[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

[Lidis]

In a Sale-leased back the lessor can defer the profit and amortized over the estimated remaining economic life of the asset, however losses should be recognized immediately

[Anonymous]

losses should be recognized immediately if CV > FV, otherwise deferred, according to Roger

[HopefulCPA0601]

also in the sale leaseback there are certain rules for deferring profit for the seller..

if substantially all rights retained (>90%) = defer all gain and amortize over leased asset

if rights retains are less than substantially all but greater than minor (10%-90%) = defer gain up to present value of the minimum leaseback payments; gain in excess of this amount is recognized immediately

if minor portion of rights retained by seller (<10%) = recognize all gain and loss, do not defer gains

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

[samdiegoCPA]

Deferred Taxes, SE, and Investments for me today…

AUD: 84
REG: 84
BEC: 79
FAR: 83

[Anonymous]

Please can someone explain why the answer is a. Thank you

Kuchman Kookware issued 40,000 shares of its $8.00 par value common stock for $9 on January 1, Year 1. Kuchman repurchased 1,000 shares at $8 per share on April 1, Year 2, resold 500 shares at $9 per share on July 1, Year 2, and, on October 1, Year 2, resold the final 500 shares at $5 per share. Assuming Kuchman uses the par value method of accounting for its treasury stock, retained earnings at December 31. Year 2 would be reduced by:

a. $500

b. $1,000

c. $0

d. $1,500

[Lidis]

Sale-lease back deferred gain can be accounted in three ways:

1- Substantially all, when seller-lessee retains all the rights to use the asset if PV of the rental payments is more than 90% of the FV of the asset sold.

2.– More than a minor l, when seller-lessee retains all the rights to use the asset if PV of the rental payments is more than 10% but less than 90% of the FV of the asset sold.

3.– More than a minor but less than Substantially all, gain is recognized to the extend of PV of rental payments.

[HopefulCPA0601]

@samdiego – investments and monetary current assets/current liabilities for me today.. stockholder equity manana. wooo what a crazy weekend

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

[HopefulCPA0601]

@ presso: here are the journal entries:

1/1/01:

dr cash 360,000

cr. common stock 320,000

cr. apic 40,000 ($1 per share – this is a plug)

4/1/02:

dr. treasury stock 8,000

dr. apic common stock 1,000

cr. cash 8,000

cr. apic treasury stock 1,000

7/1/02:

dr. cash 4,500

cr. apic common stock 500

cr. treasury stock 4,000

10/1/02:

dr. cash 2,500

dr. apic treasury stock 1,000 (this is the full amount of ur apic t/s, you dont have any left)

dr. retained earnings 500 – you debit this after you used up all of your apic t/s

cr. treasury stock 4,0000

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]

@hopefulCPA0601

In the 4/1 entries, why the debit to APIC-CS and credit to APIC-TS? I'm confused as to why we do this…

[DandyDoge]

Continue with Deferred Taxes today.

FAR: TBD
BEC: TBD
AUD: TBD
REG: TBD

[HopefulCPA0601]

@dcflcpa – when you buy back shares, the treasury stock is recorded by reducing the amounts of par value and apic for common stock. So to do that you would debit t/s at par value, and debit apic common stock for the original issue price attributable to the acquired shares. basically you have to reduce your apic common stock when you buy back shares. but since you bought back at the par value price, and this is not the cost method, you would have to balance your journal entires by also setting up apic treasury stock. — that is my reasoning, if anyone disagrees or if i'm wrong please correct!!

but if I think about journal entries for 10,000 shares of $10 par issued at $15 per share

dr. cash 150,000

cr. common stock at par 100,000

cr. apic c/s (plug) 50,000 —-> $5 per share

if i buy back 200 shares for $12 per share

dr. treasury stock at par 2,000

dr. apic c/s at $5 1,000

cr. cash 2,400

cr. apic t/s plug 600

I think the issue with the above example was that the par value and issue price are literally a dollar difference so it was difficult to see the t/s plug more clearly and thats why i did the entry of 1,000 for apic c/s and 1,000 for apic t/s to see how much apic t/s i would have in case i have to use it up and resort to debiting my retained earnings

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

[HopefulCPA0601]

i really hope i just didnt confuse you more 🙁

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]

I thought APIC T/S is only used once when shares are repurchased first time and then it's out of the picture forever. But there were no examples with T/S being re-sold below Par. I suppose I never really understood this method

[samdiegoCPA]

@anjanja all I have in my notes for APIC T/S and for T/S being re-sold under the par method is:

-If T/S is acquired at a cost equal or less than the original cost, “APIC: C/S” is debited for the original amount in excess of par and “APIC: T/S” is credited for the difference between the original cost and cost to acquire.

-When the T/S is resold, it is treated as a typical issuance, with excess selling price over par credited to APIC.

But that also doesn't address if it was re-sold below par. I always think cost method is more confusing when I do problems!

AUD: 84
REG: 84
BEC: 79
FAR: 83

[Anonymous]

@HopefulCPA0601, thanks so much!!!

[Author]

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