[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

[Anonymous]

I just think of it as being a future inflow to the company because money's going to be coming in the door at a later time.

[stoleway]

The following pertains to Smoke, Inc.’s investment in equity securities: •On December 31, Year 3, Smoke reclassified a security acquired during the year for $70,000. It had a $50,000 fair value when it was reclassified from trading to available-for-sale.

•An available-for-sale security costing $75,000, written down to $30,000 in Year 2 because of an other-than-temporary impairment of fair value, had a $60,000 fair value on December 31, Year 3.

What is the net effect of the above items on Smoke’s net income for the year ended December 31, Year 3?

A. $10,000 increase.

B. No effect.

C. $20,000 decrease.

D. $30,000 increase.

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

Mass-CPA

[NJPRU]

stoleway i think the answer is A. *hides*

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

IM GOING TO BE A CPA!!!!!

[jrosen92770]

Y'all been at it today. I have been going since 5:45 am today….What do you all do when you have reached a point of saturation?

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]

A Increase of 10,000

[NJPRU]

Just starting my studying of PPE.. going to attempt 161 MCQs. I was able to do 197 last night, hopefully I can match my productivity levels!

Good luck on your studies tonight. I'll check in periodically. 🙂

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

IM GOING TO BE A CPA!!!!!

[Anonymous]

How are you guys getting 10,000? I cant figure this one out

[jrosen92770]

20,000 loss from conversion of trade to AVS and gain of 30,000 after impairment….right?

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

[stoleway]

C is the right answer…see explanation below

In summary, Increase in AFS goes into OCI

Unrealized holding gains and losses on trading securities are included in earnings, and reclassification is at fair value. Furthermore, “for a security transferred from the trading category, the unrealized holding gain or loss at the date of transfer will have already been recognized in earnings and shall not be reversed.” Hence, Smoke should include a $20,000 ($70,000 cost – $50,000 fair value at 12/31/Yr 3) unrealized holding loss in the determination of net income. After an available-for-sale security has been written down to reflect an other-than-temporary decline in fair value, with the loss included in earnings, subsequent increases in its fair value are included in OCI (assuming it is not designated as being hedged in a fair value hedge). Thus, the appreciation of this security has no effect on Year 3 net income.

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

Mass-CPA

[Anonymous]

OH yes – Missed that part Income Statement..

[stoleway]

Reclaisfication from TD to AFS gives you a $20,000 loss in earning.

But the increase in AFS will be transferred to OCI……………………very tricky!

Remember when you transfer TD to any category, DO NOT reverse the unrealized gain or losses. They will continue to stay in earning even after reclassification.

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

Mass-CPA

[NJPRU]

never mind. poop.

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

IM GOING TO BE A CPA!!!!!

[Anonymous]

I thought an other than temporary impairment was considered realized, therefore, you would write the cost basis down to FV?

[NJPRU]

You did.. you wrote it down to 30k but (since i didn't read the entire problem right) you didn't realize the appreciation of 30k in YR3.

My brain is seriously playing tricks on me, i really thought the problem said that it was sold in YR3 lmao

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

IM GOING TO BE A CPA!!!!!

[Anonymous]

THE DATES. I'm going to fail this test because I never look at dates! It's asking for year 3 and it was written down to cost basis in year 2 so any write up would go to OCI in year 3

[Author]

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