[Q3] FAR Study Group 2014 - Page 88

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  • July 16, 2014 at 1:06 am #598784
    Vlakmir
    Member

    HAHAHA. Yeah…don't use it, you lose it!

    I meant I got my undergraduate degree in a foreign language (Japanese) – and….I'm sure accounting has pushed a lot of it out of my head over the last 3 years.

    REG - 92
    AUD - 90
    BEC - 82
    FAR - 82
    BISK Review Materials
    DONE! /Happydance

    July 16, 2014 at 3:14 am #598785
    Anonymous
    Inactive

    And again with stock

    At its date of incorporation, Glean, Inc., issued 100,000 shares of its $10 par common stock at $11 per share. During the current year, Glean acquired 30,000 shares of its common stock at a price of $16 per share and accounted for them by the cost method. Subsequently, these shares were reissued at a price of $12 per share. There have been no other issuances or acquisitions of its own common stock. What effect does the reissuance of the stock have on the following accounts?

    A. A decrease in both retained earnings and additional paid-in capital

    B. No effect on retained earnings and a decrease in additional paid-in capital

    C. A decrease in retained earnings and no effect on additional paid-in capital

    D. No effect on retained earnings or additional paid-in capital

    The answer is D

    DR Cash 360,000

    DR Paid-in Capital 100,000

    DR Retained Earnings 20,000

    CR Treasury Shares 480,000

    I thought the APIC related to original issuance wasn't to be used, at least according to my notes. This loss should have been applied to APIC T/S if there is any and then to RE. There is a reference to FASB ASC 505-30-25-9 but it's not clear

    July 16, 2014 at 3:57 am #598786
    DandyDoge
    Participant

    Checking in late tonight. I'm currently studying for Deferred Taxes. Just got my NTS earlier, so I'll finally be able to schedule my exams.

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

    July 16, 2014 at 4:14 am #598787
    samdiegoCPA
    Member

    I dunno how I got 83% on Consolidations because I literally only know like 3 things. How to calculate goodwill, gain, and where the acquisition related costs go, and that you only use the SE of the parent company. Ugh.

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

    July 16, 2014 at 5:58 am #598788
    ahugemistake
    Participant

    My desktops just up and died this evening, creating a huge distraction that I could not afford. tonight went waste, I have 20 more days until FAR and have barely just scratched the surface of my final review.

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

    July 16, 2014 at 7:46 am #598789
    Lidis
    Participant

    Moss Corp. owns 20% of Dubro Corp.'s preferred stock and 80% of its common stock. Dubro's stock outstanding on December 31, 20X1, is as follows:

    10% cumulative preferred stock $100,000

    Common stock 700,000

    Dubro reported net income of $60,000 for the year ending December 31, 20X1. What amount should Moss record as equity in earnings of Dubro for the year ending December 31, 20X1?

    A. $42,000

    B. $48,000

    C. $48,400

    D. $50,000

    July 16, 2014 at 9:38 am #598790
    Anonymous
    Inactive

    @anjanja I went back to my notes and I agree with yours. Going by our notes on treasury stock acquisition and reissue, the answer should be C. Not sure if you can contact the provider of your review materials but it could be an error on their part. Even if you go by the explanation entry provided it should be A, it doesn't make sense why it says D.

    July 16, 2014 at 9:47 am #598791
    Anonymous
    Inactive

    @samdiego just do the best you can and live with it. If you get the same result in the actual exam you should be happy about it. It doesn't matter if you just got lucky on that part, but for sure it will help you pass. Or maybe you just did a smart guess (elimination technique). You may not know the correct answer but your smart enough not to pick the wrong ones. Good luck on your exam!

    July 16, 2014 at 9:58 am #598792
    Anonymous
    Inactive

    @ Revenue I'm in between B or D. I'm not sure if I have to take the 20% on preferred since the question doesn't say if Dubro declared dividend on preferred. But since it's asking for the equity, I will go for D?

    July 16, 2014 at 11:15 am #598793
    Lidis
    Participant

    Moss' share of preferred dividends

    = 20% x 10% x $100,000

    = $2,000

    Earnings attributable to common shareholders

    = $60,000 – 10% x $100,000

    = $50,000

    Moss' share of common earnings

    = 80% x $50,000

    = $40,000

    Moss' total equity in Dubro earnings

    = $2,000 + $40,000

    = $42,000

    The answer is A

    July 16, 2014 at 1:05 pm #598794
    Anonymous
    Inactive

    CPAby2015,

    thanks for checking! this is actually from ninja mcq. And yeah, sorry, it says the correct answer is A, not D, and I answered C. I'll just hope I won't get on the exam. Contradictions like this are so frustrating

    July 16, 2014 at 2:38 pm #598795
    Anonymous
    Inactive

    Sanni Co. had $150,000 in cash-basis pretax income for the year. At the current year-end, accounts receivable decreased by $20,000 and accounts payable increased by $16,000 from their previous year-end balances. Compared to the accrual-basis method of accounting, Sanni’s cash-basis pretax income is

    A. Higher by $4,000

    B. Lower by $4,000

    C. Higher by $36,000

    D. Lower by $36,000

    C is correct. The requirement is to determine the difference between accrual-basis income and cash-basis income. Because accounts receivable decreased by $20,000, the cash received was $20,000 more than the accrual-basis sales. Since accounts payable increased by $16,000 during the year, accrual-basis expenses were $16,000 more than cash payments. Therefore, accrual-basis net income is equal to $114,000 ($150,000 – 20,000 – $16,000), and therefore, cash-basis pretax income is $36,000 ($150,000 – $114,000) higher than accrual-basis income.

    I am just trying to understand why we subtract the 20 and 16. If AR and AP had decreased would we then do the opposite and add those amounts?

    July 16, 2014 at 3:28 pm #598796
    TiffaNiffaNi
    Member

    @CPA2014Dream

    This is how I go about it.

    For all of these kinds of questions, I always start with Net Income so I know to follow the “rules” regarding increases/decreases in assets/liabilities (as to whether something is a + or -).

    So for this, I set it up as:

    NI

    +20

    +16

    _____

    150,000 Cash Basis

    I know I have to add the $20,000 for the decrease in AR (as this is a cash inflow).

    I know I have to add the $16,000 for the increase in AP (as this is also a cash inflow).

    After I have my little formula set up, I can answer just about any question.

    Is Cash Basis less than NI? Well, it must be since to get from Cash Basis to NI, I need to deduct the $20 and $16.

    FAR: 7/17/14- 79
    AUD: 8/20/14- 91
    REG: 10/1/14- 88
    BEC: 11/10/14- 85

    Becker Self-Study

    July 16, 2014 at 3:29 pm #598797
    TiffaNiffaNi
    Member

    Shoot. I meant is Cash Basis greater than NI. Well, that just shot my credibility. LOL. But you get the picture.

    FAR: 7/17/14- 79
    AUD: 8/20/14- 91
    REG: 10/1/14- 88
    BEC: 11/10/14- 85

    Becker Self-Study

    July 16, 2014 at 3:36 pm #598798
    Anonymous
    Inactive

    CPA2014Dream,

    what review course do you use?

    Roger has this very simple system where you think of it as if it was a journal entry. It also works for Cash Flow

    DR Cash 150000

    CR Decrease in A/R 20000 (credit because of how this decrease would affect the B/S)

    CR Increase in A/P 16000

    So debit – credits = 114

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