[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

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

[HopefulCPA0601]

@esther – for IFRS AFS the debt securities go in income statement, equity securities go in OCI

BEC: 65 - 79* - 84 DONE
AUD: 65 - 76 DONE
REG: 63 - 77 DONE
FAR: 65 - 63 - 67 - 69 - 73 - 71 - 83 DONE

Becker Notes & Flashcards, Wiley Test Bank, Ninja MCQ

[krokofilen]

jpowell31 – how many hours to you plan to study over the next 2 weeks?

And how many hours did you already spend?

Big 4 Audit Manager from Europe here to pass the CPA in the U.S. of A in 2014! Niiice!

AUD - 95 / Jul 15 / 130h over 4 weeks
FAR - 86 / Aug 14 / 240h over 4 weeks
(11 week break)

REG - 81 / Nov 14 / 200h over 4 weeks
BEC - 87 / Nov 17 / 30 h over 2.5 days

[HopefulCPA0601]

dividends in arrears – these are dividends owed on preferred stock that have not been declared yet right?

BEC: 65 - 79* - 84 DONE
AUD: 65 - 76 DONE
REG: 63 - 77 DONE
FAR: 65 - 63 - 67 - 69 - 73 - 71 - 83 DONE

Becker Notes & Flashcards, Wiley Test Bank, Ninja MCQ

[UHC2005]

@Hopeful, yes, that's correct.

Using Ninja MCQ, NINJA Notes, Audio, Flashcards and BLITZ, and 2014 Wiley Text

FAR - (61,63)
AUD - (68)

Keep Calm and RTMFQ

Accountant, what is best in life? To crush your MCQs, see them driven before you, and hear the lamentation of their SIMS!

[D C]

Can't they declare dividend and not pay them, so they accumulate and so you have unpaid dividends in arrears? Or is this when you run into scrip dividends because there is a cash shortage to pay out dividends so they commit to paying them later?

or am I confusing concepts? someone straighten me out…

B - 80
A - 71, 67, 77
R - 71, 77
F - 72, 77
DONE!!
Becker Self-study all the way! Did use Ninja Notes & Audio for FAR.

[jpowell31]

@kroko i don't do the whole hours thing…i have no idea because i'm so all over the place and honestly i can be studying for 6 hours but realistically i've taken breaks, surfed the web…etc. . i'd probably estimate having put in about 65 hours and that until exam day putting in another 70-80. because it'll be back to back it'll help a lot more. i look at stuff i studied yesterday and thought i drilled in am like…wait…how does this go again? hopefully i can keep drilling weak areas over and over with that time off.

while there are some areas in IFRS that i know are different and some JE that are drilled in i don't have enough confidence in either of those two things right now and was hoping i'd be able to spend 2 full days on these to get them sticking. because there are major holes in other important topics still to get down pat, i think every other day now i'm going to try and rewrite a ton of JEs and read through the IFRS GAAP differences detailed summary Becker provides.

[Guti]

cpastudent22, hey young player, you only have to amortize the discount and the ppd, and then do a JE.

Discount= 60,000/10=6000×7.5=45,000

Discount remaining 60-45=15

PPD issue cost= 50,000/10=5000×7.5=37,500

PPD remaining=50-37.5=12,500

Now just do a JE to eliminate the above bal and your bond payable. The ifference will be your plug loss=

You are retiring them at 102×1,000,000=1,020,000

DR Bond payable 1,000,000

DR Loss (plug) 47,500

CR Disc15,000

CR PPD 12,500

CR Cash 1,020,000

FAR-84
AUD-
REG-
BEC-

[HopefulCPA0601]

@DC:

A scrip dividends happens when a company may not have sufficient funds to issue dividends in the near future, so instead it issues a scrip dividend, which is essentially a promissory note (which may or may not include interest) to pay shareholders at a later date. This dividend creates a note payable. (this would occur after dividends are already declared)

But dividends in arrears are dividends on cumulative preferred stock that have not been declared. They must be disclosed but you don't set up a liability for them because they are not an enforceable obligation until they are declared.

BEC: 65 - 79* - 84 DONE
AUD: 65 - 76 DONE
REG: 63 - 77 DONE
FAR: 65 - 63 - 67 - 69 - 73 - 71 - 83 DONE

Becker Notes & Flashcards, Wiley Test Bank, Ninja MCQ

[Anonymous]

Esther, Can you post the solution to the problem? I can't figure out the $750,000 answer. Thanks.

DM

[kazlotec]

[D C]

Year 1 Losses – 12 months * 50k = 600k

Year 1 impairment 650k-800k = 150k

Total Year 1 losses= 750k reported

B - 80
A - 71, 67, 77
R - 71, 77
F - 72, 77
DONE!!
Becker Self-study all the way! Did use Ninja Notes & Audio for FAR.

[Anonymous]

kazlotec, when does your NTS expire?

[Anonymous]

Gian, Thanks for the breakdown of the discount and PPD, that makes a ton of sense now.

DM

[kazlotec]

10/01/2014 so really that first is when i can take the exam

[ahugemistake]

For some reason, I am having a hard time getting this problem:

On December 31, year 2, Marsh Company entered into a debt restructuring agreement with Saxe Company, which was experiencing financial difficulties. Marsh restructured a $100,000 note receivable as follows:

• Reduced the principal obligation to $70,000.

• Forgave $12,000 of accrued interest.

• Extended the maturity date from December 31, year 2 to December 31, year 4.

• Reduced the interest rate from 12% to 8%. Interest was payable annually on December 31, year 3 and year 4.

Present value factors

Single sum, 2 years @ 8% .85734

Single sum, 2 years @ 12% .79719

Ordinary annuity 2 years @ 8% 1.78326

Ordinary annuity 2 years @ 12% 1.69005

Marsh does not elect the fair value option for recording this note receivable. In accordance with the agreement, Saxe made payments to Marsh on December 31, year 3 and year 4. How much interest income should Marsh report for the year ended December 31, year 4?.

A $0

B $ 5,600

C $ 8,100

D $11,200

ANSWER IS C

This answer is correct. The requirement is to determine the amount of interest revenue to be recorded by Marsh, after a modification of terms type of troubled debt restructure on December 31, year 4. Under ASC Subtopic 310-40, when a modification of terms results in the present value of future cash flows being less than the carrying amount, then the interest revenue is calculated by using the effective interest method. In this problem the expected future cash flows is determined by discounting the principal and interest at the original effective rate of 12%.

70,000

x

.79719 = 55,803

5,600

x

1.69005 = 9,464

Present value of future cash flows 65,267

The interest revenue to be recognized can then be determined using the effective interest method.

PV at 12/31/Y2 $65,267

Interest income at 12/31/Y3 ($65,267 x 12%) $7,832

Interest receivable at 12/31/Y3 (70,000 x 8%) 5,600

Increase in carrying value of loan 2,232

PV at 12/31/Y3 67,499

Interest revenue at 12/31/Y4 (67,499 x 12%) $8,100

I don't really understand the reasoning behind the 2,232 number, I know they are using the effective interest rate method, but why did they take the difference between the interest rates like that, I feel like I am missing something.

FAR - 78*
AUD - 66, 79
REG - 73, 76
BEC - 79

[Author]

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