIC (Plug)

Question 5

What is the bond issue price?

Answer 5

PV of face at effective interest rate (ex. 500k x PV effective rate) + Face X Stated interest rate at PV Annuity effective interest rate (500k x 3% x PV annuity effective rate)

Question 6

How do you calculate accretion expense on ARO?

Answer 6

FV of ARO x credit adjusts risk free rate

Question 7

Describe the funds in GRaSPP?

Answer 7

General Fund - Other fund for everything else
Special Revenue - Special funds that are restricted/committed for specific purposes (Grant funds, special fees, sales tax fund)
Debt Service - Pay for the principal and interest related to general obligation debt
Capital Projects - construction, purchase or leasing fixed assets
Permanent - restricted use that benefits the government programs/public (art collection for museum, nonexpendable trust)

Question 8

Describe the funds in CIPPO?

Answer 8

Custodial - cash collected and given to another recipient
Investment Trust - sponsors external investment pools
Private Purpose - for specific individuals, private orgs, or other governments (escheat property funds, other trusts)
Pension

Question 9

What is the ARO calculation?

Answer 9

Ending ARO = Beginning ARO + PV of new ARO (discounted CF) + Accretion expense - ARO settled during the period

Question 10

What are the main valuation techniques?

Answer 10

Market - involves identical or comparable assets/liabilities
Income - converts future amounts to a single discounted amt to measure FV (discounted CF)
Cost - replacement cost to measure FV assets

Question 11

What are the limitations to NOLs before and after 2021?

Answer 11

Before 2021 - NOL can be carried back 5 years and forward indefinitely.
After 2021 - NOL carried forward are limited to 80% of taxable income, no carryback allowed

Question 12

What rates are used at translation in F/S and remeasurement?

Answer 12

Translation:
IS - weighted average
BS - YE rate, except Stock/APIC at historical
Equity - AOCI is the plug

Re measurement:
IS - weighted average
BS - monetary at YE Rate, nonmonetary at historical

Question 13

How to calculate capitalized interest?

Answer 13

It is the smaller of total interest incurred (construction debt+other borrowings) or avoidable interest (weighted average amount)

Question 14

What activity is deemed as “Nonoperating Revenues” in a fund F/S?

Answer 14

Shared Revenues - collected by one gov and shared with another gov

Question 15

How to calculate intercompany gain?

Answer 15

Interco SP - Book Value of Original cost (Cost-Depreciation) = Intercompany Gain

Question 16

Diluted EPS Formula?

Answer 16

Net Income + Interest on dilutive securities (ex. bond face x stated rate + discount) / WASO (CS + convertible bonds/preferred stock)

Question 17

How to calculate Depletion Base?

Answer 17

REAL
- Residual Value
+Excavation/Development Costs
+Anticipated Restoration Costs
+Land Price

Question 18

Classifications of Governmental Expenditures?

Answer 18

1) Function - Purpose of the expenditure (General governments, Public Safety, culture & rec)
2) Org Unit - Police/fire departments
3) Activity - event, task or unit of work
4) Character - Current expenditures, Capital outlays, Debt Service, Intergovernmental,
5) Object - type of items purchased = Personnel services, salaries and wages, supplies, depreciation (usu proprietary funds)

Question 19

What qualifies a major fund?

Answer 19

1) 10% of fund category’s assets, revenues or expenditures
2) 5% of combined gov assets, revenues and expenditures
General fund is always treated like a major fund

Question 20

Encumbrance Accounting JEs 1) Initial Setup 2) PO is purchased/received

Answer 20

1) DR Encumbrance
CR Budgetary Control
2) Reverse #1
DR Expenditure
CR Voucher Payable or Cash

Question 21

How does the purchase of Treasury Stock affect Equity/EPS?

Answer 21

Decrease Equity and Increase shares on EPS

Question 22

Statement of Changes in Net Assets Available for Benefits vs
Statement of Changes in Accumulated Plan Benefits

Answer 22

1) Show increase (decrease) in a plan’s assets
2) Show changes in PV of benefits to be paid to beneficiaries
3) Shows plan’s assets at the end of the year

Question 23

How are restoration costs accounted for?

Answer 23

Restoration costs are added to the depletion base - and thus that amount is included in the total that is expensed over the life of the mining operation.

Question 24

What is a liquidating dividend?

Answer 24

The dividend is a liquidating dividend to the extent that the dividend exceeded retained earnings.

Question 25

What is the top objective of financial reporting by state and local government?

Answer 25

“Accountability” of each organization (operational and fiscal accountability)

Question 26

What is the investment calculation used in the Equity Method?

Answer 26

Initial Investment
+Income during year * % invested
-dividends during year * % invested
-amortization of assets > FV * % invested

Question 27

What is the calculation for Income used in the Equity Method?

Answer 27

Net Income during the year * % invested
-amortization of assets > FV * % invested