[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]

Amay, your words are so powerful. Everybody is taking a day off the study group. LOL

I bet some are still in the church, others on their couches watching their favorite teams play, and while the rest are napping.

Where is Zach, by the way? I miss him.

He is probably avenging and studying so hard for the next attack. Good for him. I should do the same.

[Anonymous]

@Mamabear, I quoted your previous post from yesterday: My notes say that financial instruments are classified as either FVTPL, HTM, or AFS. The Fair Value Through Profit and Loss include HTF (Held for Trading Securities) AFS securities are those that are not classified as HTM, FVTPL or loans or receivables. Everything else is AFS.

Today, as I am going through my outline for Marketable Securities, I realized your post refers to IFRS. When I read your post yesterday, ‘What in the world is she talking about FVTPL and HTF? {Would that be He11 The F*@K?}”

US GAAP's MS classifications are easier to remember I guess:

Just TAH:

T – Trading Securities

A – AFS

H – HTM

The MS classifications are pretty much the same under both of them. It's just TS is not so wordy under US GAAP.

However, the FVTPL includes 2 investments:

-HFD [Held For Trading]

-Designated at FVTPL using the FV option.

I really hope this information would really stick. When I am faced with question about IFRS, it's hard for me to remember the differences and similarities of the two. That's the way the examiners torture us during the test. We're lucky to remember what rule applies under where? WTH? I don't even know what applies under US?

[Anonymous]

I thought whoever asked about it was asking about IFRS that's why I posted that. I may have misread their post though. GAAP is much easier to remember for me because when I was in college IFRS didn't exist. Sorry if I confused you.

[Anonymous]

You did not confuse me.

In fact, I am glad that you mentioned that subject. I had no idea of the differences between US & IFRS about MS. I should be grateful. Next time, I get slapped with those terminologies, I now know where they are taken from.

[Amay]

I keep getting seemingly simple lease liability questions wrong. I need to remember that when there is a rent advance payment at the beginning of the lease, I need to deduct that first from the PV of the MLPs before doing any interest calculations to come up with the “principal reduction amount.”

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Anonymous]

I would rather be studying than doing my daughter's hair. 🙁

[Anonymous]

Mammabear? Don't let your daughter hear you say that.

I wish I had a daughter of my own:(

[Anonymous]

Oh they would rather me be studying too. 🙂 Do you have sons? I would love a son, but I am not willing to chance another girl. I love them, but I'm scared of the teenage years with 3 daughters so close in age. We definitely need another bathroom before that happens. 🙂

[Anonymous]

2 sons, 15 months apart, 22 & 23 years of age now.

[CPAfit]

hey FAR fam, haven't been here for a couple of days and so much has happened. The new job is going fine but as i said earlier I am sitting late than I am used to. So i've decided to stay late in the office this week and study then leave for home. Currently my family has gone to UK for vaca so it's not a big deal but I don't know how mom will react to this when she's back 😛 Also i'm almost done with the lectures so looking forward to review and destroying those MCQs 🙂

@mommy hopefully you'll have a son next once you get your CPA 🙂

@Amor me and my brother are also 15 months apart, 25 & 27 of age now. my brother just turned 27 and i'll turn 26 in July

[Anonymous]

@Zubairs, that's great. Sounds like you're the Mommy's boy:)

Anyway, can someone here please help me lay out the JEs for this problem about Marketable Securities? Thanks guys.

By seeing the correct JEs, I am able to see why is the correct answer for a certain question laid out like that.

Puff Co. acquired 40% of Straw, Inc.'s voting common stock on 1/2/Y1 for $400,000. The CV of Straw's net assets at the purchase date totaled $900,000. FVs equaled CVs for all items except equipment, for which FVs exceeded CA of $100,000. The equipment has a 5-year life. During Y1, Straw reported NI of $150,000.

What amount of income this investment should Puff report in its Y1 I/S?

a. $40,000

b. $60,000

c. $56,000

d. $52,000

Choice “d” is correct.

Undervalued equipment $100,000 x 40% ownership = $40,000 / 5 years = $8,000

Puff's share of Straw's income:

$150,000 x 40% >>>>>>>>>>>>>>>> $60,000

Less: Excess FV amtzn >>>>>>>>>>> ($8,000)

Equity Method Investment Income >>>$52,000

I am confused why was the FV amortization deducted from the income above.

[NYCaccountant]

@Amor When you first bought 40% of the sub, you paid 400,000 for 40%, which would allude to their being some goodwill or assets which have higher fair values than book values. 400,000 is 40% of 1,000,000, and we know the equipments market value is 100,000 more than book value, since the net assets have a book value of 900,000, this explains the difference. Now when you record depreciation expense, the sub is still using historical numbers (book value), but you have to use the current market value, which was 100,000 over book value and result in a greater depreciation and less net income. Since the sub does not depreciate this extra 8,000 a year, you have to do it and net it out of your share of their income.

Big picture view – An asset has a book value of 100,000 and a fair value of 200,000. The sub carries the asset on it's balance sheet at 100,000, while you report equity in that asset reflecting a value of 200,000. Let use your 40% and compare both alternatives

100,000*40%= 40,000 equity in asset under A.

200,000*40%=80,000 equity in asset under B. This will result in greater depreciation, but because sub is using book value their net income is in effect overstated, which means your share of their net income is overstated, and the adjustment is made to include the excess depreciation that should be booked.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[ChristieF]

Morning all! I didnt get nearly as much studying as I wanted to this weekend… thanks to cranky kids, BUT I finished a section of my Wiley book and after doing some MCQ's on the WTB this morning, I can actually say I retained something… this makes me feel a tad bit better, and I'm ready to really get on the studying ball this week…hopefully I can get through many more sections this week! Good luck to everyone studying!!

[NJPRU]

Good News: I havent given up yet.

Bad News: I only studied for 10 hours this weekend amongst a trip to CT for business travel which took out 4 hours of my study time for the weekend – I will try to do my PPE review tonight and hopefully start a new chapter tomorrow. I dont want to fall behind.

Hope you all are hanging in there!

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

IM GOING TO BE A CPA!!!!!

[oilgaslb]

Morning everyone…I'm back…even if it's halfheartedly. I got 0 studying done this weekend. I was so sick I could barely get out of bed, and finally turned a corner 1/2 way through yesterday. Then we treated little man to the Muppets movie. I got preliminary tests results back on Thursday night, and it's not looking good. I will have more answers hopefully today (tomorrow at the latest). Has anyone gone through a cancer diagnosis and been able to complete an exam less than 3 weeks later? 🙁

[Author]

Replies