[jeff]

FAR Resources:

Free FAR Notes & Audio – https://www.another71.com/cpa-exam-study-plan

FAR 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

FAR Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[Anonymous]

@W_HAMILTON – I think I spent at much time doing F2 and F3 and I did doing all the other chapters. Those two are just crazy, both in content and the number of MCQs, all of which require calculations. After those chapters F4 will seem like a breath of fresh air!

Becker question on the cost method of treasury stock: Wright Co. reissued treasury stock it had acquired for $10 per share in a variety of different circumstances. The shares have a par value of $5 and were originally sold for $15 per share. Wright accounts for its treasury stock transactions using the cost method. Prepare J/E.

So I constructed the J/E for the original issue:

DR: Cash

---

$30,000

CR: C/S

---

$20,000

CR: APIC

---

$10,000

Scenario 1 – Reissue 2,000 shares at $12 per share on January 15, Year 3.

DR: Cash

---

$24,000

CR: T/S

---

$20,000

CR: APIC

---

$4,000*

Scenario 2 – Reissue 2,000 shares at $7 per share on October 15, Year 3.

MY ANSWER:

DR: Cash

---

$14,000

DR: APIC

---

$6,000

CR: T/S

---

$20,000

BECKER'S ANSWER:

DR: Cash

---

$14,000

DR: APIC

---

$4,000*

DR: RE

---

$2,000

CR: T/S

---

$20,000

Becker's explanation: Elimination of previous treasury stock transaction ‘gains” accounted for through APIC scheduled FROM THE PREVIOUS ENTRY.

Why would the previous entry come into play? I was looking at this like Scenario 1 being applied to the original transaction, and then Scenario 2 being applied separately to the original transaction. Why would Scenario 2 refer back to Scenario 1, especially since 1 and 2 are both reissues.

[Anonymous]

@W_HAMILTON – I think I spent at much time doing F2 and F3 and I did doing all the other chapters. Those two are just crazy, both in content and the number of MCQs, all of which require calculations. After those chapters F4 will seem like a breath of fresh air!

Becker question on the cost method of treasury stock: Wright Co. reissued treasury stock it had acquired for $10 per share in a variety of different circumstances. The shares have a par value of $5 and were originally sold for $15 per share. Wright accounts for its treasury stock transactions using the cost method. Prepare J/E.

So I constructed the J/E for the original issue:

DR: Cash

---

$30,000

CR: C/S

---

$20,000

CR: APIC

---

$10,000

Scenario 1 – Reissue 2,000 shares at $12 per share on January 15, Year 3.

DR: Cash

---

$24,000

CR: T/S

---

$20,000

CR: APIC

---

$4,000*

Scenario 2 – Reissue 2,000 shares at $7 per share on October 15, Year 3.

MY ANSWER:

DR: Cash

---

$14,000

DR: APIC

---

$6,000

CR: T/S

---

$20,000

BECKER'S ANSWER:

DR: Cash

---

$14,000

DR: APIC

---

$4,000*

DR: RE

---

$2,000

CR: T/S

---

$20,000

Becker's explanation: Elimination of previous treasury stock transaction ‘gains” accounted for through APIC scheduled FROM THE PREVIOUS ENTRY.

Why would the previous entry come into play? I was looking at this like Scenario 1 being applied to the original transaction, and then Scenario 2 being applied separately to the original transaction. Why would Scenario 2 refer back to Scenario 1, especially since 1 and 2 are both reissues.

[NYCaccountant]

@ DJN What rule is that? I thought they would be two separate transactions…

@ Rache1 Honestly I'm good with debits and credits. Every time I solve any problem and I'm not sure of the answer, I use debits and credits. Works wonders with cash flow and consolidation problems because if you know the journal entries and the effects than you're already winning the battle. The goal is to win the war though lol.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[NYCaccountant]

@ DJN What rule is that? I thought they would be two separate transactions…

@ Rache1 Honestly I'm good with debits and credits. Every time I solve any problem and I'm not sure of the answer, I use debits and credits. Works wonders with cash flow and consolidation problems because if you know the journal entries and the effects than you're already winning the battle. The goal is to win the war though lol.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Anonymous]

@NYC – I think (hope) this is “one of those Becker things” that we come across occasionally. If not, then I guess I don't understand T/S process, and that would depress me mightily because that is one of the things I thought I had a solid handle on… The good news is I have enough of a knowledge base in some things to know when Becker is having a “moment,” the bad news is I'm not always confident enough in my own understanding to be perfectly sure.

I only have real deep experience with Becker as a provider, and I'm sure (to be fair) that no review course is perfect, but if you do go the Becker route for any of your other exams know that things like this will come up every now and then.

[Anonymous]

@NYC – I think (hope) this is “one of those Becker things” that we come across occasionally. If not, then I guess I don't understand T/S process, and that would depress me mightily because that is one of the things I thought I had a solid handle on… The good news is I have enough of a knowledge base in some things to know when Becker is having a “moment,” the bad news is I'm not always confident enough in my own understanding to be perfectly sure.

I only have real deep experience with Becker as a provider, and I'm sure (to be fair) that no review course is perfect, but if you do go the Becker route for any of your other exams know that things like this will come up every now and then.

[Anonymous]

@DJN- Both reissues are part of the treasury stocks that were acquired for $10 per share. So we can imply that they previously acquired 4000 shares.

– First scenario, if you have a gain, it goes into APIC-T/S, otherwise it goes to RE.

DR: Cash

---

$24,000

CR: T/S

---

$20,000

CR: APIC-T/S

---

$4,000*

– Second scenario, if there is a loss, it will be offset first by the APIC-T/S recorded on the first block reissued and the excess, if any, will be wiped out by RE.

[Anonymous]

@DJN- Both reissues are part of the treasury stocks that were acquired for $10 per share. So we can imply that they previously acquired 4000 shares.

– First scenario, if you have a gain, it goes into APIC-T/S, otherwise it goes to RE.

DR: Cash

---

$24,000

CR: T/S

---

$20,000

CR: APIC-T/S

---

$4,000*

– Second scenario, if there is a loss, it will be offset first by the APIC-T/S recorded on the first block reissued and the excess, if any, will be wiped out by RE.

[ZSRizvi]

@DJN

F7 seems to be the easiest chapter of the lot for me. And yeah that problem frustrated me because I thought it was two separate scenarios. In any case, I've pinned it down to it being a Becker screw-up.

FAR in two days…I wasn't even that nervous when I took BEC but this time around, the mental strain is taking its toll on my health.

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[ZSRizvi]

@DJN

F7 seems to be the easiest chapter of the lot for me. And yeah that problem frustrated me because I thought it was two separate scenarios. In any case, I've pinned it down to it being a Becker screw-up.

FAR in two days…I wasn't even that nervous when I took BEC but this time around, the mental strain is taking its toll on my health.

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[iwantmylifeback_]

This is what's so frustrating about the CPA exam… Poorly written questions. In the review material… on the exam… everywhere.

For example: With respect to the allocation of the cost of a business acquisition, ASC topic 805 requires

A. Cost to be allocated to the assets based on their carrying values

B. Cost to be allocated based on relative fair values

C. Cost to be allocated based on original costs

D. None of the above

I chose D assuming they were talking about legal, accounting, valuation, professional fees etc. which would be expensed in the period. Of course the answer is B explained “In applying the acquisition method, acquisition cost is allocated to acquired assets and liabilities based on their relative fair values. Any excess of cost over fair value of net identifiable assets is allocated to goodwill”

How am I supposed to infer that they were talking about “consideration transferred” vs. “Acquisition costs”? Am I missing something or is this a very poorly written question?

BEC 85
AUD 99
REG 88
FAR 93

[iwantmylifeback_]

This is what's so frustrating about the CPA exam… Poorly written questions. In the review material… on the exam… everywhere.

For example: With respect to the allocation of the cost of a business acquisition, ASC topic 805 requires

A. Cost to be allocated to the assets based on their carrying values

B. Cost to be allocated based on relative fair values

C. Cost to be allocated based on original costs

D. None of the above

I chose D assuming they were talking about legal, accounting, valuation, professional fees etc. which would be expensed in the period. Of course the answer is B explained “In applying the acquisition method, acquisition cost is allocated to acquired assets and liabilities based on their relative fair values. Any excess of cost over fair value of net identifiable assets is allocated to goodwill”

How am I supposed to infer that they were talking about “consideration transferred” vs. “Acquisition costs”? Am I missing something or is this a very poorly written question?

BEC 85
AUD 99
REG 88
FAR 93

[ZSRizvi]

Could someone please explain to me how Deferred Tax Assets/Liabilities work in relation to pension service costs and gains?

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[ZSRizvi]

Could someone please explain to me how Deferred Tax Assets/Liabilities work in relation to pension service costs and gains?

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[NYCaccountant]

I guess my review materials did not cover this as well, but my guess is that pension service cost would create a deferred tax asset because the benefits are expected to actually be paid out in the future, so it would reduce taxable income per books, but not reduce taxable income per tax return. The gain would create a tax liability because it would increase taxable income per books, but not necessarily on the tax return. Anybody feel free to correct me if i'm wrong.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Author]

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