[jeff]

FAR Resources:

Free FAR Notes & Audio – https://www.another71.com/cpa-exam-study-plan

FAR 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

FAR Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[Anonymous]

@Eliabraham, thank you for your message. And believe me, if I could help you play “catch-up” I would!

Quick question on bond carrying value. Does it include accrued interest? So, e.g., an investor buys a $100,000 bond between interest dates with $5,000 accrued interest. Is his carrying value $100,000 or $105,000? This seems so basic…

Edit: One more thing: What about on the issuer's books? So if the bond is dated Jan 1 but not issued until April 1 would the carrying value be just $100,000 or $105,000 to include the accrued interest.

It would seem to me not, but I am not relying on my own judgement any more.

[Anonymous]

Question:

The following information is available for Cooke Company for the current year:

Net sales $1,800,000

Freight-in 45,000

Purchases discounts 25,000

Ending Inventory 120,000

The gross margin is 40% of net sales. What is the cost of goods available for sale?

Answer: 1,200,000 (1,800,000 x 60% + 120,000)

So does this mean that the freight in is already factored into the net sales number?

[Anonymous]

Question:

The following information is available for Cooke Company for the current year:

Net sales $1,800,000

Freight-in 45,000

Purchases discounts 25,000

Ending Inventory 120,000

The gross margin is 40% of net sales. What is the cost of goods available for sale?

Answer: 1,200,000 (1,800,000 x 60% + 120,000)

So does this mean that the freight in is already factored into the net sales number?

[Anonymous]

@DJN On the investors books the interest would be interest receivable for that in between period that should not affect the carrying value

On the issues books:

BP @ face value

-Discount

Carrying value

Interest in between the interest payable. Hope it makes sense

[Anonymous]

@DJN On the investors books the interest would be interest receivable for that in between period that should not affect the carrying value

On the issues books:

BP @ face value

-Discount

Carrying value

Interest in between the interest payable. Hope it makes sense

[Anonymous]

@dante042104 call of the question: What is the cost of goods available for sale?

Beginning

Plus Net Purchases

COGAS$1,200,000

-EI $120,000

COS1080000

For COS:

Sales 100% $1,800,000

COS 60% $1080000

GM 40% $720,000

And yes, Freight in will be included in your net purchases. Freight out is a selling expense before G&A in the multi step income statement.

[Anonymous]

@dante042104 call of the question: What is the cost of goods available for sale?

Beginning

Plus Net Purchases

COGAS$1,200,000

-EI $120,000

COS1080000

For COS:

Sales 100% $1,800,000

COS 60% $1080000

GM 40% $720,000

And yes, Freight in will be included in your net purchases. Freight out is a selling expense before G&A in the multi step income statement.

[Anonymous]

@dante042104 another thing this information (Freight-in 45,000,Purchases discounts 25,000) its just to trick you.

[Anonymous]

@dante042104 another thing this information (Freight-in 45,000,Purchases discounts 25,000) its just to trick you.

[NYCaccountant]

@ Dante I actually thought about it as if you told me that I sold 1,080,000 and I have 120,000 left than I must have started with 1,200,000. If I added the freight in and then subtracted purchase discounts than I would of started with 1,220,000 as available for sale, which would mean that cogs would have come up to 1,100,000 (1,220,000-120,00), but we know I only sold 1,080,000 worth of inventory, so this can't be right. I was confused when I seen the question as well, but I thought about it logically and it made more sense.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[NYCaccountant]

@ Dante I actually thought about it as if you told me that I sold 1,080,000 and I have 120,000 left than I must have started with 1,200,000. If I added the freight in and then subtracted purchase discounts than I would of started with 1,220,000 as available for sale, which would mean that cogs would have come up to 1,100,000 (1,220,000-120,00), but we know I only sold 1,080,000 worth of inventory, so this can't be right. I was confused when I seen the question as well, but I thought about it logically and it made more sense.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Anonymous]

@NYCaccountant I am getting confused now help. Am I missing something?

[Anonymous]

@NYCaccountant I am getting confused now help. Am I missing something?

[Monir]

Timber Co., was evaluating the likelihood of collecting various accounts receivable currently on its books. This evaluation resulted in the decision to change from the direct recognition method to the installment method for recognizing receivables. The accounting treatment for this change is best characterized as:

a. Retroactive.

b. Cumulative.

c. Restatement.

d. Prospective.

Explanation

Choice “d” is correct. A change from direct recognition to the installment method is a change in accounting principle inseparable from a change in accounting estimate that is treated like a change in accounting estimate, prospectively.

I understand it is cahnge in accouting principle but how would I identify wheather it's inseparable ? Anybody can explain ?

Thx

[Monir]

Timber Co., was evaluating the likelihood of collecting various accounts receivable currently on its books. This evaluation resulted in the decision to change from the direct recognition method to the installment method for recognizing receivables. The accounting treatment for this change is best characterized as:

a. Retroactive.

b. Cumulative.

c. Restatement.

d. Prospective.

Explanation

Choice “d” is correct. A change from direct recognition to the installment method is a change in accounting principle inseparable from a change in accounting estimate that is treated like a change in accounting estimate, prospectively.

I understand it is cahnge in accouting principle but how would I identify wheather it's inseparable ? Anybody can explain ?

Thx

[Author]

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