[jeff]

Welcome to the Q4 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

[Lentilcounter]

@Ana how are you studying for your FAR retake? I'm on my 4th attempt and taking it around the same time as you.
Thanks.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[JRM]

Bach Co. adopted the dollar-value LIFO inventory method as of January 1, 20X0. A single inventory pool and an internally computed price index are used to compute Bach's LIFO inventory layers. Information about Bach's dollar value inventory follows:

Inventory:
at Base- at Current-
Date Year Cost Year Cost
———- ——— ———–
01/01/X0 $90,000 $90,000
20X0 layer 20,000 30,000
20X1 layer 40,000 80,000
What was the price index used to compute Bach's 20X1 dollar-value LIFO inventory layer?

A. 1.09
B. 1.25
C. 1.33
D. 2.00

WHY IS THE ANSWER NOT C???? The correct answer is D. please explain.

[EStone]

Thanks, @batmanintraining, that clears it up a bit.

How should the DRS sims be studies for? I am using Becker and there aren't many ways to study for these particular sims. If anyone has advice on how to approach the DRS sims and how to study for them please help. Thanks!

[Lentilcounter]

@batmanintraining, I agree with @EStone. Becker FAR doesn't seem to have many DRS practice sims. I think I recall seeing them on the mock exam only?

@JRM

Bach Co. adopted the dollar-value LIFO inventory method as of January 1, 20X0. A single inventory pool and an internally computed price index are used to compute Bach's LIFO inventory layers. Information about Bach's dollar value inventory follows:
Inventory:
at Base- at Current-
Date Year Cost Year Cost
———- ——— ———–
01/01/X0 $90,000 $90,000
20X0 layer 20,000 30,000
20X1 layer 40,000 80,000
What was the price index used to compute Bach's 20X1 dollar-value LIFO inventory layer?
A. 1.09
B. 1.25
C. 1.33
D. 2.00

Dollar-value LIFO year index = inventory at current year cost/inventory at base-year cost

20×1 current year cost = $80,000
20×1 base-year cost = $40,000
$80,000/$40,000=2.00

How did you come up with 1.33?

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[BatmanInTraining]

Hey @Estone and @Lentilcounter yeah I do agree Becker doesn't have too much on those, and my exams have had plenty of them. Honestly my best advice for the DRS questions is to really understand what they are looking for and be able to extract that info without getting bogged down in the “fluff”. You also would be surprised how many times the question is simpler than it appears. Use logic and critical thinking and that really will take you FAR (omg this pun) on this exam. Not EVERY solution needs to be this complicated process, it just will be surrounded by complicated instructions that are meant to trick you. It's your job to understand completely what they want, and that makes the DRS more manageable.

[LCS]

I also think the answer should be 1.33 too. I don't think the PI is calculated by dividing the current year layer by the base year layer.

[JRM]

@lentilcounter and @LCS

If you guys have becker. The example on page F3-34 is an example of the dollar value LIFO. I followed it step by step and arrived at 1.33…Becker and ninja used different numbers. wonder which one is right.

[JRM]

Per becker Price index should be calculated using the END inventory at CY cost/END inventory at BY cost.
However, ninja calculated it only using the LIFO layer……

[Ana]

@lentilcounter I hadn't studied at all for 4 weeks while waiting for my score. I jumped right into MCQ progress tests without doing any review and am scoring between 80-95%. I'm doing 33 questions at a time and then doing a set of SIMS from each chapter. I'm using Becker so that's about 7 sims in a set. I also review 3-5 page of notes for each chapter that Becker used to provide and I've added my own notes along side it. At some point I'm going to go back and redo skills practice. Let me know if you're doing anything different.

[Meshach]

I am currently studying for the financial accounting and reporting CPA foundation exam in Australia and came across a confusing question.

“During the year ended 31 December 20X6, Tin Ltd had cash receipts from customers of $220 000 and sales revenue of $250 000. Irrecoverable debts for the year were $ 10 000. At 31 December 20X6, trade receivables were $70 000.

What amount was shown in the statement of financial position for trade receivables at 1 January 20X6?

A $30 000
B $40 000
C $50 000
D $90000”
The answer they get is $50,000 however they do not explain how they came to answer. Can someone please give me a detailed explanation.

Also if there would be anyone willing to be like a study partner who I can email questions to that would be a great help.

Thanks

[Ana]

@MESHACH Here's what I think:

revenue 250 – cash receipts 220 = 30 of AR
trade rec 70
written off debt 10

(beg of year) x + 30 (AR) – 10 (w/o) = 70 (end of year)
solve for x
x = 50

[kdcpa]

@Ana thank you for the suggestion. I was finding it really challenging to understand.

[Lentilcounter]

@LCS
@JRM

I am looking at F3-M3, page 14 at example 9 which is a dollar-value LIFO problem. If I work out the Ninja MCQ problem based on the Becker example, this is how I arrive at 1.33.

Base-year cost current year cost

01/01/x0 90,000 90,000
20×0 layer 20,000 30,000
12/31×0 110,000 120,000
20×1 layer 40,000 80,000
12/31/x1 150,000 200,000

price index = ending inventory at current year cost/ending inventory at base year cost
= 200,000/150,000 = 1.33

hmmm…now this is making me scratch my head too?

Becker says to calculate the price index at the ending inventory level and the solution to the Ninja problem says to calculate it at the actual layer level so that you would 80K/40K = 2.0

Anyone else know?

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Lentilcounter]

@ana

I'm going through NINJA MCQ once again and the entire Wiley simulations test bank. I am also using Becker as a reference only. My last two weeks before the exam will be spent doing the Becker mock exams, Wiley practice exams, and random sets of Ninja MCQ.

My issue is simulations and DRS simulations. I have to get better at doing them quickly and correctly. I sometimes wonder how much my score might increase if we had one more hour of time available to take the FAR exam. I finished the audit exam with one hour to spare. Wouldn't it be cool if unused exam time rolled over to new sections that you are sitting for?

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[JRM]

@lentilcounter Yup, my conclusion is that ninja has the incorrect answer choice and explanation…

[Author]

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