[Q3] FAR Study Group 2014 - Page 38

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  • June 17, 2014 at 1:05 am #598015
    EYNewHire
    Member

    Does anyone have a good method for distinguishing between a transaction that has commercial substance vs lacking it. I can usually identify correctly account 75% of the time but I just want to make sure I don't miss any “easy” points.

    June 17, 2014 at 1:09 am #598016
    nicole2035
    Member

    @eyenewhire

    1. exchange of like items between two companies in the same business is the best example

    substance over form concept kinda similar to sales leasebacks. When someone is trying to recognize revenue, or free up cahs when in reality accoring to GAAP there is no change in cash flow. Also when their relation is so close, there would be no reason for them to do the sale unless they're trying to recognize revenue

    June 17, 2014 at 1:33 am #598017
    Anonymous
    Inactive

    @Anjanja, yes it's a cash flow. But it also involves cash basis/accrual basis FAR formula problem.

    From the formula above, another formula is derived:

    COGS from Cash Basis

    + Cash Payments

    + AP

    –Inventory

    COGS By Accrual Basis

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

    June 17, 2014 at 2:19 am #598018
    Tncincy
    Participant

    Hey Guys,

    I need a little reassurance….did anyone write down the mcq's they got wrong with the answer or just the answers? How many times did you redo them until you got them correct without memorizing them? Having trouble feeling comfortable with progress. Exactly 20 days til testing and I need to shake this insecurity……..still studying though and trying to stay focused.

    It begins with a 75
    Been here too long as a cheerleader....ready to pass

    June 17, 2014 at 3:27 am #598019
    riascheme
    Member

    But seriously…I'm on F7 but I haven't touched any of the sims, and have done half the MCQs not to mention haven't looked back yet! Basically 2 weeks left…ahhhh Freaking out a little! How much does it cost to reschedule?!

    June 17, 2014 at 4:26 am #598021
    Anonymous
    Inactive

    $35 reschedule fee when changing dates from 5-30 before the scheduled test.

    F7 with 2 weeks left, wow. Yes, you need to reschedule.

    F8, F9, & F10 (IFRS Summary inclusive) + SIMS are heavily heavily tested.

    Is this your first attempt for FAR?

    June 17, 2014 at 7:31 am #598022
    Anonymous
    Inactive

    tncincy, I hv been making notes in my book for the MCQS I got wrong. Nothing too detailed but snuff for me to glance over when reviewing. Now that I am in my review stage, I am just noting down the MCQ numbers that I am getting wrong and then redoing them. My goal is to do every MCQ at least 3 times. I am hoping I get to that. So far I hv 6 more chapters to review and I hv 28 days to exam day. Lets see how it goes. Today I tried going over the MCQS I missed for F8-F9 during my review and was so disappointed as I still got the Govt reconciliation stuff wrong!!!

    I must try to understand it but I hv no more time to spend on that for now. I will get to it once I am done reviewing the 6 chapters.

    Does anyone have any useful tips for Govt Reconciliation? I try using the GALS BARE n GOES BARE but still miss out on some stuff.

    June 17, 2014 at 10:33 am #598023
    Anonymous
    Inactive

    I am confused on how I should answer SIM, if I should use positive or negative figures. On the question, the trial balance was presented as debit having positive amount and credit having negative amount. I calculated everything correctly except that I followed the was it was presented in question, debits are positive, credits are negative. But then when I revealed the answers it turn out that all answers should be positive. Ugh! My question is, how will i determine if I should use positive or negative (for credit) figures? I just notice some of the SIMs clearly indicate to use negative figure if credit and some do not.

    June 17, 2014 at 1:22 pm #598024
    jennibfox
    Member

    On the countdown now. Just got my score report in the mail yesterday. Didn't really help me much on figuring out what I need to focus on. I am going to practice as many MCQ and SIMS as possible from here to July 1st. The last day of review I will just review my notes and try to relax. I plan on putting in about 6-8 per day. I think I can get where I need to be.

    @riascheme: That is the mistake I made on my first test. I would suggest doing as many MCQ as possible. I didn't cover all the MCQ the first time and barely reviewed the SIMS. It is still doable but you need to put in as much time as possible practicing all the questions from here to test day! This will help nail down the concepts.

    FAR - JULY 2014 - PASSED
    BEC - MAY 2015 - PASSED
    REG - AUG 2015 - PASSED
    AUD - AUG 31 2015

    June 17, 2014 at 1:41 pm #598025
    Tootsie
    Member

    Hi! Got a question – I understand how to get the issuance price, but why do we NOT include accrued interest of $8,000 into the issuance price? October 1 is when the bonds are dated, but there is interest accruing so I'm not sure why we don't include it.

    On January 1, Year 2, Oak Co. issued 400 of its 8%, $1,000 bonds at 97 plus accrued interest. The bonds are dated October 1, Year 1, and mature on October 1, Year 11. Interest is payable semiannually on April 1 and October 1. Accrued interest for the period October 1, Year 1 to January 1, Year 2, amounted to $8,000. On January 1, Year 2, what amount should Oak report as bonds payable, net of discount?

    a. $388,300

    b. $388,000

    c. $380,300

    d. $392,000

    Explanation:

    Choice “b” is correct. January 1, Year 2 is the issuance date of the bonds and on that date, the bonds will be reported at their issuance price of $388,000 (97% x $400,000).

    FAR - 76
    AUD - 88!!! DONE!!!!!!!!
    BEC - 76
    REG - 77

    never, never, never give up

    June 17, 2014 at 2:45 pm #598026
    Jspann225
    Member

    @Tootsie The accrued interest is a liability to the company. This may be a simplistic way of looking at it, but I like to think of it as the buyer is paying themselves the accrued interest.

    Company Books

    Cash 396,000 Debit

    Bond Discount 12,000 Debit

    Bond Payable 400,000 Credit

    Interest Payable 8,000 Credit

    The company received and extra 8000 in cash from the buyer and booked 8000 as a payable back to the buyer.

    FAR - 93 - 7/1/14
    AUD - 94 - 7/25/14
    REG - 92 - 8/30/14
    BEC - 89 - 10/6/14

    June 17, 2014 at 3:39 pm #598027
    Tootsie
    Member

    Thanks, Jspann! That helps a lot!

    FAR - 76
    AUD - 88!!! DONE!!!!!!!!
    BEC - 76
    REG - 77

    never, never, never give up

    June 17, 2014 at 6:38 pm #598028
    Guti
    Participant

    Big owns 28% of LTD. Because of the cumulative voting for directors,Big has a majority of Board members and is now the largest shareholder of the company. Which method would you use Cost,Equity, or Acquisition?

    I dont get this question cause it shows control, and we should consolidate,but the answer says Equity method.

    FAR-84
    AUD-
    REG-
    BEC-

    June 17, 2014 at 6:46 pm #598029
    Jspann225
    Member

    @Gian You would only consolidate if you own over 50% or if the affiliate entity is a VIE, in order for this company to be a VIE Big Co. has to be the primary beneficiary . Being the largest shareholder and having a significant presence on the board allows Big to exercise significant influence, so equity would be the correct answer.

    FAR - 93 - 7/1/14
    AUD - 94 - 7/25/14
    REG - 92 - 8/30/14
    BEC - 89 - 10/6/14

    June 17, 2014 at 7:15 pm #598030
    Guti
    Participant

    Jspann225, so percentage rules over control unless you have a VIE correct?

    Thanks,

    FAR-84
    AUD-
    REG-
    BEC-

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