[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for BEC.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[EyeFahs]

So I got a thorough beat down at Prometric the other day by way of BEC. The wait to just see a fail for an exam previously lost credit for… /0\

________________________________________________________
BEC: Passed, 81
FAR: Passed, 78
AUD: Passed, 83
REG: Failed, 71,71...4/16
=================================
~GIVE.US.FREEEEE~

[monikernc]

i need a pep talk. been at this too long. too many days left till 27th.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[jpowell31]

@moniker you seem extremely prepared and got loads of time left. you may end up going in circles that way! Take a break for one evening…or just a longer than normal break to watch a movie or something.

I sit on Friday and I'm riding a rollercoaster here….some hours I feel like I'm killing it and others I forget very basic things – that coupled with my amazing ability to freeze in an exam doesn't bode well for me. I feel like even if I knew things inside and out, I'd mess up 10-15% of the time and there's just not enough room for error with these things!

Can someone post some foreign currency examples? I feel like I haven't done a lot and have just memorized rather than learned what I have done.

[monikernc]

Thank you jdpowell. I did take last night off. I do feel prepared for the most part but this exam is going to be all over the map. Good luck with yours. Post questions tonight. I like working through and explaining them. As my daughter used to say when she was 3: good for me, good for you, good for me.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[monikernc]

I watched a few of these from acdc econ for foreign exchange and trade to shake things up a bit. He's a goob! Apparently these topics are on AP exams and high school kids know more than us.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[jpowell31]

I've spent the last 3 full days drilling down the calcs so I'm spending tonight doing loads of the wordy questions that I feel like I've lost retention of (so far so good anyway). I'm hoping it'll also help with the WC since I'm hoping to score a few extra points there. If you could share any FX questions that would be really helpful. I didn't seem to flag any to review in Ninja and would prefer not to sift through all econ questions to find them :).

[monikernc]

Here is one. With my tips first: this is a money market hedge to hedge a receivable, borrow foreign currency and buy us$ today. To hedge a payable, borrow us$ and buy foreign currency today.

Ninja mcq 189

Miller Manufacturing and Mining is facing potential translation exposure and believes that it would be desirable to use a money market hedge to reduce their risk to currency fluctuation. They have a 1.2 billion yen receivable that will come due one year from today. Current interest rates in the United States and Japan are 8% and 5% respectively. The current spot exchange rate is 120 yen = $1. If the money market hedge is structured correctly the firm would:

A. borrow 1.143 billion yen in Japan and invest it in a Japanese bank at 5% so that they would have 1.2 billion yen available when the receivable comes due.

B. borrow 1.111 billion yen and convert the proceeds into $9,259,259 and invest the money in the United States and use the proceeds of the receivable to repay the Japanese loan, collecting the proceeds $10,000,000 from the U.S. investment which would represent the guaranteed proceeds from the Japanese sale.

C. borrow 1.143 billion yen and convert the proceeds into $9,524,810 and invest the money in the United States and use the proceeds of the receivable to repay the Japanese loan, collecting the proceeds of $10,285,714 from the U.S. investment which would represent the guaranteed proceeds from the Japanese sale.

D. borrow $10,000,000 and convert the proceeds into 1.2 billion yen and invest the proceeds to have 1.26 billion yen available when the receivable comes due.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Anonymous]

I do not know how the heck this exam has the highest pass rates….

Hang in there monikernc, I have come to the conclusion that this thing tests our emotional and mental stamins equally or more than it does tests our IQ…

[jpowell31]

See, I know that's C because that's one of a handful I've done. I feel like I've memorized it not fully learned (if it came up in this format, I got it…otherwise I'll be thrown)

[SaveBandit]

Do joint costs always go through COGS? I thought there were a couple of different ways you could account for joint costs: One way it runs through COGS and another way it gets expensed below CM.

Basically, I don't get why this question assumes that joint costs are automatically part of COGS. It doesn't really tell you anything about how they allocate joint costs:

Assume that Whitehall Corporation agreed to sell AM-12 to Flank Corporation after further processing for $5.50 per unit. During the first month of production, Whitehall sold 50,000 units with 10,000 units remaining in inventory at the end of the month. With respect to AM-12, which one of the following statements is correct?

A. The operating profit last month was $125,000 and the inventory value is $30,000.
B. The operating profit last month was $200,000 and the inventory value is $45,000.
C. The operating profit last month was $50,000 and the inventory value is $15,000.
D. The operating profit last month was $50,000 and the inventory value is $45,000.

Answer D.

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[monikernc]

Right but read my tip again and eliminate wrong answers quickly then do the one calculation you need to choose the correct answer from the remaining 2 options

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[monikernc]

Try this one. Us importer has an account payable due in one year for €100,000,000 Spot rate is €1 =$1.43. US interest rate is 8%, Eurozone rate 3%. What will the importer do?

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Anonymous]

I have not study well that topic (hedges) so I will try to benefit chiming in here. Basiclly if we have a receivable from a foreign currency to protect myself I will look to have a payable from that currency so if hte currency falls and I enp up receiving less I also end payimg less thus even things out? The money ai borrow I will invest it on the US currency so I earn more on the investment? And viceversa if I have a payable, in that case I would borrow from the US and end up purchasing and investment so if the prices increase and I have to pay more on the payable then I will even things out receiving more on the foreign receivable?

[monikernc]

Answer
To hedge a payable due in euros, borrow US$ and buy euros today.
€100,000,000/1.03=€97,087,379
€97,087,379*1.43=$138,834,952 cost to buy euros.
Put euros in eurozone bank at 3% interest to have €100,000,000 in one year to payoff payable.
Pay back US loan with $138,834,952*1.08= $149,941,748

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[monikernc]

Cortes, the way i understand it is you want to eliminate the translation risk by either buying or borrowing the amount of foreign currency today that equates to the amount receivable or payable in a year. So if you are receiving foreign currency in a year you borrow it today and if you are paying foreign currency in a year you buy it today. This way you have eliminated the risk of changing exchange rates. The interest rates are fixed so no risk of those changing either.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Author]

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