FAR Study Group January/February 2013 - Page 61

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  • February 13, 2013 at 5:08 am #400189
    Anonymous
    Inactive

    I am struggling with year end bond adjustment concept, where the bond payment is July 1, and JAN 1 instead june 30and dec 31… urghh i wana pull my hairrrrr x-( Help my far fam!! i will really appreciate it if someone has lil example.. xxx

    February 13, 2013 at 5:28 am #400190
    Anonymous
    Inactive

    urgghh i got it – i dont know

    if its payable next year, then we have to make adjustment and accrue the interest in current year.. Bingo! ( I think i am right ) AM I??

    February 13, 2013 at 5:28 am #400191
    Anonymous
    Inactive

    See you tmrw.. Lot to cover and 14 days left….

    February 13, 2013 at 5:57 am #400192
    MCLKT
    Participant

    Yes you are right!

    Example $100k sold at face 5% bond int. pay July 1 and Jan 1.

    (.05*100,000 = 5,000 annual interest)

    1/1/x1

    DR CASH $100,000

    —->CR Bond Pay $100,000

    6/30/x1 (6 months)

    DR Interest Expense 2,500

    > CR Interest Pay 2,500

    7/1/x1

    DR Interest Pay. 2,500

    >CR CASH 2,500

    12/31/x1

    DR Interest Expense 2,500

    > CR Interest Pay. 2,500

    ===NOTE as of 12/31 total interest exp. is $5,000; but interest payable balance is only 2,500==

    01/01/x2

    DR Interest Pay. 2,500

    >CR CASH 2,500

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    February 13, 2013 at 7:15 am #400193
    FlipACoin
    Participant

    MCLKT….your extensive bond knowledge is CPA-sexy….

    February 13, 2013 at 7:22 am #400194
    MCLKT
    Participant

    HA! Flip…That's awesome… Now, you know, I'm not going to be able to do another bond question without bringing bond CPAsexy back, lol.

    I'm still up going through this power night. It's 1:20 and I believe I have officially master Earnings Per Share 🙂

    On to the next one.

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    February 13, 2013 at 7:35 am #400195
    FlipACoin
    Participant

    lol MCLKT…I know you will! 🙂

    I'm not really into full on study mode yet but just lurking here has been a huge help so far. Your motivation is inspiring. Keep it up and stay angry!

    February 13, 2013 at 12:08 pm #400196
    joch0803
    Member

    Good morning Far Fam!

    I decided to get a couple hours of studying in before work today…large coffee and chocolate muffin hopefully will give me energy to demolish a large portion of chapter 8!!!!

    Today's Plan: Finish MCQ for sections 1 and 2 of chapter 8 and watch lecture and do MCQ for 8.3!!!

    Lets have a great day!!!!! 11 days to go!

    Audit 10/2012- 77
    Reg- 1/7/13- 82
    Financial-2/25/13- 78
    BEC- 74,66,81!

    License pending : )

    Ethics- Passed
    Experience- Done

    Using Becker self study.
    **For BEC retake using Ninja Blitz, Ninja Notes, Ninja Audio, and WTB (my Becker expired)

    February 13, 2013 at 2:25 pm #400197
    MCLKT
    Participant

    Great job JOCH! I hope you got a lot done this morning. I'm under some tight deadlines at work, so will be busy today.

    T minus 14 days! I'm going to revamp my study schedule today over lunch and enforce some strict discipline over the next two weeks.

    I can't thank you all enough for being so encouraging. I was ready to postpone my exam until April, oh my! NOT 6 MORE WEEKS OF FAR. NOOOOO!

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    February 13, 2013 at 3:41 pm #400198
    gobias
    Member

    Can anyone explain this to me?

    Zulu Transportation Inc.'s pension trustee provided the company with the following information for its defined benefit pension plan at December 31:

    Unrecognized prior service cost: $ 240,000

    Unrecognized net gain: 75,000

    Net periodic pension cost: 385,000

    Zulu has an effective tax rate of 30%. Under IFRS, what amount would Zulu report in accumulated other comprehensive income related to its pension plan on its December 31 balance sheet?

    $0

    $115,500

    $385,000

    $165,000

    Choice “1” is correct. Under IFRS, unrecognized prior service cost and unrecognized net gains are off-balance sheet items that are disclosed in the footnotes only and are not included in the pension benefit asset/liability or other comprehensive income.

    The text, however, says the following: “gains and losses are referred to as remeasurements of net defined benefit liability (asset) and are reported in other comprehensive income. Remeasurements of net defined benefit liability (asset) reported in OCI are not reclassified (amortized) to the income statement in subsequent periods.”

    Per this explanation, shouldn't the unrecognized net gain be included in OCI?

    F - 86
    R - 90
    A - 97
    B - 91

    February 13, 2013 at 4:02 pm #400199
    MCLKT
    Participant

    The gains/losses (referred to in the text) that are posted to OCI and closed to Accum. OCI result from adjusting the Pension Liability (balance sheet account).

    This adjustment is based on the Projected Benefit Obligation – not the Pension Cost.

    They are giving you Actuary Account numbers used to calculate the Pension Cost (pension expense). No effect to OCI. This is all used by the actuary to determine the Pension Expense to apply and calculate the PBO.

    If the problem went on to say the PBO was $200,000, the FV of plan assets is $180,000 and the current Pension Liability on the books balance $5,000 THEN there would be an adjustment, net of tax effect to OCI. You would increase the Pension Liability by $15,000 so it matches the PBO.

    DR OCI- Pension $15,000

    >CR Pension Liability $15,000

    DR Deferred tax asset $4,500

    > CR OCI – tax asset

    ===End Pension Liability is $20,000 same as PBO

    ===Net adj to OCI is $10,500 to show increase in expense net of tax

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    February 13, 2013 at 4:06 pm #400200
    peetree
    Member

    Hey @Gobias

    I think the key for that question is the fact that they are unrecognized gains. I know the prior service cost under IFRS is expensed when it is realized. (IFRS doesn't do that whole bleed out of OCI thing)

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 13, 2013 at 4:11 pm #400201
    mindjet
    Member

    Hey,

    I just joined the group and read ur question.

    Answer is, under IFRS, Comprehensive income is reported either in Income statement and comprehensive income or in a separate Comprehensive income stmt. It is not included in stockholder's equity and thus does not show in B/S.

    GAAP reports in either I/S & CI or CI stmt and Stockholder's equity.

    FAR 02/28/2013

    February 13, 2013 at 4:22 pm #400202
    peetree
    Member

    @mindjet that is true for presentation of financials but I don't think it is what the pension related question is getting at.

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 13, 2013 at 4:29 pm #400203
    Anonymous
    Inactive

    @joch0803 0 – you almost gave me a heart attack.. 11 days darn!!!! Thanks god i still have 3 days extra heheheheheheh

    @MCKLT – you are the best <3 u

    Ok I think I am too much bonded with bonds, I need to spend today to wrapping up the bonds & leases AND move forward…

    Good luck everyone.xxxxxxxxxxxx

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