[jeff]

Resources:

Free Study Planner + FAR NINJA Notes (Governmental Accounting): https://www.another71.com/cpa-exam-study-plan/

FAR Exam Experience: https://www.another71.com/cpa-exam-forum/topic/far-exam-experience-official-thread

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

[MCLKT]

@peetree – LOL! Good ol' management! My guess is either $60k or $54,545 are either of those options?

You gotta use algebra, right?

First solve for pre-tax income:

Pre-tax Income – tax = net income after tax

x – .40x = 360,000

.60x=360,000

x=600,000

If Income before tax is $600,000 and the bonus is 10% of Pretax income = $60,000

or… it's trickier:

IF I read the question correctly and the bonus is 10% of Pretax income less bonus then:

x = .10(600,000-x)

x = 60000- .10x

1.10x=60,000

x = 54,545

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[peetree]

I think i'm letting the wording of the question throw me for a loop.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[MCLKT]

OMG the suspense is killing me!!!! what's the answer? LOL!

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[peetree]

lol! it was 60! had to work backwards to pretax income 😀

good work.

I'm gonna do a bunch of these right now and just pound the algebra into my head.

also, good call @soxfan!

I'm now just starting to write out the formula, and substitute the multiple choice answers into the equation.

For example:

Beck, the active partner in Beck & Cris, receives an annual bonus of 25% of partnership net income after deducting the bonus. For the year ended December 31, partnership net income before the bonus amounted to $300,000. Beck's bonus should be:

Bonus = .25(300,000 – Bonus)

60,000 = .25(300,000 – 60,000)

60,000 = .25(240,000)

60,000 = 60,000

Edit: yes, definitely use the trick of plugging answers that are already given to you. So much easier.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[MCLKT]

Yeah the wording can be so tricky. I just set them up without numbers first to see the math from a big picture:

Revenue – expense – bonus = Income – Tax = net income

Then I just start plugging in what the question gives me.

And hopefully at the end there is an option for the solution I came too, lol.

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[MCLKT]

Ibli – I started sort of doing that with questions. I mean, sure the lecture and notes expose you to the info. But the questions fine tune it to what you need to know. So, when I covered investments, I watched the lecture, took notes, went to the back and read all of the answers to the assigned homework. Not to get the answer, but to read the explanations. It was very helpful. If there were calculations I didn't pay too much attention to the numbers. Then I worked the questions. I scored a 90%. And as I answered them, I found myself stating some of the answers I had read. Like, “the equity method is used because there is significant influence”, “a company may elect fair value option for available for sale securities”,”available for sale securities are reported at market value”, etc.

I'm doing this moving forward.

Well, the goal this week is to wrap up the cram videos/homework and take a full length practice exam on Sunday.

I've still got: Shareholder's Equity, Def. Taxes, Business Combinations, and Derivatives.

Good job FAR fam. Keep up the momentum. WE'RE SO GOING TO PASS.

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[lbi18]

MCLKT – Good to know that someone else is following the same approach I am.

Anyone have any advice on bonds though? I'm having a real hard time remembering all of the different types of them. I almost feel stupid going through these homework questions and getting so many wrong. The convertible and nonconvertible (i.e. warrants) are truly throwing me for a loop.

I'm just trying to push through this homework without throwing my book out the window!

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[peetree]

@lbi

remember if they are convertible, than the affect on stockholders equity doesn't come into play until they are exercised.

I can't remember where I posted it but what really helped me with bonds was journaling out all of the transactions. Literally, writing out your debits and credits with the amounts.

Always start with your bond payable and Cash received because these are normally given to you in the problem. Then calculate the remaining items of the journal entry.

For example:

“Bondholders of Balm Co. converted their bonds into 90,000 shares of $5 par value common stock. In Balm's accounting records, the bonds had a par value of $775,000 and unamortized discount of $23,000 at the time of conversion. What amount of additional paid-in capital from the conversion should Balm record?”

So for this example, we already know what is going to be coming out of your bond payable account because its given to you.

Dr. Bond Payable 775,000

We know we need to get rid of the unamortized discount which has a debit balance so.

Cr. Discount 23,000

We know we're issuing common stock so we can make that journal entry (90,000 shares at 5$ par)

Cr. Common stock 450,000

Now all we have to do is plug for APIC so our journal entry is balanced (775,000 – 23,000 – 450,000) = 302,000

Cr. APIC Common Stock 302,000

A proper entry of:

Dr. Bond Payable 775,000

Cr. Discount 23,000

Cr. Common stock 450,000

Cr. APIC Common Stock 302,000 (The plug)

Always start with what the question is giving you and just complete the journal entry.

Fill up 4 pages of college ruled paper with bond journal entries and I promise you, it will all make sense easily.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[lbi18]

@peetree

It definitely helped to write out the journal entries. I think my main problem is that I get intimidated by all of the numbers thrown at me in the question and I panic. I went through the MCQs a second time and did better – I just took my time and really thought about it. I will go through the optional questions either tonight or tomorrow, my brain seems fried ATM.

I find it a little annoying that the CPA exam tests non-GAAP methods. I mean, what is the point? It just seems like more information that we have to cram into our heads.

Oh well, thanks for your help though!

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[sali25]

Hi,

I am studying the pension plans and have issues understanding when to report the pension plan as asset or as liability (overfunded vs underfunded). Can anyone explain it to me?

Thanks

FAR: 88
REG: 81
BEC: TBD
AUD: 11/30/13
"Efficiency is doing things right. Effectiveness is doing the right things" Peter Drucker

[peetree]

@lbi Definitely don't overdo it or you'll forget everything you just learned!

Yeah, I hear you on the non-GAAP methods. I guess its done just in case we're consulting a client that is not required to use GAAP method and would prefer the market value method or whatnot.

Just keep writing them out!

I finished the final lecture today and will be starting my final review tomorrow.

…oh baby, i hope it all sticked somewhere in my head.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[MCLKT]

@Sali – Use the PBO and the Fair Value of Assets to determine.

PBO is the Projected Benefit Obligation. You owe this to employees.

Fair Value of Assets is the $$$ you will use to pay.

If you owe more than you have available to pay out, you are underfunded make sure the difference is on your books as a liability.

Think of it like any other payment/savings. Like, you're saving up for a car using a money market savings account.

You project the car will cost $10k but the fair value of your savings account is $7k.

You are underfunded for that purchase by $3k. Put an IOU in your savings for the other $3k. (liability)

Every time you contribute to your savings you will decrease the IOU. Once your savings is up to $11k you are overfunded! Switch that liability to an asset of $1k.

Time to celebrate… or go buy that car 🙂

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[gobias]

Is it worth it to learn all the ratios in the F7 appendix? Some of them I can just guess, but most would require memorizing.

F - 86
R - 90
A - 97
B - 91

[peetree]

@sali

Think of the PBO amount as a liability account (even though its not) and the fair value of the plan assets as an asset account (even though it could be in an asset or liability position based on funding)

Compare the amount of the PBO to the Plan Assets.

As a general rule-

If the PBO > Plan Assets, it is considered underfunded and would be a liability to the entity.

If the Plan Assets > PBO than it is considered funded and would be in a non-current asset position.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[MCLKT]

@gobias – no one can tell you for sure. Just remember if it's in your study material, it has the chance of being tested. Especially Becker from what I hear. You will be tested on ratios in AUD and BEC as well. So it's beneficial to be familiar with the ratios. What you don't want to happen is, someone tell you don't worry about it, then you get a ratio sim. (that's my kind of luck)

Maybe just jot down whatever ratios come up in your homework, and make sure to get a good grasp on those.

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[Author]

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