[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

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

[LStevens225]

Question:

On 8/31 year 1, Wood Corp issued 100,000 shares of its $20 par value c/s for the net assets of Pine Inc. in a business combination accounted for by the acquisition method. The market value of Wood's c/s on 8/31 was $36 per share. Wood paid a fee of $160,000 to the consultant who arranged this acquisition. Costs of registering and issing the equity securities amounted to $80,000. No G/W was involved in the acquisition. What amount should Wood capitalized as the cost to acquiring Pine's net assets?

The answer is $3,600,000 but (and this is what I hate about these books) if you do the j/e then how do you show that $80,000? I know the $80,000 reduces the APIC but then the entry below doesn't add up so I'm confused

J/E

Investment dr. $3,600,000

C/S cr. $2,000,000

APIC cr. ??? Would this be the $1,600,000 or is there another line to hit that reduces this?

[stoleway]

@jrosen92770

It is held for resale, so you treat it as you will treat inventory.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[jhawkins1010]

Goal for tonight: MCQ's for (1) Noncurrent Liabilities, (2) Leases and Contingencies and (3) Equity. Problem a cake walk for most of you guys, but my motivation is not NEARLY where it was last week. Crossing my fingers …

[How many letters do you need]

Stevens: good question, I remember reading that transaction costs related to issuing stock come out of APIC but I dont recall them saying how you should do this. Im guessing in a normal ttansaction its just netted against proceeds but since this involves an acquisition Im not sure. Anybody else know this one?

MBA,CMA,CPA, CFF?, ABV?

[Guti]

Stevens, I think I remember this one. If the cost of registration is not exp then you reduce APIC. You still have to pay for it so you credit cash.

Investment dr. $3,600,000

C/S cr. $2,000,000

APIC cr. 1,520,000

cash cr. 80,000

FAR-84
AUD-
REG-
BEC-

[NJPRU]

Hey guys – I have a REALLY dumb question… What are escrow payments and why does real estate taxes net? Here's is why I ask:

On the first day of each month, Bell Mortgage Co. receives from Kent Corp. an escrow deposit of $2,500 for real estate taxes. Bell records the $2,500 in an escrow account. Kent’s Year 2 real estate tax is $28,000, payable in equal installments on the first day of each calendar quarter. On December 31, Year 1, the balance in the escrow account was $3,000. On September 30, Year 2, what amount should Bell show as an escrow liability to Kent?

Answer:

Through the first three quarters, Kent’s deposits were $22,500 ($2,500 × 9 months), and the tax payments totaled $21,000 [3 × ($28,000 ÷ 4 quarters)]. Consequently, the escrow balance should be $4,500 ($3,000 beginning balance + $22,500 – $21,000).

I can't really answer the question without memorization because I don't really understand the concepts of the two, i.e. escrow and real estate taxes.

Thanks in advance. 🙂

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[jrosen92770]

A financial instrument held by a third party on behalf of the other two parties in a transaction. For instance, when you have a mortgage, part of your mortgage payment goes to escrow for home owners insurance and for property taxes. When due the bank send it to the insurance company and/or taxing authority.

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Anonymous]

Yep–What JRo said.

[NJPRU]

LOL, thank you.

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[Anonymous]

My children are still awake. Arrggg. Anybody going to be on in another half hour for some quizzing? I went back and did all the ones you went over today. Gone thrown for a loop on a couple of them without looking at your solutions. A little discouraging. I feel like there are so many things I need a refresher on.

[Anonymous]

Good luck to everyone testing this week!!!! You can do it!

[jrosen92770]

Feel the same way, even after 4 lectures/chapters.

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[jrosen92770]

By the way, any question goes here if it helps us pass this!

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[ChristieF]

Hey FAR group…. Got the littlest munchkin down, the other is with daddy about to go to bed, so I actually get study time… YAY! I was looking over some of the questions you guys were quizzing today, some were over my head, but my head hasn't been in it the past couple of days, so I'm not surprised!

[Anonymous]

Question:

How do you accrue for contingency gains?

[Author]

Replies