[jeff]

FAR Resources:

Free FAR Notes & Audio – https://www.another71.com/cpa-exam-study-plan

FAR 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

FAR Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[mjp44]

Revaluation of intangible assets: I believe this question from WILEY Test Bank was posted before but I couldnt find a definitive answer.

Veronica Corp. uses the revaluation model for intangible assets. On March 1, 2010, Veronica acquired intangible assets with an indefinite life for $200,000. On December 31, 2010, it was determined that the recoverable amount for these intangible assets was $180,000. On December 31, 2011, it was determined that the intangible assets had a recoverable amount of $187,000. How should Veronica recognize the gain or loss in the December 31, 2011 financial statements?

A: Gain on the income statement of $7,000.

B: Loss on the income statement of $20,000.

C: Unrealized gain in other comprehensive income of $7,000.

D: Unrealized loss in other comprehensive income of $20,000.

Answer is C.

I had thought that any revaluation gain that reverses a prior revaluation loss is recorded in the income statement and that any gain surplus was reported in OCI. Therefore, I chose A.

This question has come up before in the forums but there was some uncertainity as to whether this was an error in the testbank.

ALSO, the revaluation model is only applicable with IFRS right? So, I assume this question is referring to IFRS

FAR- PASSED (11/13)
REG- PASSED (2/14)
BEC- PASSED (5/14)
AUD- PASSED (8/14)

If it's important to you, you will find a way. If it isn't, you will find an excuse.

[CPA2B_NJ]

@hab6301 – I too thought FAR was my strongest area, since I was a nerd accounting student. The amount of information that we need to retain is so tremendous that academia success doesn't translate to passing FAR. I'm studying with Becker as well, and F2 has been slow going for me.

Follow the advice of @CPA4birthdaypresent and just write small facts to help you remember such as:

constant dollar = inflation = what things “inflate”? PRICES… monetary items

current cost = appreciation = the only things that “appreciate” are non-monetary items

You're not alone.

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[CPA2B_NJ]

@mjp44 – I'm using Becker and a similar problem/answer came up in my MCQ's last night. I didn't understand when the gain/loss goes to net income vs comprehensive income. Anyone?

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[Qlad]

Someone, please explain this answer to me in easy words…

Harris Inc. recd $50000 from sale of AFS securities in year 2. The securities were acquired for $ 62000 in year 1 and had a market value of $55000 at the EOY. Harris does not elect the fair value option for any of his assets (what does that mean?..how does it make a difference?). Ignoring income taxes, how would this info affect OCI for year 1 and year 2?

The answer is Y1 (7000) and Y2 7000.

I do not understand the Y2 solution…Also, if the fair value option point was not given, wud the answer be different? …please help…

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[kevlee]

y1 = 62k-55k = 7k loss in OCI (Debit)

y2 = Reverse out the 7k loss in OCI. (Credit) because it is sold and since it is not using fair value

[Anonymous]

@Qlad By the firm selling the AFS securities in Y2, they would recognize the gain or loss on the sale. In year one they purchased them for $62k and classified them as AFS. Since they are AFS, they must revalue them at fair value at EOY; however, the G/L will flow into OCI which then flows into AOCI. If they were trading securities, they the G/L would go the I/S at EOY. Then in Y2 they were sold of $50k, since they are being sold, the loss must now be recognized on the I/S and therefore we must back the previously recognized loss of $7k out of OCI.

Hope this helps.

[icanhazcpa]

@WestonM @Joey You guys have got me confused now! According to Becker textbook, “Components of OCI can be reported either net of tax OR before related tax effects.”

BEC - 83
FAR - 83
REG - 74, 78
AUD - 76

Becker Self Study

[Qlad]

@kevlee, adrost

I did exactly as u…but if it was a loss (7000) in y1 and reversed in Y2 ..the answer in OCI y2 shud be 0 and I/S ..loss (12000)…

But the answer is OCI Y2 +7000…

In the solution it shows that they have revalued AFS again in OCI for loss (5000) …ie 55000-50000…then reversed reclassification adjustment of + 12000…so that the difference in OCI is +ve 7000. I don't understand, why?

Actually..let me write exactly as they did it…

Loss from sale of securities (reported in I/S) Y1: 0 Y2 : (12000)

OCI:

Unrealized loss on AFS securities Y1: (7000) Y2: (5000)

Reclassification adjustment Y1 : 0 Y2: 12000

---

Net effect in OCI Y1: (7000) Y2: 7000

==================

I am not sure why that (5000) came in y2…is it bcoz it did not opt for fair value…? or that is how it is solved and i have been wrong all along?

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[mjp44]

@Qlad: if FVO is elected, for AFS, you would record any unrealized gains/losses in the income statement and NOT OCI. You would also reverse any previous accumulated G/L out of OCI to retained earnings.

The unrealized loss in yr one is (7K) 62K-55K

The unrealized loss in yr two is (5k) 55k – 50K – I believe this is still reported in OCI even though the security is sold.

The security was sold in yr 2 for 50K which would be a realized loss of (12k) 62k-50K. Which is reported on the I/S.

FAR- PASSED (11/13)
REG- PASSED (2/14)
BEC- PASSED (5/14)
AUD- PASSED (8/14)

If it's important to you, you will find a way. If it isn't, you will find an excuse.

[Qlad]

@mjp44…

I had no idea about the difference if fair value was opted….thanks..that clarification has helped in clearing some confusion …where did u find that..i have been trying to find some explanation but did not find it anywhere

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Anonymous]

Just want to double check my thought process on cash and cash equivalents…

Purchased a T-Bill or CD on 7/1/2013 with a mature date of 6 months (1/1/2014).

For the 2013 year-end, this T-Bill or CD is not a cash equivalent since its original maturity date at purchase was over 90 days. Even then though it will be cash the next day, the 90 day criteria was not met, therefore it is current asset investment.

Thoughts?

[mypetmeatball]

^Correct. To my understanding the entire duration of the t-bill is what's important, not the remaining time until maturity.

[studylongUstudywrong]

What up Study group?

I am starting the NINJA method for FAR. Plan to sit mid-end August. Right now it is BLITZ Videos with intense notes, basically I am coping the slides with minor additions.

I used CPAExcel, Ninja Notes and audio and I passed REG in MAY!!!

This time I am following way of the NINJA as best as I can.

My day dream is spending the night in the rafters of a Prometric test center, then when FAR walks in thinking he is soo bad… I am going to drop down and SMACK that punk!!!! I can hear the thud echoing…… I am so pumped after passing REG!!!

Has anybody here failed FAR after following the NINJA way? This is my third attempt, the first as a NINJA.

I have no fear of failure. My only fear is giving up.

Licensed Texas CPA

[Anonymous]

Hey studylong! If your username was inspired by Gin&Juice by Snoop dogg, then I love it!!

I too am taking FAR for the 3rd time and it is my first time using the NINJA method. So far I feel decent about the material and I'm doing Mcqs right now.

I sure hope we pass this!!

[Anonymous]

@studylong

Haha that's a great dream. That made me laugh. Wouldn't mind dropping the smack down either on FAR too. Also pumped after passing REG. NINJA has worked for me so far, so no complaints here.

Follow what you did for REG and I'd say you'll be fine.

[Author]

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