[ryanfondren]

I switched to the v.2 verson of FAR for Becker. During the lectures i learned that with inventory valuation, you now value using the lower of cost or NRV rather than cost or market (unless LIFO or retail method). Going through the multiple choice questions, i am seeing that the “old rule” us still used – where i am asked to calculate the lower of cost or market for FIFO inventory. As i am taking the exam on January 4, 2016, which rule is going to be relevant or am i just misunderstanding this completely?

[AlexCPA]

You're right. Use lower of cost or NRV for FIFO and avg. cost.

Use lower of cost or market for LIFO and retail

This will be tested in the exam on 2016. The latest ninja MCQ uses these new rules as well.

FAR - 89
AUD - 88
REG - TBD
BEC - TBD

Using Becker and Ninja MCQ

[qarnism]

what other changes would be in 1st Q of 2016, for FAR.

thanks

[AlexCPA]

FINANCIAL ACCOUNTING & REPORTING (FAR)

Due to Accounting Standards Update 2015-01 issued by the FASB in January 2015, which eliminates the concept of extraordinary and unusual items from U.S. GAAP, ‘Going Concern’ will replace ‘Extraordinary and Unusual Items’ in the Specific Transactions, Events and Disclosures area of the FAR Content Specification Outline (CSO). The AICPA has explicitly stated the elimination of extraordinary and unusual items will not become effective on the exam until Q1 2016.

Accountings Standards Update 2015-03, issued in April 2015, simplifies the presentation of debt issuance costs, which we refer to as bond issuance costs or BIC. Currently, BIC is reported as a deferred charge in the asset section of the balance sheet and gets amortized separately on the income statement. Under the revised standard, BIC will be treated similarly to a discount or premium and will be reported as an adjustment to the carrying value of the liability. The AICPA has explicitly stated this change to the accounting for BIC will not become effective on the exam until Q1 2016.

Accountings Standards Update 2015-05, issued in April 2015, concerns the accounting treatment of cloud computing expenses. This change is testable on the exam possibly as early as Q4 2015, but most likely starting in Q1 2016. When an entity enters into a cloud computing arrangement, an analysis is performed to determine whether some or all of the arrangement represents a software license. If the entire arrangement, such as a platform-as-a-service arrangement, is considered a software license, then its entire cost to include the present value of future payments is treated as an intangible and accounted for similarly to other license. If the arrangement does not include a software license, the entire amount is treated as a service contract with the expense recognized in the period in which the benefit is derived. If the arrangement is a combination of both software license and service contract, the total cost will be allocated between the software license and the service contract.

FAR - 89
AUD - 88
REG - TBD
BEC - TBD

Using Becker and Ninja MCQ

[qarnism]

thank you Alex for the valuable info.

[Anonymous]

Q1? I thought changes usually dont impact the cpa exam until Q3. Glad I read this. Im going to have to look into it

[Anonymous]

Very helpful info. Appreciate it.

[Excel14]

Interesting, since my Gleim book which is 2016, makes zero mention of any change. Under IFRS, the comparison of inventory is between NRV and Cost, but no mention of a change in GAAP. Odd.

BEC (2/28/16) ----- 78
FAR (09/10/16)-----
AUD
REG

CIA, CGAP, CFE

[Author]

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