[jeff]

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

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

[dbacpa]

My Notice to Schedule expires July 11th for FAR. I have the exam scheduled for May 27th right now. I just made it through chapter 9 of Becker with one more chapter to go. I have just been plugging away at the Becker chapters and progress tests. I know I will never feel completely comfortable but I feel way under prepared right now. Does anybody think I have enough time to finish Becker and hammer away at Ninja MCQ's before the 27th? Is there such thing as giving myself too much time to study if I push it back? I really wish June wasn't a blackout month I feel like I just need a couple more weeks to really review, re-write notes, and really hit the MCQs. Thanks in advance.

[wannabeCPA1234]

So I just took this FAR exam….lol the MCQs are the usual. No surprises for me. I thought they were easy. Only guessed on probably 2-3 of them tops and even then it was more of a 50/50 type guess.

The sims…..holy hell. I don't even know where to start. Probably 7/8 of the sims had a massive amount of data and most of the topics were completely out of left field. I was familiar with the topics being tested but no where near the level of detail they were testing. Becker only covers these topics at the high-level theory. If they tested a topic that I was familiar with the questions were like the most obscure type of topics or data set.

The only easy question was the research question, every other sim was a complete nightmare. I went into the sims with over 2 hours and 30 mins and still struggled with them. It was hard to even just grasp your head around the amount of data you have to work with. Honestly, I don't even know how you would prepare for those types of questions. If was almost like as if someone dropped a bunch of random accounting worksheets on your desk and said “prepare a balance sheet/trial balance etc” from scratch. There isn't enough time to devote to each question!

Also by the way, I felt VERY confident with the material before going into the exam. I am not one of those people who just winged the exam. I read every page of the becker book MULTIPLE times and made sure to try to understand the topics at a mastery level. Did a couple thousands MCQs. Any sim question you guys are using to “practice” on will do little to help you to be honest.

[Anthony]

@mtaylo24 Don't neglect the sims! I hated studying them and it felt like pulling teeth because how long they can be, but I forced myself through it. I felt that work I put in to them paid off when I took the exam, hopefully the scores I get back on August will agree with me.

[mtaylo24]

@Anthony, I'm gonna put them back into rotation. It doesn't really help that the first sim I pulled up in the bond chapter had 7 different transactions. Did you do the final review mode in Gleim, if so what did you think?

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]

@mtaylo24 I never touched the final review mode or the rehearsal. Only 2-3 things I touched from the whole program is the sims/mcq and a bit from the book.

[wannabeCPA1234]

Just FYI, the sims you are using won't really help you much. The real sims on the exam are way different in the way the material is tested.

[mtaylo24]

@wannabeCPA1234, Your probably right. I just study them because they cover things that the MCQs neglect. Which review program did you use?

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)

[wannabeCPA1234]

becker

The issue is that the sims we use to practice on are way too straight forward. The real sims on the exam will overload you with data/information and then you will struggle to piece it all together. Even if you know the rules and formulas, you will still struggle because you have to know how to piece it all together to get the data you need. There is a lot of data given that is not at all relevant to answering the questions.

[Jj]

Can someone clear this up for me?

On June 30 of the current year Huff corp. issued at 99, one thousand of its 8%, $1000 bonds. Huff uses GAAP. Huff paid issuance costs of $35,000. On June 30 of the current year, Huff should report a bond liability of:

Answer= $955,000

My question is wouldn't the bond liability on the books be 1,000,000 because you DR:: cash $955000 DR: discount $45000 and CR: bonds payable $1000000. wouldn't the bond payable be the liability?

[Jj]

@wannabecpa- was FAR your first exam?

[mtaylo24]

@Beantown23

Wouldn't it be

Dr. Cash 990,000
Dr. Discount 10,000
Cr. Bonds Payable 1,000,000

Dr. Debt Issue Costs 35,000
Cr. Cash 35,000

Net Bond Liability = 1,000,000 – 10,000 discount – 35,000 Debt issue Costs = 955,000

Edit: Or better yet

Dr. Cash 955,000
Dr. Debt Issue Costs 35,000
Dr. Discount 10,000
Cr. Bonds Payable 1,000,000

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)

[Jj]

Yes that's a mistake on my part. Dr cash 955,000 dr discount 10,000 dr bic 35000. I don't have my materials infront of me but unless I'm mistaken Becker lumps the bic and discount because they are both amortized over the life of the bond? Also I just don't understand why they call the cash receipt the liability. Wouldn't the liability be the amount recorded on the bond payable? I'm just confused.

[mtaylo24]

@Beantown, Maybe the discount/issue costs are unamortized, so they are treated as liabilities on the balance sheet?

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)

[Jj]

That makes sense. So the cash received and the discount are technically considered a liability. But that would be 990,000. The 35000 bic is technically paid, unless you aren't crediting cash and still owe it? I'm just trying to understand it. I get how to calculate it but it just don't make sense to me.

[mtaylo24]

See classifications below:

Dr. Cash 955,000 (asset)
Dr. Debt Issue Costs 35,000 (liability)
Dr. Discount 10,000 (liability)
Cr. Bonds Payable 1,000,000 (liability)

You reverse your liability as you amortize:

Dr. Debt Issue **unsure of acct name** (Expense)
Cr. Debt Issue Cost (Liability)

Dr. Discount Exp **unsure of acct name** (Expense)
Cr. Discount (Liability)

Edit: Just checked the text for discount/premium amort entry/account names

Dr. Interest Expense
Dr. Premium
Cr. Cash

Dr. Interest Expense
Cr. Discount
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)

[Author]

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