FAR Study Group – Q1 2018 - Page 15

What's your approach as it relates to time management on FAR? The test is 4 hours long and graded 50/50 on MCQ to SIMS, so I'm setting a goal to allocate 2 hours for the 66 MCQ's and 2 hours for the Sims. Do you have a different approach?

So I finally passed BEC (4th time a charm)… FAR is left, and I need to pass by 4/20. I took in Q3, 65, whamp. I take on 3/9 to give myself one more window if needed. I'm going to use Ninja – I used Becker round 1.
Send good vibes please.
Also, anyone in MD… I have to take the ethics exam too, do I need to take that BEFORE anything expires or after I pass all 4? Meaning does the 18 month window count on ethics too?

@Cruz818 –

Thank you for sharing your experiences. Your FAR experience doesn't sound too off from my FAR on in the fall. I thought the third testlet was the harder of them but didn't want to spend too long as I knew I had 2 more testlets after the break. They are time consuming! And sometimes just too hard to get through under the time constraints of going back and forth and again between the documents. (The hope is the double screens in Q2 will fix that issue or at least help).

I will tell you two things. I maybe wasn't 100% prepared when I took my first test last year (okay, I know I wasn't). But until you get in there and truly see and experience it, it's a mystery. At least now the mystery is over. You've sat for one! To me that took the uncertainty and the nerves out of not knowing and I felt the next ones were easier to sit for. Doesn't mean the tests were easier, but you will know what to expect of the experience (as you mentioned w/the calculator, excel) and you can prepare accordingly.

Second thing – you truly will not know how you did until you see. These tests are impossible to predict, as people here will tell you. Your obscure topics may be pretest, and you'll never ever know for sure. It's a little (lot) frustrating, but it's part of the experience.

What is your plan for now? Wait and see how you did? With no clock ticking, you do have the luxury of time in that regard so you can keep going with FAR which is a good idea. Again, thanks for sharing. And even if you didn't get there this time, you will.

I would really recommend just starting studying for the next exam. I know it sucks but you don't want to lose a month of your window right from the get-go (if you end up passing which I think is not unlikely based on what you wrote here).

@Cruz818

-You're welcome.

I am sitting next week and I always get so nervous the week prior. Although I'm usually okay during the test, nerves wise. I have to buckle down and spruce up some key areas. I am hoping practicing SIMS does the trick this time around.

Again, without a clock ticking, I think it is up to you. We'll find out much quicker for Q1, than for the remaining quarters. You can retake FAR if necessary and BEC later in Q2, OR, if you pass, take BEC towards the beginning and then maybe AUD at the end of Q2. You have some flexibility.

On January 1, Year 1, Frost Co. entered into a 2-year lease agreement with Ananz Co. to lease 10 new computers. The lease term begins on January 1, Year 1, and ends on December 31, Year 2. The lease agreement requires Frost to pay Ananz two annual lease payments of $8,000. The present value of the minimum lease payments is $13,000. Which of the following circumstances would require Frost to classify and account for the arrangement as a capital lease?

A. Ownership of the computers remains with Ananz throughout the lease term and after the lease ends.
B. The economic life of the computers is 3 years.
C. Frost does not have the option of purchasing the computers at the end of the lease term.
D. The fair value of the computers on January 1, Year 1, is $14,000.

I am so confused by this question from Gleim. Question seems very simple at first, with answer A being the obvious answer.
However, according to Gleim, the answer is D.
Here's the explanation.
Answer (D) is correct.
A lease is classified as a capital lease by the lessee if, at its inception, any of the following four criteria is satisfied: (1) the lease provides for the transfer of ownership of the leased property, (2) the lease contains a bargain purchase option, (3) the lease term is 75% or more of the estimated economic life of the leased property, or (4) the present value of the minimum lease payments (excluding executory costs) is at least 90% of the fair value of the leased property to the lessor. This criterion is inapplicable if the beginning of the lease term falls within the last 25% of the total estimated economic life. Consequently, if the fair value of the computers on January 1, Year 1, is $14,000, the lease must be capitalized. The present value of the minimum lease payments is 92.86% ($13,000 ÷ $14,000) of the fair value at the lease’s inception.

Does anyone understand the logic behind why A is incorrect?

Q1
01/01/X1 Common stock shares outstanding 30,000
02/01/X1 Issued a 10% common stock dividend 3,000
07/01/X1 Issued common stock for cash 8,000
——
12/31/X1 Common stock outstanding 41,000
======

Shares Fraction Weighted Shares
Outstanding x of Year = Outstanding
———– ——– —————
33,000 (1) x 12/12 = 33,000
8,000 x 6/12 = 4,000
——
Total weighted-average shares outstanding = 37,000

Q2

Shares outstanding at 1/1 100,000
Stock dividend at 3/31 24,000
Stock issuance at 6/30 5,000

Shares outstanding at 1/1 + Stock dividend at 3/31 124,000 x 12 = 1,488,000
Stock issued at 6/30 5,000 x 6 = 30,000
———
1,518,000
Divided by number of months / 12
———
Weighted-average number of common shares 126,500

In computing weighted-average number of shares (also called weighted-average common shares)

It just might be silly but why are we dividing 1,518 000 by 12 ? how is Q2 Different from Q1