[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

[jstay]

yeah, and the practice sim i took today there was a foreign currency one that was related to measurements when translated (for a translation) and i know those well but it just mix when to recognize a gain/loss on the actual translation

[Anonymous]

Anyone?

Can someone please explain what this means exactly. Is the question worded funny? Or am I just not understnding:

FASB's conceptual framework explains both financial and physical capital maintenance concepts. Which capital maintenance concept is applied to currently reported net income, and which is applied to comprehensive income?

a

Currently reported net income: Financial capital

Comprehensive income: Physical capital

b

Currently reported net income: Physical capital

Comprehensive income: Physical capital

c

Currently reported net income: Financial capital

Comprehensive income: Financial capital

d

Currently reported net income: Physical capital

Comprehensive income: Financial capital

Answer C. Under the physical capital maintenance concept, gains and losses are recognized only when assets are disposed of or liabilities are settled. Both net income and comprehensive income apply the financial capital maintenance approach under which holding gains and losses are recognized.

Thank you.

[jstay]

cpadream, i have no idea. to me its just one of those things you gotta know if you see it on the exam. just know that currently reported net income and comprehensive income are financial capital

[pia ach]

Green Co. had the following equity transactions at December 31:

Cash proceeds from sale of investment in Blue Co. (carrying value—$60,000) $75,000

Dividends received on Grey Co. stock 10,500

Common stock purchased from Brown Co. 38,000

What amount should Green recognize as net cash from investing activities in its statement of cash flows at December 31?

$37,000

$47,500

$75,000

$85,500

Is common stock purchased a financing activity or investing? Wiley mentions it is financing, but in this answer it is added to investing…what am i missing?

Finally done!!! Experience-pending. Ethics- Pending.
Reg 78 / 73/82.
Aud 74/89.
BEC 72 /78.
FAR 74/ 73/ 82.

[M.O.D.]

@pai ach

Common stock purchased from another company to invest in that company is investment.

Own common stock transactions to increase or reduce equity is financing.

Note the names of the companies' stock transactions

@CPAdream

It means that changes in financial asset values are reported in both NI (trading securities) and CI (AFS)

But physical assets ie PP&E changes in asset valuation are not reported in either.

(But under IFRS, they could be under CI)

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[pia ach]

Thanks MOD..i missing all the small details present in the que…should read it more carefully and not try and rush thru..

Finally done!!! Experience-pending. Ethics- Pending.
Reg 78 / 73/82.
Aud 74/89.
BEC 72 /78.
FAR 74/ 73/ 82.

[jstay]

pia ach, the answer is 37,000 right? dividends received is operating because it enters into financing?

[jstay]

this question really isnt clear…

Neron Co. has two derivatives related to two different financial instruments, Instrument A and Instrument B, both of which are debt instruments. The derivative related to Instrument A is a fair value hedge, and the derivative related to Instrument B is a cash flow hedge. Neron experienced gains in the value of Instruments A and B due to a change in interest rates. Which of the gains should be reported by Neron in its income statement?

A.

Gain in value of both debt Instruments A and B

B.

Gain in value of debt Instrument A only

C.

Gain in value of debt Instrument B only

D.

Neither gain in value of debt Instrument A or B

isnt it that only Effective portion of cash flow hedge is reported in oci. i chose A becasue it did not specify…

answer was B

[Anonymous]

A is a Fair Value hedge that will have the gains and losses reporter on the Income Statement.

B is a Cash Flow hedge that will have the gains and losses reported in OCI.

So this question asked which one of the gains will be reported on net income, and the answer is A only because net income is in the income statement.

[jstay]

but i thought an ineffective cash flow hedge is reported on I/S as well. how am i supposed to know if that was an ineffective or effective cash flow hedge. had it said it was an effective cash flow hedge i would have known right away the answer should be B..i hope there isnt any confusion on the exam like this one

[Anonymous]

I have never read that all ineffective hedges are reported to the I.S. The exam won't try to trick you on this as it will just wanting you to know CF=OCI and FV=IS

[Anonymous]

So are the basic financial statements for FASB the same for GASB? Like is MD&A part of the basic financial statements? If not, what exactly is?

[jstay]

look a few pages back, not sure which one, poster jpowell13 also said it that ineffective go to I/S and effective go to OCI. i believe its at the top of one of the pages..shouldnt be further back than page 20

[Anonymous]

Well, effective hedges are when there are no gains or losses. In this case there obviously is a gain so then it should go to IS? I don't know, but that is pretty confusing. I'm just going to stick with the simple criteria that is posted. Just got to hope the test doesn't try to trick us.

[Anonymous]

Question on adjusting entries concerning depreciation methods. Say in year one the company uses DDB in year one and uses SYD in year two. What would the adjustment be in year two or if any? Would it still be DR depreciation exp and CR accum dep?

[Author]

Replies