FAR12

Question 1

which is right?
1. reclassification adjustments, and theri effect on the both net income and other comprehensive income, are reported in the footnotes.

2. the tax impact of each component included in the current year’S other comprehensive income must be reported.

Answer 1

[2]
1is wrong because the represents an inaccurate required disclosure . all reclassification adjustments, including the effect on reported net income and other comprehensive income, must be presented in the statement in which the components of net income and the components of other comprehensive income are presented.

Question 2

an entity with a patent.
CV 500
FV 495
undercount future cash flow 515
what is the impairment loss?

Answer 2

[0]
impairment analysis should begin with CV vs undercount future cash flow(not the present value of cash flow)

then CV vs FV

Question 3

deferred tax asset of $4,000
taxable income $150,000, with an applicable tax rate of 40%
#JE

Answer 3

dr: income tax expense-current 60,000
cr: tax payable 60,000
dr: income tax expense-deferred 1,600
cr: deferred tax assets 1,600

Question 4

a company acquired a new office building by giving 50,000 shares of CS along with cash to the former owner.
FV of stock @19
par value of stock @10
cash give up 750,000
FV of building 1,700,000

un the supplementary information to the statement of cash flows, this transaction would be reported as an investing and financing activity in the amount of:

Answer 4

[950,000]
在這種非現金投資活動（non-cash investing and financing activities)中，需要報告在補充信息欄。報告的金額應該是非現金的部分，本交易中就是放棄的股票，按市場價計算。

Question 5

which may be prepared but not required for both defined benefit pension plans and defined contribution pension plans?
1. statement of changes in accumulated plan benefits.
2. statement of cash flows

Answer 5

[2]
1 is required for [defined benefit pension plans] and is not prepared by the [defended contribution pension plans]. [defended contribution pension plans]每次交的金額都一樣，所以不用做累計計畫營利表。

兩者否可以做現金流表，但不是必須

Question 6

use direct method
purchase of treasury stock
which CF?

Answer 6

financing section.

Question 7

net income 1,000,000. 500,000shares of CS outstanding
25,000 shares of $100 par 5% cumulative PS. each PS is convertible to 4 shares to CS
is the PS dilutive or not?

Answer 7

EPS=(1,000,000-125,000)/500,000=1.75
DEPS=1,000,000/600,000=1.67
EPS>DEPS, so it’s dilutive

Question 8

a city government levies a tax on its citizens for improvements to road. how should the city report the tax in its statement of activities?
1. in special items reported separately from general revenue
2. as program-specific contributions in program revenues,
3. by type of tax in program revenues
4. by type of tax in general revenues.

Answer 8

[4]
nonexchange revenue in support of governmental activities, such as taxes for improvements to roads, are classified as general revenues on the government-wide statement of activieties.

Question 9

a government’s management’s discussion and analysis would include a reconciliation of fund financial statements and government-wide financial statements

is wrong, why?

Answer 9

a reconciliation of fund financial statements and government-wide financial statements would be in basic financial statements, not required supplementary information(MD&A)

Question 10

a government’s management discussion and analysis section would include which of the follows?
1. comparison of prior and current year activities and significant results reported in fund financial statements.
2. comparative fund financial statements, covering at least the past two years.
3. the identity of the primary government and the determination of discrete component units.

Answer 10

1 and 3.
compare the result but not the financial statement!

Question 11

the fund financial statement and government-wide financial statements have [different/same] objectives,
which may [be/not] reconciled on the face of the fund statement or in the notes to the government-wide statements.

Answer 11

different- may be

Question 12

in preparing government-wide financial statements for a governmental entity, interfund receivables and payables between governmental and enterprise funds should be:
1. report as amounts due to and due from other funds
2. reported as reservations of fund balance
3. reported as internal balance
4. reported as additions to or reductions from the unrestricted fund balance

Answer 12

[3]
when governmentwide financial statements are prepared for a governmental entity, interfund receivables and payables that occur between funds categorized as governmental activities and funds classified as business-type activities should be reported as internal balances and aligned so that they sum to zero on the financial statements. they are not eliminated from individual fund activities to the preparation of the government-wide financial statement.

Question 13

the city of S entered into a $35,000 lease properly classified as a lease representing a contract that transfers ownership. to derive its government-wide financial statements, what work paper entry would the city prepare to properly record the lease?

Answer 13

dr: capital assets 35,000
cr: capital outlay expenditure 35,000
dr: other financing sources 35,000
cr: lease liability 35,000

Question 14

major fund treatment

Answer 14

1. 10% of its fund category
2. 5% of combined governmental and enterprise assets, revenue, and expenditure/expenses
3. the general fund, even through it doesn’t meet the criteria, is always treated as a major fund.

Question 15

JE

Regarding subsequent events, our investment in Stock Rubber LLP has experienced significant changes since year-end. The stock price per share at year-end totaled $57.50 and as of today, the stock is trading at $21.50 per share. As a reminder, we currently hold 10,000 shares. Please advise as to whether I need to record an entry in the Year 4 financial statements based on this decrease.

Answer 15

no need

Changes in the fair value of an investment after the balance sheet date (even if significant) are nonrecognized subsequent events.

Question 16

a nongovernmental, NFP entity calculated a $4,000 increase in net assets with donor restrictions.
-a cash donation designed by the donor as an endowment in perpetuity 28,000
-net assets released from restrictions 12,000
-a donation received that was designed as a quasi-endowment 21,000

which of the following should be reported as the increase in net assets with donor restrictions in the current year statement of activities?

Answer 16

[20,000]
+4,000
+28,000
-12,000(it was concluded in with restriction part, so need to be decreased )

quasi-endowment= donor without restriction, so ignore from this computation

Question 17

R withdraw partnership
asset revaluation 230⇒290
L capital: 111, 35%
R capital: 105, 25%
S capital: 154, 40%

R received $18 in cash in addition to the final capital position after the asset revaluation.

bonus method
goodwill method

Answer 17

【bonus method】
1. count asset revaluation
dr: asset 60
cr: L capital 21
cr: R capital 15
cr: S capital 24

2. R withdraw will charge to L, S
   L charged: 18×（35%/75％）＝8.4
   S charged:18×（40%/75％）＝9.6

dr: L capital 8.4
dr: R capital 120(105+15)
dr: S capital 9.6
cr: cash 135

3. count each other
   L=111-8.4+21=123.6
   R=105+15+18=138 →withdraw
   S=154+24-9.6=168.4

【goodwill method】
1. count asset revaluation
dr: asset 60
cr: L capital 21
cr: R capital 15
cr: S capital 24

2. count the goodwill
   goodwill=18/0.25=72
   dr: goodwill 72
   cr: L capital 25.2
   cr: R capital 18
   cr: S capital 28.8
3. count each other
   L=111+21+25.2=157.2
   R=105+18+15=138 →withdraw
   S=154+24+28.8=206.8

Question 18

・dividends on its 1,000 shares of 6%, $10 par value cumulative preferred stock have not been declared or paid for 3 years.
・treasury stock that cost 15,000 was reissued for 8,000

what amount of retained earnings should be appropriated as a result of these items?

Answer 18

[0]

there is no requirement to appropriate retained earnings for any purpose. retained earnings may be set aside for future purposes by classifying a portion as appropriate.
losses on treasury stock would reduce paid in capital in excess of par

Question 19

financial statements should report the construction in progress for the civic center in the
1. capital fund
2. government-wide financial statement

Answer 19

[2]
it would not be in the capital projects fund, since each year’s capital project activities are closed out at year’s end, prior to year-end, construction in progress expenditure of the current year would be reported in the capital project fund.

Question 20

how is accumulated other comprehensive income presented in a company’s balance sheet?
1. as an item of equity following retained earning
2. as an asset or equity, depending on whether the account balance is a debit or a credit.

Answer 20

[1]
the balance is presented after retained earnings and before treasury stock.

Question 21

finance lease payment is cash flow from which activity?

Answer 21

operating

Question 22

P acquired 100% S for 200 on Jan.
S fair value 190, book value 170
inventory BV 70, FV 75 on Dec
land BV 30, FV 50 on Dec

what is goodwill should report in Dec

Answer 22

The goodwill recorded in the acquisition date consolidation workpaper totaled $10,000. This represents the difference between the cash paid for Boof & Mortimer Holdings ($200,000) and the fair value of net assets acquired ($190,000). The initial consolidating journal entry reflected the provisional fair values presented in the valuation report (Valuation Report exhibit). The final valuation report indicated a final fair value for land that was $5,000 higher than initially estimated. As the final valuation report was received by the end of Year 4 and the measurement period does not exceed one year, it is appropriate to use the $50,000 fair value of land in the year-end consolidating journal entry. The goodwill amount of $5,000 is calculated as follows:

Cash paid for investment $200,000
Book value of net assets acquired (170,000)
Difference $30,000

Fair value adjustment—inventories $(5,000)
Fair value adjustment—land (20,000)
Difference = Goodwill $5,000

Question 23

par value method
issuance, buyback, re-sell
use AIPC of ?

cost method
issuance, buyback, re-sell
use AIPC of ?

Answer 23

par value method=APIC-CS
cost method, issuance=APIC-CS
resell=APIC -TS

Question 24

for the year ended Dec 31, a company has a loss carry forward of 180 available to offset future taxable income. however there are no temporary difference.
tax rate 21%.
in its income statement, should recognize an increase in net income of:

Answer 24

[0]
[net operating loss carry forward] can be used in losses,
but deferred asset should be reduced by a [value allowance] based on the [more likely or not] test of expected realization.

Question 25

the portion of special assessment debt maturing in five years, to be repaid from general resources of the government, should be reported in the:
1. government-wide statement of net position
2. general fund

Answer 25

[2]
when special assesssment debt is to be repaid from general resources of the government, the debt should be recorded as general long-term liabilities in the governmental activities column of the government-wide statement of net position .any debt is to be repaid from general resources would be displayed in this way.

Question 26

government-wide financial statement focus on ___ accountability of government.

Answer 26

operational
operational accountability takes an economic view that reports on the long-term efficient and effective use of resources.

fiscal accountability takes a short-term view that focuses the reader on compliance and current year performance.

Question 27

the per-share amount must be reported on the face of a public company’s income statement for which item?

Answer 27

income from continuing operations

Question 28

should debt issuance cost be include in the cost of land?

Answer 28

no. debt issuance costs are presented on the balance sheet as a direct reduction to the carrying amount of bond.

Question 29

the board of trustee adopted a formal resolution designating $20,000 of the proceeds for the future purchase of equipment for the preschool program.
should it be reported as contributions without donor restrictions?

Answer 29

no.
the board’s formal resolution designating $30,000 of the mauring CD for the duture purchase of equipment is a designation within equity not revenues. the designation would not represent contributions without donor restrictions.

Question 30

cost of printing catalogs for a sale promotional campaign
advertising expense or not?

Answer 30

no.

Question 31

Y1 accumulated OCI 340
foreign currency translation loss 30
unrealized gain on AFS debt security 10
unrealized loss on AFS equity security 10
amortization of actuarial pension loss 15
actual return on pension plan assets 65

Y2 OCI?

Answer 31

335=340-30+10+15
only count AFS debt security. amortization pension loss on pension plan asset should be add back

Question 32

for an investment trust fund, the required financial statements are
1.
2.

Answer 32

1. a statement of fiduciary net position(balance sheet)
2. a position of changes in fiduciary net position (income statement)

Question 33

in the reconciliation of the governmental fund balance tot eh net position displayed for governmental activities on the government-wide statement of net position, a government would most likely subtract:
1. capital assets net of depreciation
2. non-current debt
3. other financing sources- debt proceeds
4. internal service fund net position

Answer 33

[2]
+ capital asset net of
- accumulated depreciation
- non-current liabilities
+ service(internal service fund) net position

other financing sources-debt proceeds are presented on the statement of revenues, expenditures, and changes in fund balance. although the amount included on this line item would be subtracted in reconciling the change in fund balance to the change in net position, the activity in this line item would have no impact on the balance sheet reconciliation of governmental fund balance to government-wide net position.

Question 34

which is a condition that must be present in order for the contract modification to be accounted for as a separate contract?
1. the scope of the original contract increases through the addition of distinct goods or services.
2. the performance obligations of the original contract are partially satisfied.

Answer 34

[2]

Question 35

on June 30 the company issued 1000 of 8%, $1,000 bonds at 99.
the bonds were issued through an underwriter to whom H paid bond issuance costs of $35.
on June 30 of the current year, H should report the bond liability at

Answer 35

[955,000=990,000-35,000]
discount or preimium on the sale of bonds as well as the bond issuance costs are included in the carring value of the bonds on the balance sheet.

Question 36

interest paid on a discount bond in a given period is:
1. equal to interest expense less the amortization of the discount
2. equal to interest expense plus the amortization of the discount
3. the coupon rate multiplied by the increasing carrying value each period.

Answer 36

[1]
interest expense in a period for any bond consists of interest paid and the amortization of any discount/premium. for discount bonds, the amortization of the discount is subtracted from interest expense to derive interest paid.

Question 37

dividend received on which cash flow?

Answer 37

operating

Question 38

a city’s bond payable amount due for bonds payable should include bonds payable and
1. capital outlay
2. debt service- principal
3. other financing sources

Answer 38

[2]
bonds payable plus principal payments on debt of 10,000 over the course of the year are used to derive the bonds payable balance at the beginning of the year.

Question 39

stock dividends on common stock should be recorded at their fair market value by the investor when the related investment is accounted for under which method?
1. cost method
2. equity method

Answer 39

no-no
stock dividends and stock splits are not considered income to the recipient. therefore, investors do not record stock dividends at fair market value. they simply reallocate the investment account balance over more shares so that the value per share decreases.
股票股息和股票分割不被視為收款人的收入。 因此，投資者不會以公平市場價值記錄股票股息。 他們只是將投資賬戶餘額重新分配給更多股票，從而降低每股價值。

when a company declared a property dividend of market securities with carrying amount of $60 and fair value of $78. the retained earnings should decrease $60 because the dividend should not be recorded in fair value,

Question 40

when the financial statements of a foreign subsidiary are in the subsidiary’s functional currency, which of the following accounts would be translated at the historical exchange rate?
1. fixed assets
2. APIC
3. retained earnings
4. translation gain or loss

Answer 40

[2]
under the translation method, APIC, CS are translate at the historical rate.

Question 41

A exchange new truck with an old truck from B. the translation has commercial substance.
old book value 57.5(cost 75, accumulated depreciation 17.5),FV 60
A paid for 8 cash in additionally
1. how much A should record new truck
2. gain or loss and how much?

C exchange new truck with an old truck from D
old book value 120(cost 225, accumulated depreciation 105),FV 125
D paid for 15 cash in additionally
1. how much 15 should record new truck
2. gain or loss and how much?

Answer 41

1. 68
2. 2.5
   因爲有商業是指，old 用FV來算
   ——————
   1.105.6
3. 0.6
   dr: new 105.6
   dr: A/D 105
   cr: old 225
   cr: gain 0.6
   沒有商業實質，就要用BV來算

Question 42

net cash provided from financial activities?
1. proceeds from issuance of long-term debt 600
2. increase in capital lease payable 67
3. payments on long-term debt(49)
4. purchase of bond payable 90

Answer 42

[551]
1. financial
2. disclosure
3. financial
4. investing

Question 43

the account of fund-raising expenses?
1. soliciting prospective members of 45
2. printing membership benefits brochures 30
3. soliciting membership dues 25
4. maintaining donor list 10

Answer 43

[10]
1. 攬準會員=membershio development expense
2. 印刷會員福利手冊=membershio development expense
3. 徵集會費=administrative collection function
4. 維護捐助者名單 fund-raising expenses

Question 44

a city report compensated absences liability should be the rate effect in:
1. at the balance sheet day
2. when the unpaid compensated absences were earned

Answer 44

[1]
因爲工資總是上升的，如果在獲得是就計算的話，到員工終止合同的時候（可能是10年後）就會出現負債算少的情況
compensated absent liability should be calculated based on the pay or salary rates in effect at the balance sheet date. the valuation of the non-current liability on the government-wide statement of the net position will be equal to the number of hours employees are entitled to receive upon termination times the rate of pay earned at the balance sheet date

Question 45

gross deferred tax asset=
net deferred tax asset
+?

Answer 45

valuation allowance

gross deferred tax asset×tax rate=temporary difference

Question 46

issued new bond to retire old bond.
increase liability = excess of new bond face value+ old bond (face value/ carrying value)?

Answer 46

carrying value
bond liability on the balance sheet net of [unamortized discount=carrying value]
資產負債表上的債券負債扣除未攤銷折扣

Question 47

4/1 Y2 issued 200 of $1,000 FV bonds at 101 plus accused interest
the bond was dated Nov1, Y1, and bear interest at an annual rate of 9% payable semiannually on Nov1 and May 1. what amount should be received from the bond issuance?

Answer 47

[209,500]
received from the bond issuance=cash

cr: cash 209,500
dr: bond payable 200,000
dr: unamortized bond premium 2,000
dr: bond interest payable 7,500(Nov1 to Mar30, 5months)

Question 48

which cash flow?
-stock option expense

Answer 48

operating. 如果5月份發行，應該計算5-12月之間的費用。

Question 49

fair value= selling value -
1. transportation cost
2. transaction cost

Answer 49

[1]
transportation cost=郵送料, should be decreased from the fair value.
but transaction cost is not need.

Question 50

in a company’s notes to its financial statement, the first note described significant changes in accounting policies.
should the company duplicate a description of its changes to significant accounting policies?

Answer 50

no.
已經在note匯報過就不需要重複匯報。

Question 51

how should state appropriations to a state university choosing to report as engaged only in business-type activities be reported in its statement of revenues, expenses, and changes in net position?

Answer 51

[nonoperating revenues]
receiving stat appropriations represents a non-exchange transaction and will be treated as non-operating revenues. operating grants and subsidies represent non-exchange transactions that are not derived from operations.

Question 52

start-up company incurs significant organizational costs in its first year of operation.
TDA?
TDL?

Answer 52

[TDA]
Organizational expenses are immediately recognized for purposes of financial statement presentation but are amortized for tax purposes over multiple years.

Question 53

with regard to fair value hedge, hedge effectiveness is a measure of the extent to which the:
1.hedge transaction offsets the exposure to changes in the hedged item’s fair value
2.hedge transaction results in eliminating changes in fair value of the hedged item.

Answer 53

[1]
a fair value hedge is hedge of exposure to changes in the fair value of a recognized asset of liability that are attributable to a particular risk.
for an instrument to qualify for hedge accounting, the hedge must be considered highly effective at offsetting the specified risk during the hedge is designed.

Question 54

changed from individual item approach to the aggregate approach in applying the lower of FIFO cost to market to inventories/
the change should report as:
1. a component of income from continuing operations, without separate disclosure.
2. retrospective adjustment on the retained earnings statement, with separate disclosure

Answer 54

[1]
change in principal, so have to retrospective

Question 55

1. derivative instrument not designated for hedge purposes nor held for trading purpose= operating activity/ investment activity?
2. derivative instrument not designated for hedge purposes but is being held for trading purpose= operating activity/ investment activity?

Answer 55

1.investing
2. operating

Question 56

amortization of actuarial pension loss
effect on OCI

Answer 56

increase OCI

Question 57

which will be affected by a non-compensatory stock option/ purchase plan provided to eligible employees under USGAPP?
1.APIC
2.APIC-stock option
3.APIC-expired stock options

Answer 57

[1]
the only journal entry made under a non-compensatory stock option/purchase plan is when the eligible employees purchase the stock. when the common stock is purchased by an employee at a price above its par value, the additional paid-in capital account is credit

Question 58

income tax-base financial statements differs from those prepared under GAAP in that income tax-basis financial statement:
1. Recognize certain revenues and expenses in different reporting periods.
2. include detailed information about current and deferred income tax liabilities

Answer 58

[1]
income tax-basis financial statement recognized revenues when taxable income or deductible expenses are recognized on the entity’S tax return. non-taxable income and non-deductible expenses are shown on the financial statement and included in the determination of income.

Question 59

cash and cash equivalents should use FV/NRV as measurement basis?
treasury bill is or not?
certificate of deposit is or not?

Answer 59

FV
yes-yes

Question 60

A recent small fire at Moore Furniture’s warehouse destroyed office equipment that was previously used by the billing department but was shipped to the warehouse for public sale. The company subsequently filed an insurance claim for the fire damage. The following breaks down the value of the equipment destroyed and the insurance proceeds received for the fire damage:

Original cost of office equipment$17,500
Accumulated depreciation$3,500
Cost to replace equipment$19,000
Insurance proceeds$15,000

gain or loss recognized on equipment destroyed by fire

Answer 60

gain 1,000

NRV of equipment 14,000
Then subtract the NBV from the insurance proceeds received to get the gain or loss.

Question 61

inventory current value less than fixed purchase value, by a material amount.
account treatment?

Answer 61

describe the nature of the contract in a note to the financial statement
★recognize a loss in the income statement
★recognized a liability for the current loss

Question 62

unfinished inventory at a coat of 85, sale value of 125.
the inventory will cost 10.5 to complete.
the normal profit margin is 30% of sale. the replacement cost of the inventory was 75.
what amount should report as inventory on the balance sheet under lower of cost or market?

Answer 62

replacement cost 75
market ceiling NRV 125-10.5=114.5
market floor 114.5-125×0.3=77
market value=middle value=77
77<85, so 77 will be the answer

Question 63

1. working capital turnover
2. return on equity
3. net profit margin
4. return on asset

Answer 63

1. net sale/ average working capital
2. [net income- preferred dividends]/average total equity
3. net asset/ net sales
4. net income / average total asset

Question 64

the conversion from cash basis revenue to accrual basis revenue
1. ending A/R
2. beginning A/R
3. ending contract liability
4. beginning contract liability

Answer 64

1. add
2. subtract
3. subtract (contract liability = unearned revenue)
4. add

Question 65

which of the following items would be reported by a custodial fund?
1. the fund balance
2. current asset and current liabilities
3. statement of cash flows
4. revenues and expenses

Answer 65

[2]
a custodial fund would report a statement of fiduciary net position, which would show the custodial fund’s current assets equaling current liabilities(and no fund balance). it should be noted that custodial funds typically have no year-end balance as the money is periodically transferred to an authorized recipient to clear the fund.託管基金將報告受託人淨頭寸表，其中顯示託管基金的流動資產等於流動負債（且無基金餘額）。 應該指出的是，託管基金通常沒有年終餘額，因為資金會定期轉移到授權接收者以清算基金。

Question 66

government-wide statement of net position
CANS

statement of revenues, expenditures, and changes in fund balance
CPAS RIDES

Answer 66

+Capital asset net of
-Accumulated depreciation
-Non-current liabilities
+Service(internal service fund) net position

Question 67

which is not required to be presented in an exhibit prepared using XBRL when a filer submits From 1–K to the SEC?
1. management’s discussion and analysis
2. statement of comprehensive income
3. summary of significant accounting policies
4. balance sheet

Answer 67

[1]
MD&A is not required to be presented in an exhibit prepared using XBRL. others are required

Question 68

gain on sale =

Answer 68

gain on sale = FV-BV

Question 69

the company operates in an industry that is not subject to seasonal fluctuations that could have a significant impact on its financial condition.
which period is required to present the balance sheet on Form 10-Q?
1. the end of preceding fiscal year
2. the end of the corresponding fiscal quarter of the preceding fiscal year.

Answer 69

[1]
due to the absence of seasonal fluctuations, the end of the preceding fiscal year is the appropriate period to include in addition to the most recent quarter end.

Question 70

small reporting company
1. public equity float
2. annual revenue

Answer 70

1.75 miliion
2. 100 million

Question 71

a change in accounting principle that is inseparable from the effect of a change in an accounting estimate should be reported
1. as a separate disclosure after income from continuing operations, in the period of change and future period if the change affects both
2. as a component of income from continuing operations, in the period of change and future periods if the change affects both.

Answer 71

[2]
應報告與會計估計變更影響密不可分的時候，應該算成是估計變更。因此選2

Question 72

which will not impact OCI?
1. the amortization of prior service costs.
2. gains from the actual return exceeding the expected return on plan assets
3. the increase in plan benefits applied retroactively
4. contributions to a plan made by the company itself

Answer 72

[4]
a company contributing to its pension plan will impact the funded status of the plan, but it will have no impact on OCI.
1. prior service cost( in the period incurred) and the amortization of prior service cost will impact OCI.
2. when a pension plan earns more on its asserts than expected, this gain will go into OCI
3. the decision to increase pension plan benefits and apply them retroactive will impact OCI

Question 73

hedge currency
to net income or OCI?

Answer 73

net income.
should count together with other net income hedge like fair value hedge