Please use the information below to access the Authoritative Literature for the research Task Based Simulation Questions.
You should have received 6-month access to authoritative literature from NASBA. If you didn't, no worries -- simply use the instructions below (no NTS needed!)
For FAR, you'll be researching within the FASB's Accounting Standards Codification (ASC).
Free access to the ASC is available to anyone with an email address -- no NTS needed.
o To sign up for Basic View access, go here: https://www.fasb.org/store/subscriptions/fasb/new
o Scroll down to the Select button at the bottom of the screen. That is the button for choosing the free Basic View.
o Once you press the button, you will be taken through the registration process, during which you must provide an email address.
• AUD – For AICPA auditing standards, go to the free materials located on the AICPA website here. Go to free PCAOB auditing standards here. Go to AICPA review and compilation standards here.
• REG – Access the Internal Revenue Code through Googling, e.g. ‘IRC Partnership Tax Year Election,’ and going to free sites with the IRC in easy-to-read format, usually the ones offered through Cornell University Law School.
In addition, for REG the online AICPA sample test provides a nice big chunk of the IRC you can search through and get familiar with the exact same tools and research methods you'll have available on the exam. It's a little confusing getting to the TBS section in REG, where you'll find the Authoritative Literature tab, so here are instructions for getting there:
• Open the AICPA Sample Test in a separate browser window with Internet Explorer. Please note the AICPA Sample Test can only be viewed with Internet Explorer. So you could have IPQ open with your preferred browser, e.g., Chrome, and have the Sample Test open in Internet Explorer, and simply toggle between them with ALT+TAB as you work on a REG research question.
• On the link given above, where it says To access the Sample Tests, click here, click here. Remember you need to be in Internet Explorer
• A Welcome screen appears. Press the arrow button at the top right (looks like a Play button on a remote).
• A New Item Type screen appears. Press the arrow button again.
• A Displayed Values in spreadsheet tool screen appears. Press the arrow button again.
• The Main Menu screen appears, with all the exam sections. Choose REG by clicking its button.
• A REG welcome screen appears. Press the right arrow button at the top right.
• You are now in the REG MCQ sample testlet. We want to get to the TBS testlet, so ignore the navigation buttons at the bottom and press the Submit Testlet button at the top right.
• Now you're back to what appears to be the REG welcome screen. Press the right arrow button at the top right.
• This is the TBS testlet! Navigate to the first TBS by pressing the Next button at the bottom right.
• In this TBS or any TBS in this testlet, you have full access to the exact same IRC Authoritative Literature as what you'll see on the exam, via the Authoritative Literature tab.
OK, here is a step-by-step walkthrough of a research question for FAR, AUD, and REG:
A client has discontinued manufacturing a specific product and, as a result, has retired certain machinery and equipment that was used in the manufacturing process. The client intends to attempt to sell the assets to another manufacturer. Identify the location in professional standards that indicates how a long-lived asset classified as held for sale should be measured.
1. Log in to your FASB ASC Basic View. You will see a left-hand sidebar with the broad topics of the Codification: General Principles, Presentation, Assets, etc. On the right of the screen is a FASB information page headed What’s New.
2. This question seems to concern assets. Mouse over Assets in the left-hand sidebar. You will see a popup with subcategories of assets: 305 – Cash and Cash Equivalents, 310 – Receivables, etc.
3. Let’s try 340 – Other Assets. Mouse over Other Assets. Another popup appears.
4. Hmm. Judging from the items in this new popup, this does not appear to be the place where we can find out how a long-lived asset classified as held for sale should be measured.
5. Maybe it could be in Property Plant and Equipment – after all, the question is asking about a *long-lived* asset. Mouse over Assets again from the sidebar, then mouse over 360 – Property, Plant & Equipment in the resulting popup.
6. Hmm. In this PP&E popup, the only item that might be relevant is 10 – Overall. So let’s click on that.
7. Now the ‘What’s New’ FASB information page has been replaced with the excerpt you clicked on from the ASC, 360 – Property, Plant & Equipment 10 –Overall.
8. You have several choices for things you can take a close look at. The most important ones are: 05 Overview and Background, 25 Recognition, 30 Initial Measurement, 35 Subsequent Measurement, 40 Derecognition, 45 Other Presentation Matters, and 50 Disclosure.
9. Which one of these seems most relevant to the question? Long-lived assets classified as held for sale… hmm, doesn’t sound like Recognition, or *initial* measurement. Sounds more like Subsequent Measurement? Right. Let’s try that. Click the plus sign to expand 35 Subsequent Measurement.
10. Oooh! It expands to show General and Impairment or Disposal of Long-Lived Assets! Looks like we’re close! Click on Impairment or Disposal of Long-Lived Assets!
11. Now we’re in some searchable text. Let’s see, what would a good search term be? How about ‘sale?’ Press CTRL+F, enter the word ‘sale,’ and press Enter.
12. Whoah! There it is! 35-37 Long-Lived Assets Classified as Held to Sale! This has to be it! Let’s read it to make sure it answers the question.
13. Darn. Upon reading this bit of the Codification, it does NOT seem to answer the question. But it gives a link to click on: See paragraphs 360-10-45-9 through 45-11 for the initial criteria to be met for classification as held for sale. It doesn’t sound like what we’re looking for, but let’s click the link anyway…
14. Nope. Not what we’re looking for. Hit the Back button to return to the previous page.
15. Let’s try that CTRL+F for ‘sale’ again. Searching through the results, we finally arrive at the jackpot:
16. 35-43 Accounting While Held for Sale: A long-lived asset (disposal group) classified as held for sale shall be measured at the lower of its carrying amount or fair value less cost to sell. (…). THAT’S THE ANSWER.
17. So make a note of ’35-43,’ then scroll to the top to get the rest of the ASC reference: 360-10-35, oh and that’s the same 35. So the total answer is: 360-10-35-43.
I double-checked and yes, that is the right answer according to IPQ.
On the exam, CTRL+F will not work in the FASB ASC Authoritative Literature tool. Search Within can be used in its place, but keep in mind that Search Within is more limited than CTRL+F. For instance, if 'credit card fees' is a phrase in the searchable text, Search Within will reveal results if you Search Within on credit but will yield no results if you Search Within on cred.
Kerrington, CPA, is trying to determine if the engagement time has obtained sufficient appropriate audit evidence to support an opinion on the financial statements. One concern is the reliability of the evidence obtained and Kerrington is trying to determine if some forms of evidence are considered more reliable than others.
1. Which title of Professional Standards addresses this issue & will be helpful in understanding whether certain forms of audit evidence are more reliable than others?
2. Enter the exact section and paragraph with helpful information.
OK, so let's try an internet search, AU-C AICPA reliability of audit evidence. Our hope is that this search will help us find the AU-C section containing the answer.
AU-C 500 is the first search result, so let's go in there and see what we can find.
Search on reliab in AU-C 500; that way, you'll hit on both the word 'reliable' and 'reliability.'
Going through each of the search results, we hit upon paragraph .A32, headed Reliability, which seems to give guidelines for gauging the reliability of audit evidence based on its source and nature. It definitely seems as if it could be the answer.
Is it the answer? - Yes, it is! Hurray!
Bonus -- here is an AUD research question you can work through that uses the limited AUD Authoritative Literature available in the AUD TBS area of the AICPA Sample Test:
Mike, CPA, audits the financial statements of Ike, Inc., a private company, in March of 2017. In June of 2017 Ike, the CEO of Ike, Inc., asks Mike to provide more copies of the audit report in order to present them to First Bank, from whom Ike hopes to obtain a loan. In this situation, what are Mike's responsibilities regarding events occurring since the date of the audit report?
Click here for the answer.
A taxpayer has purchased a delivery truck and is trying to determine if it is 5-year property.
Which code section, subsection, paragraph, and subparagraph indicates what is included in 5-year property?
Access the REG Authoritative Literature in the AICPA Sample Test using the steps given above.
Now that you’re in REG Authoritative Literature, let’s try and search for the answer to this research problem.
First, click on Internal Revenue Code in the left sidebar. Subtitle A and Subtitle B appear.
Click Subtitle A, Income Taxes.
IPQ 321 has a very simple prompt, “a taxpayer has purchased a delivery truck and is trying to determine if it is a 5-year property. which code section, subsection, paragraph, and subparagraph indicates what is included in 5-year property?”
Very tricky! Not a lot to go on here. It’s depreciation…classes of property…we’re looking for the 5-year class…maybe search on “5-year property?”
So up in the search bar, type in “5-year property” . Quotes included. Hyphen removed upon instructions that appear in red. So – search term “5 year property” , no hyphen.
Five results appear. The first one looks pretty good – Section 168, Accelerated cost recovery system. This question definitely concerns MACRS, the accelerated cost recovery system, so it seems relevant. So, click on that first result.
Scrolling through the result, very soon we get to what appears to be paydirt:
(B) 5-year property. The term “5-year property” includes –
A long list of items considered 5-year property ensues.
So now we have to figure out the full citation, meaning the full Section – Subsection – Paragraph – Subparagraph asked for in the question. A good way to do this is to scroll up, after first noting we are in Subparagraph B of some Paragraph.
Ah-ha. There it is. It appears this Subparagraph B is part of Paragraph (3) Classification of certain property. Now which Subsection is this Paragraph part of? Scroll up to find out.
There it is! Subsection (e) Classification of property
And we already know we’re in Section 168, right?
So there’s your answer: 168 (e) (3) (B), which is indeed the correct answer in IPQ.
We hope you find these instructions and walkthroughs helpful. A little practice on research questions goes a long way -- the operational Research TBS on FAR, AUD, and REG is unambiguous and straightforward, so it's an easy way to chalk up points toward your scale score. Theoretically, the Research TBS counts 6.7% toward your AUD and FAR scores, because 1/6 x 40% = 6.7%, and 8% toward your REG score, because 1/5 x 40% = 8%.
The Roger CPA Review Team