Day 16

Question 1

I’m a NFP, how are Endowment funds and donor restricted funds classified on the Stmt of financial position?

Answer 1

Non-Current Assets

MCQ-01268

Question 2

When are Cash Contributions and Unconditional Pledges recognized as Contribution Revenue?

Answer 2

Rule: in the year in which the cash or pledge is received

MCQ-01212

Question 3

How should unconditional Pledges received by a nongovernmental NFP organization that will be collected over more than one year be reported?

Answer 3

Pledges Receivable - valued at their PV

MCQ-05951

Question 4

The market value of a bond issued at a discount (or a premium) is the PV of two cash flows:

Answer 4

1. The PV of the Principal Amount
   PLUS:
2. The PV of all future Interest Payments
3. Both at the market (effective) rate of interest

MCQ-00646

Question 5

Interest Paid on a discount bond in a given period equals:

Answer 5

Equals Interest Expense LESS the Amortization of the Discount

MCQ-01251

Question 6

If a leased equipment transfers ownership how should the equipment be depreciated?

Answer 6

Like a normal asset

Capitalized value of the lease
LESS:
Salvage Value ÷ Useful Life

MCQ-00581

Question 7

ABC purchased 30% of XYZ for $200k at the time of the purchase XYZ Stockholders Equity was $500k and the Fair Value of their net identifiable assets was $600k. What amount of Goodwill should ABC record for this transaction?

Answer 7

Investment $200k
LESS:
FV × Ownership % ($600k × .3 = $180)

Goodwill = $20k

MCQ-00289

Question 8

At the inception of a Finance Lease, the Residual Value expected to be owed at the end of the lease term should be:

Answer 8

Included as part of the minimum lease payments @ PV

The Residual Value expected to be owed at the end of the lease term (Purchase Option) = an additional lease payment and MUST be included in the PV calculation of minimum lease payments

MCQ-00403

Question 9

How should a Lessee record an Operating Lease that has a variable payment option?

Answer 9

Rule: The Lessee shall record an operating lease as lease expense using STRAIGHT LINE BASIS

MCQ-00566

Question 10

On 1-1-23, ABC issued a $100,000 par value, 5% five year bonds when the market rate of interest was 8%. Interest is payable annually on December 31.

What is the value of net Bonds Payable at the end of year 1?

Answer 10

$100,000

JE:
DR Cash $88,022
DR Discount $11,978
CR Bond Payable $100,000

MCQ-04225

Question 11

What is the initial carrying value of a lease liability?

Answer 11

The PV of the payments

Note: when calculating the CV after the first payment, you need to subtract the interest component of the lease

MCQ-08770