[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

[RandomAlt]

C is correct, and your explaination is spot on.

Next! A fund computation problem

Wexford Co. has a subunit that reported the following data for year 1:

Asset (investment) turnover

1.5 times

Sales

$750,000

Return on sales

8%

The imputed interest rate is 12%. What is the division residual income for year 1?

A. $60,000.

B. $30,000.

C. $20,000.

D. $0.

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

[h0wdyus]

d. zero

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

FROM NJ

[Zackrampage]

0. Since assets turnover = Sales/Avg Assets, plugging in sales and the 1.5 turnover gives assets of 500k. 500k x 12% imputed rate = 60k. Then take 8% return x 750k sales = 60k. Net income of 60k – 60k from (assets x imputed rate) = 0 residual income.

i pray for my exam on Thursday to be as easy as this question.

FAR - 62 , End of aug 2015
BEC - 67, 67
AUD - TBD
REG - TBD

[RandomAlt]

Correct. Where is your work!

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

[h0wdyus]

Net Sales / Avg Asset = 1.5

Avg Asset = 500,000

Net Income is 8% of Sales i.e 60,000

NI – 12% of Avg Assets = RI

60000 – 12% of 500000

RI = 0

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

FROM NJ

[RandomAlt]

Good form

I don't know what is emphasized in Becker, but CPAexcel has really emphasized the ROI ratio, and breaking it up using the DuPont method

ROI = Net Profit X Asset Turnover

ROI = NI / Sales X Sales / Investment

Sales cancel out

ROI = NI / Investment

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

[RandomAlt]

I just got this one wrong…I would like a reason as to why the correct one is correct if someone can get it right (Gotta love when they give a reason “A goes with B is the best answer”)

If complete segregation of duties is impossible in a small business, which two functions should be potentially combined?

A. Review and custody.

B. Authorization and record keeping.

C. Review and record keeping.

D. Authorization and review/auditing.

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

[h0wdyus]

I would say D

If I authorize something , I think it should be safe for me to review later to see if the record keeping was done correctly.

Just a thought. Crazy question.

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

FROM NJ

[Zackrampage]

The concept tested in that questions is how do managers deal with a lack of IC in a small company, and the response is they must be tightly wound and extremely observant. D seems the closest to explaining it. I did that one in becker yesterday but forgot what I got on it.

FAR - 62 , End of aug 2015
BEC - 67, 67
AUD - TBD
REG - TBD

[h0wdyus]

where is stoleway.. where. his test finished at 11:00 AM.

Is he already celebrating and forgot us.

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

FROM NJ

[stoleway]

Hey guys, I'm back. From the look of things, I could pass this test and be done forever or my scores could even be more devastating than the ones posted in my signature. The first testlet was not easy but doable, I marked about 5 questions I wasn't sure about. Second testlet got wordy with less calculations, guessed on 8 questions which is a lot IMO. Third testlet got a little bit easier for me because the calculations started showing up. In all, my test was about 40% calculations and I'm really pissed.

Simulations was all about IT, all 3 of them, full of crap. Anyway, I constructed bunch of nonsense for them. I think the rest of you over here are in great shape. Keep it up, I will be on the other side wishing y'all well:)

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

Mass-CPA

[Zackrampage]

@Stoleway were they hard 3-4 step calculation questions?

FAR - 62 , End of aug 2015
BEC - 67, 67
AUD - TBD
REG - TBD

[h0wdyus]

@stoleway

Be positive dude. If the test was hard, it is a good thing. You will pass. Imagine asking a CPA to make recommendations about IT. in the WC. I find that funny.

Were all the topics evenly weighted. The stuff we have been discussing on here, does that seem relevant or was the test or in a different direction.

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

FROM NJ

[stoleway]

Well some of the stuff we discussed here were relevant so its nice to have a broad knowledge. BEC is a funny section because they don't care where they pick the questions from. I got some audit question which I knew very well. I think you guys will do fine and I know you would have aced the IT questions.

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

Mass-CPA

[Zackrampage]

IT questions were straight forward for you?

FAR - 62 , End of aug 2015
BEC - 67, 67
AUD - TBD
REG - TBD

[Author]

Replies