[jeff]

Welcome to the Q2 2017 CPA Exam Study Group for FAR. 🙂

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

[Anonymous]

@automn3 I did find a couple of videos on Youtube, which helped me understand more on Intercompany Transactions and Consolidations.
I'm taking my FAR on 10th and this is my first CPA exam. I'm freaking out!

[mtaylo24]

Speaking of business combos

To record investment in Sub:
Dr. Investment in Sub
Cr. Cash

To record investment in sub with business combo expense:
Dr. Investment in Sub
Dr. Business Combo Expense
Cr. Cash

To record balance sheet on acquisition date:
Dr. Plant assets (net)
Dr. Goodwill
Dr. Capital stock – Sub.
Dr. Retained earnings – Sub.
Cr. Investment in Sub
Cr. Noncontrolling interest

Eliminate dividends paid to 70% parent:
Dr. Investment in Sub (70% of dividend)
Cr. Dividends (70% of dividend)

Intraentity JE:
Dr. Due to Parent Corp.
Cr. Due from Sub Corp.
 
Bond Issue Costs:
Dr. Debt Issue Costs
Cr. Cash

Fee for stock certificates:
Dr. APIC
Cr. Cash

Finders and consulting fees:
Dr. Business Combo Expense
Cr. Cash

Eliminating JE:
Dr. Sales
Cr. Inventory
Cr. COGS

Eliminating JE:
Dr. Sales
Cr. COGS

Eliminating JE:
Dr. Equipment
Dr. Gain on Sale of Equipment
Cr. Accumulated Depreciation
Cr. Depreciation Expense

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Anthony]

Intracompany transaction sucks so much, probably my second hated topic next to equity. You just need to memorize the J/e and I believe if you do that you're going to be OK.

[Anonymous]

Im printing that to add it to my notes 🙂 TY @mtaylo24.
I hope Ninja MCQ has more questions on this. With Becker i got a 90 on this subsection! HA! Thats how i know it was not covered on detail lol

[mtaylo24]

This damn cash flows chapter is pissing me off. Every new question contradicts the previous one smh.

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Anthony]

I need to redo the sims for that chapter. First attempt was a mid 60s yesterday 😐

[HoldMyBeerCPA]

One more to add to mtaylo's fine cheat sheet

To record consolidating entries at the end of the year, subsequent to acquisition:
Dr. Plant assets (FV at acquisition date less any annual depreciation of excess of FV over BV)
Dr. Goodwill (FV at acquisition date less any impairment losses recognized)
Dr. Capital stock – Sub.
Dr. Retained earnings – Sub.
Cr. Investment in Sub [FV paid at acq. date, +/- any income from sub (at percentage of ownership), less any dividends received (at percentage of ownership), less any amortization of excess PPE/impairment of goodwill (at 100%, rather than percentage of ownership)]
Cr. Noncontrolling interest [FV at acq. date, +/- any income from sub (at percentage of ownership), less any dividends received (at percentage of ownership)]

Or perhaps I've made it more confusing. Hopefully not!

[mtaylo24]

Saw this one in a sim, this might help too.

Paid cash and issued shares for all voting stock with direct costs of registering and issuing equity securities and also paid a fee to a consultant.

Dr. Investment in sub
Dr. Expense for consulting fee
Dr. APIC (direct registration and issue costs)
Cr. Common Stock
Cr. APIC (Common Stock – mkt less par)
Cr. Cash

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Anonymous]

thank you so much for sharing! Cannot wait to use these on my SIMs on saturday 🙂 🙂

[Anonymous]

Becker's explanations on consolidation and intercompany transactions worked out fine for me, but I got to actually work on a consolidated client's financials. When they start to describe entries, I picture that client's books, and it falls into place. Without the hands on experience, I'd just have to memorize it. CAR IN BIG is helpful.

[HoldMyBeerCPA]

So far I've completed 150 MCQs via NINJA MCQ…so far it's looking bad. Average score 65%, trending score 34%. I have no idea why my trending score is so low, is it because I have answered questions in some areas (such as government and NFP)? If that's the case, then my trending score of questions I have answered is about 60%. Not sure what to make of my progress so far. But I'm just starting to realize how defeating this process is.

How was everyone else's average and trending scores through the first few hundred MCQs?

[mtaylo24]

^^^I wouldn't worry about trending until you are a couple hundred questions in, plus you have to do questions from all sections for your trending to balance out.

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[mtaylo24]

@anthony, I just pulled a 59% on the cash flow sims. Got a 0% on the direct method sim smh!

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[hwasup7]

My exam is within 4 days. Was planning to read through the Becker book one last time. Worth it?

[Yo831CA]

Sage, Inc. bought 40% of Adams Corp.'s outstanding common stock on January 2, 2004 for $400,000. The investment gave Sage significant influence over Adams.
The carrying amount of Adams' net assets at the purchase date totaled $900,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by $90,000 and $10,000, respectively. The plant has an 18‐year life. All inventory was sold during 2004. Goodwill, if any, is expected to have a useful life of 40 years. During 2004, Adams reported net income of $120,000 and paid a $20,000 cash dividend.
What amount should Sage report in its Income Statement from its investment in Adams for the year ended December 31, 2004?

$48,000

$42,000 (correct)

$36,000

$32,000

My question here, why the dividends were completely disregarded, the investor uses the equit

[Author]

Replies