[jeff]

@h0wdyus

Incorrect

The answer is B. Comparable sales.

“The use of comparable sales is not an income approach to valuation of a business, it is a market approach. Under the comparable sales approach, the value of a business is determined by comparing it to other entities with comparable characteristics for which the value is more readily determinable.”

This was a tricky one

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[h0wdyus]

stoleway is back in action. 🙂

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[stoleway]

I thought it was call provision but its wrong, see explanation below. I'm forced to dispute it and maintain C

B is correct

Sinking funds are designed to reduce the risk to bondholders by gradually reducing the amount of debt the firm has outstanding. In order to enforce the sinking fund provision, the bonds are often used with a call provision. uf

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[h0wdyus]

🙂 another poorly worded question to make sure it is not testing your knowledge.. Keep em coming .

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[stoleway]

Which of the following is an advantage of computer systems over manual processing?

A Elimination of computational errors and errors processing routine transactions

B Significant cost reductions to the organization in both terms of time and money

C Faster processing times resulting in shorter accounting cycles

D Elimination of antiquated processes and procedures

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[h0wdyus]

I am going to go with A.. though I am leaning towards B too.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[stoleway]

I thought B was very compelling but A is correct.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[h0wdyus]

Cost for the computer systems can be substantial too. So I chose A. B can be it too. Trickery.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[Portia]

@schizokitten

I am having the same problem w B3.1.

did you get a response with a fix. If yes, can you please post.

Thanks,

Portia

[WANNABE_CPA]

I cant understand this question :

For the next 2 yrs, a lease is estimated to have an operating net cash inflow of $7500 per annum, before adjusting for $5000 per annum tax basis lease amortization, and a 40% tax rate. The present value of an ordinary annuity of $1 per year at 10% for 2 years is $1.74. What is the lease's after tax present value using 10% discount factor?

A. $11310

B. $9570

C. $2610

D. $4350

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[stoleway]

@WANNABE_CPA

The investment will generate $7500 cash inflow

Depreciation will be $5000

NPV = PV factor x after tax free cashflow

(NOTE: this is another method of solving for NPV when initial investment is not given)

Free Cashflow = 7500 x .6 ( after tax operating cash flow) + 5000 x .4 (depreciation tax shield)

= 4500 + 2000

= 6500

Therefore

NPV=1.74 X 6500

=11310

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[WANNABE_CPA]

Thanks stoleway…got it now 🙂

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[RandomAlt]

Playing lunch break catch-up…

I like this question…I feel like this is the type of question that trips people up on the exam if they don't read carefully.

Kim Co.'s profit center Zee had 2004 operating income of $200,000 before a $50,000 imputed interest charge for using Kim's assets. Kim's aggregate net income from all of its profit centers was $2,000,000. During 2004, Kim declared and paid dividends of $30,000 and $70,000 on its preferred and common stock, respectively.

Zee's 2004 residual income was

$140,000

$143,000

$147,000

$150,000

FAR - [10/07/2013 --> 66] [07/07/2014 --> 86]
BEC - [08/31/2014 --> 86]
AUD - [11/24/2014 --> 88]
REG - [02/14/2015 --> 92]

[stoleway]

operating income of $200,000 – $50,000 imputed interest charge = $150,000?

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[h0wdyus]

No idea.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

I was thinking of dividend and total income of 2 mill and the residual income after declaring dividend.

RI = Net Income less cost of capital is also residual income.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[Author]

Replies