[jeff]

Welcome to the Q2 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

[aatoural]

I am with Spartan. my finance professor in college made sure we will not forget it. I write it like Spartan as well RF+B(MR-RF).

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[tskits75]

Found out my score just now for BEC that i took on 5/26. Passed! thanks for all the help from this forum

AUD - 92
BEC - 79
REG - August
FAR - TBD

[aatoural]

Congrats!

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Crunchtime]

Just found out I passed FAR and My auditing expires on 7/31/16 and my last exam of BEC is scheduled for July 11th!!! I need to pass it this time. I been so close for so long, this is it!!!

I am pretty pumped!!

AUD-77
BEC-70,73,68,74 SH##!!!!!, 80
REG-73,76
FAR -74,82

Ethics here I come!!

[Spartans92]

Does anyone know for the Ninja MCQ do I have to see every single question before I can focus on my trouble areas? Also, Congrats to everyone that passed!

BEC- PASS

[mckan514w]

@Spartan- I usually set the custom one to “only ones I missed last time”- OR I look at the progress report and note where I am deficient and then set the custom questions to only go through those particular topics…

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Spartans92]

Congrats Mckan on passing Reg!! And thanks! I will try to utilize the MCQ as much as I can and so far I like it.

BEC- PASS

[Anonymous]

Congratulations to all who passed BEC this wave release!
And to those few who didn't make it this window, chin up. We all got this. Good news is, you have roughly 20 days to rebound and nail this beast.

For the rest of us taking BEC today through Friday, whew, let's keep on trucking!!

[Anonymous]

Quick question:

How do we treat depreciation allocations (of an old and new machine/invested capital asset) on discounted undiscounted cash flows?
Are they addition/subtraction to inflows or outflows? I am totally confused. Please help.

Please take a closer look at the problem below. The depreciation of $4,000 was deducted from the minuend of cash flows. In effect, this item was added back to the revenues, making it part of the cash inflows. If anyone can just clarify if I should put depreciation expenses/savings to where: inflows or outflows. Thanks again.

A company invested in a new machine that will generate revenues of $35,000 annually for 7 years. The company will have annual operating expenses of $7,000 on the new machine. Depreciation expense, included in the operating expenses, is $4,000 per year. The expected payback period for the new machine is 5.2 years. What amount did the company pay for the new machine?
A. $145,600
B. $161,200
Correct C. $166,400
D. $182,000

The answer is C.

The payback period is the length of time required to recover the initial cash investment with net cash flows. In this case, the operating expenses of $7,000 include depreciation of $4,000, so the cash operating expenses are $3,000 per year. Subtracting $3,000 of annual cash operating expenses from the $35,000 annual revenue gives a net cash inflow of $32,000 per year.

Since the investment will be recovered in 5.2 years, we multiply the 5.2 years by the annual net cash inflow of $32,000 to find the cost of the investment must be $166,400.

[pyacpa49]

Had my test Monday. It seemed like everything that Wiley said doesn't show up often on the test was on my test. Other questions were a lot more specific than I remember going over in Wiley or the Ninja MC. Didn't study the WQ much, but they didn't seem bad. As long as you know the topics you should be good. I just kept a generic format in my mind and used that. All in all it could have gone either way. I'm not feeling like crying, but I'm not certain I passed either. Time will tell. Good luck to everyone.

[pyacpa49]

Had my test Monday. It seemed like everything that Wiley said doesn't show up often on the test was on my test. Other questions were a lot more specific than I remember going over in Wiley or the Ninja MC. Didn't study the WQ much, but they didn't seem bad. As long as you know the topics you should be good. I just kept a generic format in my mind and used that. All in all it could have gone either way. I'm not feeling like crying, but I'm not certain I passed either. Time will tell. Good luck to everyone.

[Kmay89]

@Amor D, in the problem you are looking at, the only reason depreciation is added back is because the problem states that the operating expenses of the new machine include depreciation. If this wasn't the case, you would ignore depreciation unless the problem discusses after-tax cash flows.

This is how I solved the problem: Revenue 35,000 – Cash Operating Expenses (7,000-4,000) = Annual Cash Flow of $32,000. Because the cash inflow is the same each year, you can multiply 32,000 by 5.2 to get $166,400.

If the problem had discussed after-tax cash flows, you would multiply depreciation by the tax rate, and add that amount back to after-tax revenues.

BEC- 93
FAR- 9/6/2016
AUD- 10/7/2016
REG- 11/21/2016

Wiley CPAexcel Self Study & Ninja supplements

[aatoural]

AmorD depreciation is always an inflow when taxes are taken into account (dep * TR). If not tax information is given, then depreciation is not used. In this case for payback period all you need to know is the cash flows, depreciation is not a cash item. At least that is my understanding. Hope this helps.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Anonymous]

Thanks guys. I appreciate both of your help.

I still have 400+ questions unseen from NINJA test bank.

[Anonymous]

Just saw this sample problem pertaining depreciation in capital budgeting:

——————————————————————

When estimating cash flow for use in capital budgeting, depreciation is:

A.
included as a cash or other cost.

B.
excluded for all purposes in the computation.

C.
utilized to estimate the salvage value of an investment.

Correct D.
utilized in determining the tax costs or benefit.

You are correct, the answer is D.

The only effect depreciation expense has on cash flows is the determination of income tax. Depreciation expense is subtracted from income to find taxable income. Therefore, while depreciation is not a cash flow directly, it does affect income tax cash flows.

“Included as a cash or other cost” is incorrect because depreciation is not a cash flow. “Excluded for all purposes in the computation” is incorrect because depreciation is considered in determining cash flows for income taxes. “Utilized to estimate the salvage value of an investment” is incorrect because the salvage value is the cash value of the asset at the end of its useful life, which is not related to the book value remaining after deducting annual depreciation expense.

[Author]

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