Thanks for that write up. I do understand how to calculate premiums and discounts and how to amortize them with their JE. What I can't wrap my head around is the question is asking for “bond liability” and the answer is the cash amount of 955,000. In my mind when it's asking for a liability it's the full face value of 1,000,000 as that will be the matured value.
That makes sense. My brain is fried right now, but once the bond is matured and all the interest payments are made, you still end up paying the 1,000,000 face value to the bond holder right? So wouldn't it be a liability of 1,000,000!!! lol I'm burnt out this exam is the hardest one by far.
That's what I'm saying! Haha so since the liability of the bond once it's matured is 1,000,000, when the question asks for the bond liability why isn't it the full 1,000,000 because at the end of the day, that's what you're paying. Thanks for your help. I understand how it all works it just doesn't make SENSE to me why that's how it's done that way. Why is the bond liability 955,000 if your actually liability that you will end up paying is 1,000,000. Either way thanks for your help I'll re-hit the book and hopefull it will make more sense.
I feel your pain. Sims are so, so EHHH…. Also, the amount of information some of these sims have makes me go crazy….. (Is it really necessary for the AICPA to make such sims)
@beantown it is asking for the NET bond liability. So you have to subtract the discount and the debt issuance costs. If it was the gross liability it would be the full amount. Just like with AR… NET accounts receibable is AR minus the allowance while gross AR is the total amount you are actually owed
@mtaylo notes receivable suck I reviewed them last night again and it made a lot more sense. I don't have notes but if you have any questions I'll try to answer them for you.
Yeah I just got a 58% in Ninja. Struggling with the allowance increase/decrease questions and for N/R keep forgetting what to add/subtract prior to calculating interest.
The best way to deal with AR and the allowance account is set up T accounts. AR beg balance is debit, things that decrease AR (credits) are write offs, collections, uncollecables and conversions. Allowance is a credit balance so beg balance, bad debt exp etc. things you're debiting bring the balance down, so write offs, transfers to NR….when you bring down Ar with credits, the reverse is a debit to allowance. so if you have a write off it's dr. ALlowance cr. Ar
The big part of getting the AR questions right is paying attention to the method used for example the allowance method % of rec will give you the ENDING balance of the allowance account. Other methods will give you the credit increase of the allowance account and you're solving for the ending balance
Hey 01Auditor , “honestly didn't think it was very bad” heard it after long time from any FAR candidate.Can you please share your experience with SIM ? Most of candidates say almost impossible FAR SIM and I get an idea that no human can solve these SIMS in 2 hours and here you did it with 20 minutes still in hand.Excellent.Like to hear more.
O yeah , forgot please make sure you don't post the exam questions here because that would be violation and so many attorneys will remind you about non disclosure agreement you signed at Prometric.I don't want exam questions . LOL
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