Misc CPA FAR

Question 1

Indirect cash flow Add back to net incom

Answer 1

Depreciation expense Amortization expense Depletion expense Losses Loss under equity method actg Amortization of premium bond investments Amortization of discount on bonds payable Decreases in current assets Increase in unearned revenue

Question 2

Indirect method Subtract from net income

Answer 2

Gains Amortization of discount on bond investments Amortization of premium on bonds payable I distributed income under equity method of actg investment Increases in current assets Decreases in current liability Decreases in unearned revenue

Question 3

Dividend received JE equity method

Answer 3

DR: cash CR: investment in invested

Question 4

Amortization of discount on BP JE

Answer 4

DR Cash DR Discount CR Bonds Payable

Question 5

Accrual to Cash Basis Equation

Answer 5

Add decrease AR, Add decrease PPDs, add increase accrued expense add increase unearned revenue

Question 6

Steps of recording implicit interest on NR

Answer 6

1- loan amt x pv of 1 2- loan amt x interest % x pv of annuity 1+2= pv of loan 3- implicit interest rate x pv of loan = interest rev 4- face amt of loan x stated rate = cash 5- difference +- carrying value of loan

Question 7

Dollar value FIFO conversion index

Answer 7

Ending inventory @cy dollars divided by ending inventory in base year dollars

Question 8

Dollar Value LIFO Base year dollars

Answer 8

Specific price level at beginning of the year in which the firm adopted LIFO Index is multiplied by increase in inventory for the year measured in current cost

Question 9

Troubled debt restructure

Answer 9

If debt settled pv of consideration paid less than carrying value of debt If debt is modified pv of restructured cash flows is less than carrying value of debt at restructure

Question 10

Troubled debt restructure debtor gain

Answer 10

Gain equal to the bv of debt including unpaid accrued interest less market value of consideration transferred Ordinary g/l in disposal of nonmonetary assets transferred in full

Question 11

Book value per share

Answer 11

Total owners equity- liquidating p/s / outstanding shares c/s

Question 12

Gross profit formula

Answer 12

Sales-cgs/sales

Question 13

Deferred GP

Answer 13

Sales -cash collected x GP%

Question 14

Bonus equation

Answer 14

Bonus=%(net income - bonus)

Question 15

Group/Composite Sale

A company using the composite depreciation method for its fleet of trucks, cars, and campers retired one of its trucks and received cash from a salvage company. The net carrying amount of these composite asset accounts would be decreased by the

Answer 15

Cash Proceeds Received

When applying group or composite depreciation methods, when one sells an asset, the cost of the asset is removed, and the accumulated depreciation is assumed to be equal to the difference between cash received and cost. When the asset cost and this accumulated depreciation amount are both removed, the carrying amount of the asset accounts is decreased by the cash proceeds exactly.

Question 16

Grants Recorded in Fund Statements

Answer 16

Grants are recorded as revenues in the fund statements

Question 17

Cost to Retail Method

Hutch, Inc., uses the conventional retail inventory method to account for inventory. The following informa­tion relates to current-year operations:

Average
Cost Retail
Beginning inventory and purchases $600,000 $920,000
Net markups 40,000
Net markdowns 60,000
Sales 780,000

What amount should be reported as cost of sales for the current year?

Answer 17

In the retail column, add the beginning inventory and purchases to the net markups for a subtotal of $960,000:

$920,000 + $40,000 = $960,000

Next, divide the cost of $600,000 by this subtotal:

$600,000 ÷ $960,000 = 0.625

Then, get the ending inventory at retail, the $960,000 subtotal less the net markdowns and sales for a total of $120,000:

$960,000 – $60,000 – $780,000 = $120,000

Multiply the ending inventory at retail by the cost to retail percentage of 0.625 (62,5%) to reach the ending inventory at cost:

$120,000 × 0.625 = $75,000

Cost of sales is the beginning inventory and purchases at cost, less the ending inventory at cost:

$600,000 – $75,000 = $525,000