Wiley CPAexcel® Summary of July 2016 Content Updates July 1, 2016 The July 2016 Wiley CPAexcel product updates are now available All updates align with recent AICPA changes to the CPA Exam, including the addition of Document Review Simulations (DRS) This document provides a summary of what has changed Need to access your updated products? Log in Committed to passing the exam in 2016? Shop Products efficientlearning.com/cpa Want to take a free test drive? Free Trial Wiley CPAexcel® July 2016 Content Updates AUD | Auditing and Attestation AICPA CSO Changes: None Pronouncement Changes: SAS No 130 and No 131 eligible for testing January 1, 2017 Wiley Changes Statement on Auditing Standards No 130, “An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements.” SAS No 130 will be eligible for testing on the CPAExam in January, 2017 Until that time, this topic is covered by Statement on Standards for Attestation Engagements No 15, “An Examination of an Entity’s Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements.” Candidates for testing in 2016 will be responsible for being familiar with SSAE No 15 Candidates for testing in 2017 will, instead, be responsible for being familiar with SAS No 130 The Wiley CPAexcel materials included coverage of both sets of standards along with guidance as to which standards are applicable to 2016 and which standards are applicable to 2017 The good news is that there is a great deal of similarity between the requirements under SSAE No 15 and SAS No 130 Statement on Auditing Standards No 131, “Amendment to Statement on Auditing Standards No 122 Section 700, Forming an Opinion and Reporting on Financial Statements.” This pronouncement addresses a somewhat technical issue that is relevant to an audit that is conducted in accordance with the standards of the PCA OB when the audit is not actually under the jurisdiction of the PCAOB Such a circumstance involves changing the language used (in a rather minor way) in the auditor’s report The study materials dealing with the introduction of the auditor’s reporting language (for audits of nonissuers) shows how the auditor’s report would be changed to address such a circumstance BEC | Business Environment and Concepts AICPA CSO Changes: None Pronouncement Changes: None Wiley Changes Corporate Governance: No changes Economic Concepts and Analysis: All economic data and graphs used in the study material was updated to reflect the most current statistical data available Financial Management: Some minor topics were added to the CPAexcel study material, including: Present value of a perpetual annuity Raising equity through crowdfunding Preauthorized debit/credit card charges Need to access your updated products? Log in Information Systems and Communications: Revised the BEC IT content to reflect Changing technologies, e.g., increasing use of biometric and multi-factor security systems, Increased emphasis on system security and controls Strategic Planning: No changes Operations Management: A new Balanced Scorecard (BSC) example was inserted into the BSC lesson to increase the possibilities of students becoming more familiar with different metrics and thus classifying them successfully (i.e., into one of the four BSC categories) These include (1) Financial, (2) Customer, (3) Internal Business Processes, and (4) Learning and Growth Committed to passing the exam in 2016? Shop Products efficientlearning.com/cpa Want to take a free test drive? Free Trial Page Wiley CPAexcel® July 2016 Content Updates FAR | Financial Accounting and Reporting AICPA CSO Changes: None Pronouncement Changes: * Eligible for testing in July 2016 Eligible for testing in January 2017 FASB ASU 2015-16 FASB ASU 2015-11 FASB ASU 2016-03 FASB ASU 2015-17 GASB Statement No 77 FASB ASU 2016-5 GASB Statement No 78 FASB ASU 2016-6 GASB Statement No 79 FASB ASU 2016-7 FASB ASU 2016-9 GASB Statement No 80 * Not all pronouncements will impact a "newly-licensed" CPA and are, therefore, not likely tested Wiley Changes Financial Accounting FASB ASU 2015-11 | Simplifying the measurement of Inventory: Use of LC-NRV GASB Statement No 80, “Blending Requirements for Certain Component Units” FASB ASU 2015-16 | Simplifying the accounting for measurement period adjustments GASB Statement No 81, “Irrevocable Split-Interest Agreements” FASB ASU 2015-17 | Classification of deferred taxes GASB Statement No 82, “Pension Issues,” which replaces “covered employee payroll” in GASB Statement No 67, 68, and 73 FASB ASU 2016-3 | Adoption of PCC standards FASB ASU 2016-7 | Transition to equity method In addition, “Refreshed” the following lessons FASB ASU 2015-03 | Accounting for bond issue costs Accrual accounting Not-for-Profit Organizations: No substantive changes Special purpose frameworks Governmental Organizations LTD lessons GASB Statement No 77, “Tax Abatement Disclosure,” Equity lessons GASB Statement No 78, “Pensions Provided through Certain Multiple-Employer Defined Benefit Plans” Non-monetary exchanges GASB Statement No 79, “Certain External Investment Pools and Pool Participants” Need to access your updated products? 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Free Trial Page Wiley CPAexcel® July 2016 Content Updates REG | Regulation Eligible for testing in October 2016 AICPA CSO Changes: None Pronouncement Changes: Bankruptcy code inflation adjustments Eligible for testing in July 2016 Eligible for testing in January 2017 Annual tax changes Removal of Dodd-Frank content December 2015 extended tax provisions New due dates that are effective for returns whose tax year begins after 12/31/15 Wiley Changes Ethics, Professional, and Legal Responsibilities: No substantive changes Business Law Bankruptcy: Every years, the bankruptcy figures are reviewed and indexed appropriately In 2016, the 2013 bankruptcy figures will be tested through the Q3 testing window The 2016 indexed bankruptcy figures are eligible for testing October 1, 2016 Bankruptcy Figures 2013* 2016** Unsecured debt limit $383,175 $394,725 $1,149,525 $1,184,200 Unsecured claim 12 or more unsecured creditors need creditors with aggregate of this amount $15,325 $1,5775 Unsecured claim fewer than 12 unsecured creditors any one creditors with this amount $15,325 $1,5775 Maximum homestead equity state $155,765 $160,475 Maximum federal homestead exemption married $45,950 $4,7350 Motor vehicle $3,675 $3,775 $575 $600 Total of household items $12,250 $12,625 Tools of trade $2,300 $2,375 Bodily injury $22,975 $23,675 Secured debt limit † Household items up to/per item Jewelry $1,550 $1,600 Contributions to employee benefit plans $12,475 $12,850 Claims of farm producers and fishermen $6,150 $6,325 Consumer creditors $2775 $2,850 * Good for exam through Q3 2016 testing window ** Good on/after October 2016 † The wage claim priority has gone from 90 days to 180 days, like the pension, retirement claims (5th in order of distribution) Need to access your updated products? 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Free Trial Page Wiley CPAexcel® July 2016 Content Updates Bankruptcy Figures 2013* 2016** Luxury goods within 90 days $650 $675 Cash advance within 70 days $925 $950 Federal Tax Process, Procedures, Accounting, and Planning Deductions for AGI and Itemized Deductions: These have been extended to 2015 and 2016 Most Important Updates for 2016 Tax Law tested beginning July 1, 2016 Qualified higher education expenses Property Transactions Deduction of greater of sales taxes or state income taxes Capital Gains and Losses Premiums for qualified mortgage insurance related to acquisition indebtedness on a qualified residence are treated as qualified mortgage interest Certain educator expenses Qualifying small business stock: Gains from the sale of qualifying small business stock by noncorporate taxpayers are eligible for a 100% exclusion Up to $100,000 of distributions from an IRA will be tax-free if contributed to a charitable organization by an individual age 70 or over Section 1231 Assets: Cost Recovery Qualified leasehold improvement property, qualified retail improvement property, and qualified restaurant property are depreciable under the straight-line method over 15 years using the half-year convention Individual Tax Issues AMT and Other Taxes No AMT adjustments are required for assets purchased in 2008–2016 that use bonus depreciation Bonus depreciation: Bonus depreciation of 50% is allowed for new qualifying property placed in service in 2015 and 2016 Qualifying Small Business Stock (QSBS) For QSBS that was purchased before September 28, 2010, the general rule for this preference item is that 7% of the gain excluded from income under the qualified small business stock provision (see the “Capital Gain and Losses” lesson for more detail) is a preference item for the AMT Gain is excluded only if the stock was held for more than five years, so note that stock qualifying for this exclusion that was sold in 2016 would have been purchased before December 31, 2011 Section 179: The maximum amount expensed in any year is limited to the lesser of business income or $500,000 for 2015 and 2016 The Section 179 election is phased out (dollar for dollar) if qualified assets purchased exceed $2,010,000 for 2016 ($2,000,000 for 2015) Deductions Basic Principles Capitalization Regulations: Taxpayers can elect under the de minimis safe harbor election to expense outlays for lowercost items The election is irrevocable This safe harbor applies if the taxpayer: Gain on the sale of qualified small business stock that was acquired after September 27, 2010, and is sold more than five years after the purchase date will not be subject to the AMT This gain is also completely excluded from regular tax Tax Credits (Personal and Business) –– Has written procedures in place at the beginning of the tax year that provide for the expensing of amounts below a specified dollar amount, or that have a useful life of 12 months or less, A taxpayer who erroneously claims the child credit due to intentional disregard of the rules is ineligible to claim the credit for a period of two tax years If the credit is claimed due to fraud the period is extended to 10 years –– Also expenses the items for its accounting/book records, and Alternative motor vehicle credit extended to 2015 and 2016 –– Insures that items costing more than $5,000 are capitalized $2,500 if the company does not have acceptable (generally meaning audited) financial statements Need to access your updated products? Log in Committed to passing the exam in 2016? A taxpayer who erroneously claims the earned income credit due to intentional disregard of the rules is ineligible to claim the credit for a period of two tax years If the credit is claimed due to fraud the period is extended to 10 years Shop Products efficientlearning.com/cpa Want to take a free test drive? Free Trial Page Wiley CPAexcel® July 2016 Content Updates Work opportunity tax credit extended to 2015 and 2016 Research credit extended to 2015 and 2016 Corporations Special Corporate Deductions A corporation’s contribution of inventory or real property used in its trade or business to charities that use the property in a manner related to the exempt purpose and solely for the care of the ill, needy, or infants, or where the property is used for research purposes under specified conditions, is subject to special rules The deduction is the lower of: AB of property + 50% x (FMV – Adjusted Basis), or x Adjusted Basis This rule applies for contributions of “wholesome” food inventory by corporations and other businesses to charities that use the food in an appropriate manner These contributions can also be deducted up to 15% of taxable income (instead of the regular 10% limit) Note that this rule applies to all businesses, not just corporations S Corporations Income and Basis: The following provision was made permanent If an S corporation contributes appreciated property to a charitable organization, the corporation can deduct the fair market value of the property However, S corporation shareholders can reduce their basis by only the contributed property’s basis Distributions and Special Taxes: The following provision was made permanent The Built-In Gains Tax can only be imposed for a period of years after the S election is made Tax Research and Practice Compliance Responsibilities Statute of Limitations: The statute is extended to six years if more than 25% of the gross income is understated on the original tax return The six year rule also applies if the understatement in income is due to the overstatement of the basis of an asset Summary of Due Dates beginning in 2016 Tax Return Regular Due Date* Extended Due Date** Individual 15th day of 4th month months Corporation calendar year 15th day of 3rd month months Corporation june 30 15th day of 3rd month months Corporation all others 15th day of 4th month months S Corporation 15th day of 3rd month months Partnership 15th day of 3rd month months Fiduciaries estates and trusts 15th day of 4th month 1/2 months Tax-Exempt Organizations 15th day of 5th month months months after date of death month Estate Tax * Months after Year-End ** Months after Regular Due Date Preparer Penalties: If the understated tax liability is due to an unreasonable position and the preparer willfully attempts to understate the tax liability or recklessly or intentionally disregards rules or regulations, the penalty is the greater of $5,000 or 75% of the income earned by the tax preparer for preparing the return or claim Additional penalties may be imposed on preparers for: Not signing returns done for compensation ($50 per failure; maximum of $25,500 per year; 2016) Not providing a copy of the return for the taxpayer ($50 per failure; maximum of $25,500 per year; 2016) Not keeping a list of returns filed ($50 per failure; maximum of $25,500 per year; 2016) The same penalty applies for not keeping a list of tax return preparers hired to prepare returns $510 (2016) for each instance of endorsing or negotiating a refund check Failure to provide the taxpayer’s identifying number on the return ($50 per failure; maximum of $25,500 per year; 2016) preparer can be fined $500 per failure if he or she does not exercise due diligence in determining if a taxpayer is eligible for the earned income credit, child tax credit, or American Opportunity tax credit Need to access your updated products? 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Free Trial Page Wiley CPAexcel® July 2016 Content Updates DRS | Document Review Simulations Over 10 Document Review Simulations have been added to the Wiley CPAexcel Test Bank To access them, log in and navigate to the simulations section AUD DRS Test Bank Simulations Module Engagement Planning Assignment 22 Auditing & Attestation Planning Activities Risk, Materiality, Analysis and Fraud Audit Risk Question ID : tbs.AUDDocrev001 DRS Test Bank Simulations Module Internal Control Assignment 38 Auditing & Attestation Internal Control Concepts and Standards Internal Control Concepts Question ID : tbs.AUDDocrev002 DRS Test Bank Simulations Module Evidence Assignment 66 Auditing & Attestation Audit Evidence Specific Audit Areas Cash Question ID : tbs.AUDDocrev004 DRS Test Bank Simulations Module Evidence Assignment 66 Auditing & Attestation Audit Evidence Specific Audit Areas Inventory Question ID : tbs.AUDDocrev003 DRS Test Bank Simulations Module Reporting Assignment 112 Auditing & Attestation Audit Reports Qualified for Misstatement Question ID : tbs.AUDDocrev005 FAR DRS Test Bank Simulations Module Inventory Assignment 64 Financial Statement Accounts Inventory Question ID : tbs.TBSDocrev0002 DRS Test Bank Simulations Module Derivative Instruments and Hedging Activities Assignment 195 Specific Transactions, Events and Disclosures Commitments, Contingencies, and Guarantees Question ID : tbs.FARDocrev002 DRS Test Bank Simulations Module Statement of Cash Flows Assignment 64 Financial Statement Accounts Cash Bank Reconciliations Question ID : tbs.FARDocrev001 DRS Test Bank Simulations Module Monetary Current Assets and Current Liabilities Assignment 108 Financial Statement Accounts Long-Term Debt (Financial Liabilities) Troubled Debt Restructuring by Debtors Question ID : tbs.FARDocrev004 Need to access your updated products? 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Free Trial Page Wiley CPAexcel® July 2016 Content Updates FAR DRS Test Bank Simulations Module Deferred Taxes Assignment 131 Financial Statement Accounts Deferred Compensation Arrangements Pension Expenses Question ID : tbs.FARDocrev005 REG DRS Test Bank Simulations Module Property Assignment 81 Federal Taxation Property Transactions Section 1231 Assets Cost Recovery Question ID : tbs.REGDocrev001 DRS Test Bank Simulations Module Corporate Taxation Assignment 115 Federal Taxation Corporate Taxation Formation of a Corporation Question ID : tbs.REGDocrev002 DRS Test Bank Simulations Module Individual Taxation Assignment 101 Federal Taxation Individual Tax Issues Filing Status Question ID : tbs.REGDocrev003 DRS Test Bank Simulations Module Individual Taxation Assignment 125 Federal Taxation Distributions Question ID : tbs.REGDOCrev004 DRS Test Bank Simulations Module Individual Taxation Assignment 138 Federal Taxation Estate and Gift Taxation Federal Estate Tax Question ID : tbs.REGDocrev005 Need to access your updated products? Log in Committed to passing the exam in 2016? Shop Products efficientlearning.com/cpa Want to take a free test drive? Free Trial Page ... the exam in 2016? Shop Products efficientlearning.com /cpa Want to take a free test drive? Free Trial Page Wiley CPAexcel® July 2016 Content Updates FAR | Financial Accounting and Reporting AICPA... passing the exam in 2016? Shop Products efficientlearning.com /cpa Want to take a free test drive? Free Trial Page Wiley CPAexcel® July 2016 Content Updates Bankruptcy Figures 2013* 2016* * Luxury... in Committed to passing the exam in 2016? Shop Products efficientlearning.com /cpa Want to take a free test drive? Free Trial Page Wiley CPAexcel® July 2016 Content Updates REG | Regulation Eligible