[jeff]

Welcome to the Q3 2017 CPA Exam Study Group for FAR. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your FAR exam.

The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

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

[mtaylo24]

@QueenCPA Thanks, I bought HOCK (I love Gleim but they were too expensive), I might try to knock take part 1 early Sept and Part 2 late OCT. I've been through all of the questions and readings so far, so it all comes down to if I'm done with the CPA.

FAR is a beast, but doable. Probably the one section that is straight up with the material (since there is so much) and doesn't try to catch you off-guard (cough BEC, cough REG). Time management is a biggie, but I think Jeff was spot on with his latest podcast, to take your time with the 66 MCQs, then divide the remaining time by 8, and use that as a limit for each sim. I wasted so much time on the research question in the first sim testlet that it set me back for the other sims. Best of luck!

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[jeff]

New Video:

Video: Recommended CPA Exam Study Hours

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

[Harper]

Taking FAR in the middle of August…

Got Becker review & final review.

[michelATL]

Does anyone have advice on how to spend the last 10 days before FAR most efficiently?

I'm taking FAR August 1st and have been studying somewhat inconsistently with Becker since April. I've made it through F5 completing all of the lectures, MCQ, and skills practice. I just took Mock Exam 1 and scored a 60, without finishing 2 of the SIMS.

The materials from the modules that I have studied was very familiar but I just don't have time to go through the rest of the review so thoroughly.
I graduated with a BA in Accounting in December and I'm currently working on my MTax so I have a decent basis to go off of.
Any advice or insight would be GREATLY appreciated!
Thanks, Michel

[DeterminedCPAer]

@michelATL

My last post disappeared. Ha. Skim the pages and do as many MCQs as you can. CHapter 6 is currency, hedging, deferred taxes and some other stuff. Chapter 7 is pensions and I think EPS. Chapter 8 is cash flow and non for profit. Chapter 9 and 10 are government.

Heard NFP and government was big, more than what people thought the AICPA blue print stated.

[BBHYX]

@michelATL hit the MCQs as much as you can! For chapters you don't do as well, you can play the becker lectures at 2x speed to get a faster skim over the material. Skip the skills practice for sure.

[DeterminedCPAer]

Thanks @hopingtogetFAR. I'm not going to reschedule. Just gotta push through.

[Vinti]

Can someone help me with this problem? why in solution they taken $5010 for 9% rate also?
I dint understood the actual meaning of line “This note was discounted to yield a 9 % rate to King”.

Becker Question CPA-00337
Ace Co. sold to King Co. a $20,000, 8%, 5year note that required five equal annual yearend
payments.This note was discounted to yield a 9 % rate to King. The present value factors of an ordinary annuity of $1 for five periods are as follows:
8% 3.992
9% 3.890
What should be the total interest revenue earned by King on this note?
A. $9,000
B. $8,000
C. $5,560
D. $5,050
Explanation
Choice “C” is correct. $5,560 total interest revenue.
Annual payments = $20,000 ÷ 3.992 = 5,010
Five equal payments of principal and interest. x 5
Total payments 25,050
Discounted note = $5,010 x 3.890 = (19,490)
Total interest over five years 5,560

[Radez]

@Vinti

The first step in the problem is calculating what that annual payment actually is, since all you're given is the face value and nominal rate, and the fact it's an annuity of 5 equal payments. Since it's an annuity, you can use the PV factor at the nominal rate, 8%, to calculate your annual payment. That's the 20k / 3.992 = 5,010. The annual payment amount is determined by the nominal rate and face value, so that 5,010 isn't changing. However, to calculate total interest, you need to calculate the PV of the annuity at the effective interest, so that's why the next step is 5,010 multiplied by the PV factor of the effective interest rate instead. “Discounted to yield x” means the market or effective interest rate, ie. the rate that determines interest expense, vs. the nominal rate (8%) which determines interest payments.

[DeterminedCPAer]

@Vinti @Radez

Anyone who has taken the exam, can you let us know if the MCQ example above that @vinti provided is comparable, harder, or easier than the MCQs you had on the exam?

I feel like I know bonds but I was stuck on this question too. Both the first time I studied and during my review of chapter 5. I can review now and see how its done but i know i'll forget by exam day lol.

[sscpa]

Hi guys,

Quick question regarding the timeline of consolidated financial statements and eliminating journal entries.

Jan 1 is the acquisition date. The problem is asking us to prepare acquisition date AND year-end consolidation work-paper eliminating journal entries.

I don't understand why we are doing the year-end eliminating entries if we already did them at the acquisition date. I understand that the sub's net income and retained earnings will change, which in turn changes our elimination entries for Investment in Sub and Retained Earnings.

Am I misunderstanding something about when or how we do eliminating journal entries?

By the way, the year-end journal entry is prefaced with:

“Assuming parent accounts for its investments in sub using the equity method for internal accounting purposes, Parent would report an investment in sub of…

Beg Investment + Share of Sub Income – Share of Sub Dividends = Ending Investment in Sub

They then proceed to restate the exact same eliminating entries that were done for acquisition date w/ modified amounts for RE and Investment in Sub.

[jeff]

Video: Taking Too Many CPA Exam Notes

HIYA!

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

[DeterminedCPAer]

@sscpa

Eliminating JEs are done for external reporting. Anytime you need to report external, you need to consolidate based on what the sub's equity is and parent's investment in sub is. You would also remeasure the assets in case the fair value went up or down. It can be done monthly, quarterly and annually.

What they are trying to show is how the eliminating JE changes during the year as the subsidiary is making income.

Reference page 75. This is the equity on December 31. The $500k in APIC for olinto should be $400k. (Error on Becker part).

The question asks for the eliminating JE on 1/1 and 12/31.

Basically saying if you had to consolidate year 0 and year 1.

To consolidate year 0 (1/1), you have to take the 12/31 RE of Olinto and back into 1/1 RE. That's what they are doing on the bottom of page 75.

So the 1/1 equity of Olinto was 1.7m.

On page 76, they are doing the elimination JE as of 1/1 (or think of it as 13/31 year 0)

Debit the CAR = 1.7m
Credit I = 2.5m you paid
Credit N = 0 bc no NCI, bought 100%

Note: on Grarty's B/S you have investment in sub = 2.5m on 1/1.

Debit B = 200k for land to FV
Debit I = 100k for intangible
Debit G = 500k goodwill

Now on 12/31 they want you to consolidate again. Assume they need to prepare financials for external reporting.

Now most of the numbers will be the same except for the investment in sub. That account on the parents books will increase or decrease based on what the sub did (had net income or paid dividends).

Since Geary owns 100% his balance sheet on 12/31 would be 2.5m original investment + 350k income Olinto made – 150k dividends paid out and ultimately went to Greaty. The ending investment in sub is 2.7m on 12/31.

Now we issue financial statements, since Greaty owns more than 51% we have to consolidate. One financial statement representing both Geary and olinto.

CAR is now 1.9m because Olinto's RE increased by 200k and B is 2.7m.

In this case the fair value of assets didn't change, if they did during the year, we would adjust them.

Does this help? Probably to much info which you already knew how to do. Hope I didn't confuse you more.

[sscpa]

Thanks for going in depth with the calculations. While I understand where they get their numbers from, I spent forever trying to understand how APIC changed until I realized it was a typo.

Is this problem showing us the difference between an Acquisition Date of 1/1 vs an Acquisition Date of 12/31? If that's the case, the 2nd eliminating entries are labeled “Year-End” instead of “Acquisition Date” so maybe that's what's confusing me.

[Vinti]

@radez Now I got it. Thanks a lot.

@determinedCPAer I take FAR on aug 31.

[Author]

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