Bonds…Why Can't I Understand this!?

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  • #178983
    lauriemarie5
    Member

    I have been trying to digest and understand Bonds in F5 of Becker all day. I cannot seem to grasp it to save my life. I just don’t understand it at all and the more I try the more I get wrong on HW. I am trying so hard not to break down and cry…I am already behind as I should have been working on Pensions and Income Taxes today which is another area I am very weak. I test 8/26 and now I feel like I am never going to be ready in time.

    Studying for FAR takes such an emotional toll on you…I feel like I am breaking down more and more daily.

    Can anyone give any insight on how to grasp bonds?!?

    REG: 80 (11/13/15)
    FAR: APR 2016
    BEC
    AUD

    "Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

Viewing 14 replies - 1 through 14 (of 14 total)
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  • #427391
    Anonymous
    Inactive

    Bonds are tough and they are very important. Just accept that this is a topic that will take more than one day…it may take several days. Break it into bite sized pieces and do one sub-section, those MCQs and master that piece before you go onto the next subsection. Take your time and work the MCQs, write your notes/fact nuggets and review, review, REVIEW. I am trudging through FAR also. I set aside 3 hours each night to study. The first hour I review Bonds and Governmental – every night – because those are heavily weighted topics…the second two hours I work on another areas. Time and practice will help you succeed with bonds. Don't despair and don't give up! You still have time to kick FAR's butt…so take a deep breath, walk away from bonds and work on something else and then come back to it. Good luck!

    #427392
    neika822
    Participant

    @LaurieMarie – you are NOT alone. I'm trying to get through these stupid chapter 5 MCQ's as well. I feel like each time I “get it”, they throw something else in there that just throws me for a loop. I keep going back to the book and rewriting notes and trying to understand. We'll get there!!! Don't get discouraged!!

    R - *77*(02/'13)-Becker & NINJA
    A - 71('11); *87*(04/'13)-Becker & NINJA
    F - *76*(08/'13)-Becker & NINJA - "server upgrade" survivor
    B - 60('11); *82*(10/'13) -Becker & NINA

    DONE, DONE, AND DONE.

    CPA in Massachusetts; issued 01/24/14

    #427393
    neika822
    Participant

    I feel like every question for bonds is like:

    “Solve for ‘n'”: WRONG. You forgot to add the unicorn dust!

    “Solve for ‘x'”: WRONG: You didn't say ‘abra cadabra'!

    And I'm just sitting there, wide-eyed, thinking “WHEN DID WE GO OVER THIS??”

    R - *77*(02/'13)-Becker & NINJA
    A - 71('11); *87*(04/'13)-Becker & NINJA
    F - *76*(08/'13)-Becker & NINJA - "server upgrade" survivor
    B - 60('11); *82*(10/'13) -Becker & NINA

    DONE, DONE, AND DONE.

    CPA in Massachusetts; issued 01/24/14

    #427394
    lauriemarie5
    Member

    @neika822 EXACTLY…I go back through the book and I am like where does it explain this?!

    REG: 80 (11/13/15)
    FAR: APR 2016
    BEC
    AUD

    "Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

    #427395
    Anonymous
    Inactive

    Best advice I could give for bonds is learn the journal entries. Everything will start to click once you know those entries. Regardless if the problem requires the entry or not, write it out anyways.

    #427396
    Anonymous
    Inactive

    Also, I did every single MCQ on bonds from my review course. Make sure you know how to make the amortization schedule as well.

    #427397
    acamp
    Participant

    I made a long-winded writeup about bonds here:

    https://www.another71.com/cpa-exam-forum/topic/i-just-dont-get-bonds

    Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

    Becker Videos: [AUD - 82]

    California CPA

    #427398
    neika822
    Participant

    Thanks, acamp. I'll look at that tonight! I'm going to watch Blitz tonight too, to try to help myself. I know I understood bonds in college and I don't have too many issues with the amortization table. I think its more the warrants/convertible bonds attached that gives me grief. I think I just need it to “click” but until that happens, I'm lost, haha.

    R - *77*(02/'13)-Becker & NINJA
    A - 71('11); *87*(04/'13)-Becker & NINJA
    F - *76*(08/'13)-Becker & NINJA - "server upgrade" survivor
    B - 60('11); *82*(10/'13) -Becker & NINA

    DONE, DONE, AND DONE.

    CPA in Massachusetts; issued 01/24/14

    #427399
    wizards8507
    Participant

    Build an amortization schedule. If you understand your mortgage, you understand bonds.

    NY CPA

    #427400
    MintsRGood
    Participant

    @Laurie Don't get stuck on bonds, or any other topic for that matter, and throw a wrench in your study schedule! Think of your first efforts with reading your text and going through the homework like you are laying a foundation for learning. Keep moving along in your schedule but budget yourself time to go back revisit topics like Bonds that are giving you fits! Put the Bond materials away today and come back to it in a few days. You will be surprised with how much better it will go!!! I've found the best way to wrap my head around bonds is to master the effective interest schedule. Everything you need for your journal entries is right there for the taking once you create that table!

    Something that may help to is to find a medium difficulty sample bond problem in your text (think SIM) and immerse yourself in that one problem. Prepare the effective interest schedule, prepare all the journal entries, the present value calculations, etc. and understand where and how every number works on that sample problem. Work that problem until you can do it with your eyes closed! Then when you are practicing Bonds and get stuck, you can refer back to that sample to arrive at an answer! That is how I survived the cost accounting component for BEC! 😉

    Good luck and keep at it! You can do this!!!!!!!!! 🙂

    REG: 75 DONE 🙂
    AUD: 61, 71, 68, 92 DONE 🙂
    BEC: 76 DONE 🙂
    FAR: 72, 74, 79 DONE 🙂
    Licensed Michigan CPA 🙂
    -Some people dream of success...others wake up and work hard for it!!!
    -The cowards never start and the weak die along the way!
    -You better work, b***h!
    -Only those who dare to fail greatly can ever achieve greatly.-JFK

    #427401
    peetree
    Member

    Below is the way I attacked bonds when I studied for FAR. It seemed to help a lot of people in our study group during the Jan/Feb window. I hope it helps you as well.

    Copy/Paste from that thread.

    Questions about Bonds and Leases have one thing in common. They both try to throw a bunch of numbers at you in the hopes that you'll freak out, panic, and choose incorrectly.

    This is how I attack these types of problems.

    TL/DR: WRITE OUT THE JOURNAL ENTRY NO MATTER WHAT THE PROBLEM IS ASKING UNTIL YOU FEEL COMFORTABLE.

    “On December 31, Moss Co. issued $1,000,000 of 11% bonds at 109. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the bondholder to purchase one share of $5 par common stock for $25. Immediately after issuance, the market value of each warrant was $4. On December 31, what amount should moss record as discount or premium on issuance of bonds?”

    So you get done reading that and you go, “shoot man all of that and they only want to know the premium or discount on the bond?!?!” So instead of trying to do all the math on your calculator to try to figure out what the premium or discount is, I'm saying just right the journal entry to record the transaction out. It allows your mind to go one step at a time while getting all the necessary information on paper.

    I normally reserve at least 5 lines on my piece of notebook paper to record the entry.

    Step 1: Identify the bond payable. This is easy right? because its given to us in the question. Remember Bond payable in your ledger will always be recorded at face amount, regardless of what it was issued at.

    Our 1 line of the JE

    Cr. Bond Payable. $1,000,000

    Step 2: How much cash did we receive for this bad boy. Well it says we issued it at “109” so we can multiply our face value to the 109 to get. $1,090,000. We'll debit our cash

    *Note, I'll just keep building the JE on my notebook paper*

    Dr. Cash $1,090,000

    Cr. Bond Payable $1,000,000

    Step 3: We have warrants stated in the question, and its telling us the fair value of the warrants but its not telling us the fair value of the bonds. That means we do the warrants only method. (easy to remember because you only have FMV for the WARRANTS) “Each $1,000 bond was issued with 50 detachable warrants” So how many bonds did we issue.

    $1,000,000/$1,000 = 1,000 * 50 warrants = 50,000 warrants * FMV of warrants (4$) = $200,000

    We'll add the warrants to our journal entry now too.

    Dr. Cash $1,090,000

    Cr. Bond Payable $1,000,000

    Cr. APIC Warrants $200,000

    Step 4: Balance your journal entry. Discount of $110,000.00

    Dr. Cash $1,090,000

    Dr. Discount $110,000

    Cr. Bond Payable $1,000,000

    Cr. APIC Warrants $200,000

    Now my reasoning for doing that for every single problem that relates to bonds is because bond questions can be very tricky. The examiners like to think that by putting a bunch of numbers in front of you, they'll be able to make you panic.

    By going through every practice problem writing out the full journal entry, you'll become very comfortable with where to get your numbers and you won't have to pick apart or balance a journal entry in your head to figure out what your answer needs to be. Also by practicing these problems this way, you're essentially practicing how to answer a question like this 4 different ways. What if it asked you what the journal entry to record the warrants was? you already got it covered. What if it wanted to know the cash proceeds? you already have that covered. For me, I wanted to simplify the process of answering these types of questions, level the playing field. I feel by practicing these problems this way. Bonds become easy easy points.

    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

    #427402
    lauriemarie5
    Member

    thanks guys! all your info and advice has now been logged into a word document so i can review, review, review!

    I know I can do this…but certain topics really test your ability! I found leasing to be a breeze after I got the hang of it (THANKS TO ROGER PHILLIPS YOU TUBE VIDEO!) but then bonds kinda shot me down to reality.

    I am onto Pensions & Income Taxes today which was another area I felt very weak…if I can nail these 3 areas I would feel so much better. Time will tell…and my clock is ticking!

    REG: 80 (11/13/15)
    FAR: APR 2016
    BEC
    AUD

    "Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

    #427403
    lauriemarie5
    Member

    thanks guys! all your info and advice has now been logged into a word document so i can review, review, review!

    I know I can do this…but certain topics really test your ability! I found leasing to be a breeze after I got the hang of it (THANKS TO ROGER PHILLIPS YOU TUBE VIDEO!) but then bonds kinda shot me down to reality.

    I am onto Pensions & Income Taxes today which was another area I felt very weak…if I can nail these 3 areas I would feel so much better. Time will tell…and my clock is ticking!

    REG: 80 (11/13/15)
    FAR: APR 2016
    BEC
    AUD

    "Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

    #427404
    neika822
    Participant

    @Peetree – THANK YOU. That was one that was giving me difficulty. I'll take a better look at your explanation tonight and try to attack each problem with that in mind.

    R - *77*(02/'13)-Becker & NINJA
    A - 71('11); *87*(04/'13)-Becker & NINJA
    F - *76*(08/'13)-Becker & NINJA - "server upgrade" survivor
    B - 60('11); *82*(10/'13) -Becker & NINA

    DONE, DONE, AND DONE.

    CPA in Massachusetts; issued 01/24/14

Viewing 14 replies - 1 through 14 (of 14 total)
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