[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

[NYCaccountant]

@ CPA2014Dream They originally expensed the entire new policy of $3,600, but should only have expensed $200 of the policy.

Entry to reclass below:

Prepaid Expense Dr. 3,400

Expense Cr. 3,400

After this adjustment, your balance would be $1,010 in the expense account and $3,490 in the prepaid expense account.

So we know $3,400 is related to the new policy and the old policy has expired, so we just declass the $90 at this point:

Expense Dr. 90

Prepaid Expense Cr.90

Now our expense is $1,100, and our prepaid expense is correct at $3,400

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[ZSRizvi]

@Dante

I wouldn't worry about it too much and just stick to the method that is most frequently used (in this case dividing the amount acquired by the percentage acquired). I've heard Wiley tends to have conflicting answers/ways to do problems in relation to Becker so, don't really know what to say except…BECKER FTW. LOL, just kidding.

Having said that, these homework problems are killing me. Slaughtering me. Making me want the zombie apocalypse to actually happen.

Especially F2 problems.

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[ZSRizvi]

Okay question here:

On December 12, Year 1, Imp entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows:

Spot rate Forward rate(for March 12, Year 2)

December 12, Year 1 $.88 $.90

December 31, Year 1 .98 .93

Imp entered into the third forward contract for speculation. At December 31, Year 1, what amount of foreign currency transaction gain should Imp include in income from this forward contract?

The answer is:

3/12/Year 2 future rate on 12/12/Year 1 $ 0.90 $ 90,000

3/12/Year 2 future rate on 12/31/Year 1 0.93 93,000

Gain recognized in Year 1 $ 0.03 $ 3,000

My question is how can you record a gain when you don't know the eventual rate in March and when you haven't exercised the contract yet? I'm pretty rusty on Forward Exchange contracts from BEC so can someone please explain this to me? Thanks in advance!

—

Second question:

This is from the Wiley test bank and relates to acquisition costs.

A firm issued 10,000 shares of $1 par value stock with a $50 fair value for 100% of another firm's stock.

Registration fees: $7000

Legal fees: $20,000

What should the acquisition cost be capitalized at?

The answer is $500,000.

But I put $0. I thought that the acquisition price isn't “capitalized.” Just recorded at the value paid.

Is the word “capitalized” even appropriate when referring to the recording of acquisition payment?

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[NYCaccountant]

You are assuming that you will have to buy 100,000 francs in March at .90 cents each (90,000) initially. You have to at least pay that amount because you entered into the contract on December 12. On December 31, the projected rate for March is 100,000 francs for .93 cents (93,000), but you are contractually obligated at this point to only pay 90,000, hence the gain in Net Income. The forward rate is the projected rate in March.

For question 2, the parent will record a capitalized asset to reflect the fair value of consideration given up for ownership.

So the parents balance sheet will have an asset that says, ” Net Investment in Sub Stock”. This will eventually be eliminated during the consolidations process at year end though, but for now it's an asset on the parents balance sheet. The legal fees are an expense in the current period though, while the registration fees for the stock are reductions in paid in capital. Neither factor into the recorded value for “Net Investment in Sub Stock”.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Anonymous]

Pertaining to that forward contact question with Imp…why is it 100,000 francs when it says Imp entered into THREE forward exchange contracts, each to purchase 100,000 francs. Would we not use 300,000 francs when computing the gain? Or wait…is the 100,000 that is on speculation in income and the 200,000 then in OCI?

[jasbeerch]

Hi Everybody:

I am using Yaeger Videos+ wiley book +NINJA notes

I have a question about material.

If you have to emphasize on most important topics. what will they be?

If you can make a list like most imp, medium, low weightage topics based on AICPA CSO's

I want to concentrate more on most important topics.

I hope you guys understand what i mean

So, please guide me and give me your valuable suggestions.

Thanks

[Anonymous]

ok, never mind my last question. I didn't see that they were asking just about one of the 100,000 francs purchase.

[Anonymous]

Ok, last question! I am going CRAZY trying to figure out how they came up with time value of $160 for the option contract (see second photo). This is from the Wiley 2013…page 709. If anyone can show me how it was calculated I would be forever grateful. I think I figured it out and one point but it's one of those things that for the life of me I can't keep straight.

https://i.imgur.com/0UX02mg.png

https://i.imgur.com/ZHUW4FO.png

[Anonymous]

I just wanted to put this out as a warning to people doing review course research and see if people agree. I just got through Module 14 of Yaeger, and Phil Yaeger is an absolute joke of an instructor. Cindy and Gary are well prepared and thorough, but Phil is awful. He misreads questions, makes countless mistakes and appears to have done no perpetration before filming. Also, he doesn't even teach the concepts, he simply goes over MC questions. I feel I get more simply by reading the book myself.

[Anonymous]

@adam8199,I feel you. Not to be disrespectful to Phil Yaeger, getting Cindy and Garry has made FAR more understandable. I struggled with installment sales (easiest part of FAR) because he didn't focus on the concepts or point out references. It just drove me mad because he doesn't like teaching, his not prepared, jumps around allot.

I paid for it in REG, failed and I don't blame him 100% because I am also partly at fault. I just stopped watching the videos because he was unprepared and was jumping around allot and I couldn't understand him.

[oblio]

@adam, elia

Might as well join in the pile on, Phil seems nice but maybe's he's been doing it too long. I credit Cindy with helping me pass BEC. If Phil is the main instructor for REG I will use someone else for that section.

In the meantime, a concept question for anyone:

Which of the following statements characterizes convertible debt?

(wrong answer) The issuer's stock price is less than market value when the debt is converted.

Why is this wrong? I'm thinking if the stock price is low and the market price is high then that would be a good time for the holder of debt to convert it into stock. I'm just not getting this. I've memorized no value assigned to conversion of debt feature but still can't figure why holder of debt would not convert in above situation.

[ZSRizvi]

Thanks @NYC for the answer!

@Oblio What were the other answer choices?

I have another one that is confusing me.

On December 31, Year 1, Largo, Inc. had a $750,000 note payable outstanding, due July 31, Year 2. Largo borrowed the money to finance construction of a new plant. Largo planned to refinance the note by issuing long-term bonds. Because Largo temporarily had excess cash, it prepaid $250,000 of the note on January 12, Year 2. In February Year 2, Largo completed a $1,500,000 bond offering. Largo will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during Year 2. On March 3, Year 2, Largo issued its Year 1 financial statements. What amount of the note payable should Largo include in the current liabilities section of its December 31, Year 1, balance sheet?

I put $500,000 but the answer is $250,000.

What I don't understand is why is the $250,000 even considered a current liability? Didn't Largo pay that portion off? Also, the remaining $500,000 is due in July which is less than half a year away from the balance sheet day. So wouldn't that be classified as the current portion as well as the fact that the bond proceeds didn't “refinance” the note, it just allowed Largo to have money to pay at maturity?

…am I making sense LOL.

But then again it is 2AM so maybe I need to go to sleep and see if it makes sense to me tomorrow…er…later today.

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[NYCaccountant]

Remember for GAAP, you only have to have the ability and the will to refinance short term debt to have it reclassified long term on your balance sheet. In this situation, because you paid 250,000 of the loan off within the 12 months following the December 31, balance sheet date, the 250,000 will be classified current because it used current resources, and the 500,000 balance would be classified long term because thats the balance that will eventually be refinanced and paid some time in the future after the 12 months following the the december 31 balance sheet date.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Anonymous]

I'm still stick with that question from yesterday…the intrinsic and time value get me confused. No idea how they get $160 in that example. UGH

[NYCaccountant]

@Dante I been trying to figure that out as well. Wiley never really went into any detail on how that number came about, and how it decreases over time. It may decrease over time because the options become less valuable due to the passage of time?? Idk.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Author]

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