[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

[Ana]

@LENTILCOUNTER I've never experienced any issues with time on any tests in my life until the last time I took FAR. I finished every CPA exam with time to spare, anywhere from 30-60 minutes. What really messed me up this time was having to submit the sim testlets to get the next set. My first sim testlet was so challenging and I felt I was too tight on time so I didn't spend any time reviewing and submitted it. Then the next testlet with the research questions was easier so I had more time than I needed. I wish it was still the same format of getting all the sims at the same time. I used to go back and forth on them on the other 3 tests and would work on them until I knew I couldn't do anymore. I really wonder why they changed it to this. DRS is a bitch and I don't know how to train for them better other than to practice the ones Becker has. Not much advice but really don't know what else to do.

[IwannabeaCPA2017]

Just started studying for FAR again today. Have exactly 8 weeks.. and I'm afraid this is a little too long, if I do stick to becker schedule I will have 3 weeks to review. Should I push exam up or keep it?

[Ana]

@iwannabeacpa2017 is there anything to gain by moving it up by a few weeks, like 1-4 weeks? either way are you losing BEC?

[Anonymous]

I feel like Inventory section is impossible. Anyone else feel this way?

[Anonymous]

To take it a step further – I feel like I don't understand the difference between LIFO and FIFO. I “get” that it's first in/last in but I don't seem to be able to wrap my head around what the difference from an accounting perspective really is.

Anyone have any advice?

[LCS]

Hey guys I am having trouble understanding the term “total consideration” when calculating G/L for nonmonetary exchanges. Can anyone please help?

[Lentilcounter]

@C.P.A. the third

FIFO and LIFO are inventory valuation methods or the means by which we assign value to inventory.

FIFO cost of goods sold = items that were first introduced into the inventory are assumed to be sold so you use the pricing of those items to account for the items sold
FIFO ending inventory = items that were recently purchased

LIFO cost of goods sold = items that were recently purchased are assumed to be sold so you use the pricing of those items to account for the items sold
LIFO ending inventory = older items that were first purchased

@LCS
total consideration is a term that I see coming into play into a nonmonetary exchange lacking commercial substance but where boot is given and the receiver of the boot is trying to account for it.

The receiver of the boot takes the fair value of the item they are giving up and subtracts it from the book value to get the amount of the gain. This gain amount is then multiplied by the cash received/FV of the item given up. I understand total consideration to be the cash received and the FV of the item given up.

(FV of old item-BV of old item) x (cash received/FV of old item) = partial gain recognized

Now if the cash received is more than 25% of the FV of the item given up, then all gain is recognized.

Hope this makes sense.

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

[IwannabeaCPA2017]

@Ana, yea I'm losing BEC at the end of OCT. But I'm afraid of Failing FAR so I was expecting to retake BEC. Perhaps I should move the exam up and pray for the best.
@LCS, I hate that stuff too. I feel like that stuff is just memorizing. Wait until u get to Sale lease back LOL (it isn't hard just memorizing % when to recognize vs defer). Stupid rules like 90% or more (substantial) 10-90% you recognize certain gains etc.. it gets confusing but I guess more Questions you practice the easier it flows.

[LCS]

@Lentilcounter thanks! That was very well explained!

What about the calculation of the basis of the new asset received in a nonmonetary exchange that lacks commercial substance?

Is it the BV of the asset given up add (subtract) the cash paid (received)?

[cottonkandi]

For those of you guys using Becker, how much time do you spend per section or module? I watch all the videos first and then focus on the modules. Right now, I'm on F2 and I feel like I spend about 2-3 hours on average per module which includes taking notes if I get a question wrong. I haven't even touched the SIMS yet for F1 and F2. Becker recommends spending 15 hours per section and I feel like I'm going slower than most people. I wanted to hear some feedback.

[Ana]

@IwannabeaCPA2017 In that case study your butt off and try to pass FAR before your BEC expires. You definitely have a chance from now until end of October. If it doesn't work out then you're back to your original game plan without losing anything but the time to wait for your results in December.

[Ana]

@cottonkandi It would take me a week and sometimes a day or two more to get through a chapter of Becker while working full-time. I would complete all of the lectures, notes, skills practice, and MCQ (not SIMS). I felt I was slower than others too but everyone studies at their own pace. What's important is you're learning. I always thought it was worse when I got to the review portion before my test and had to learn something because I glazed over it during the lectures and MCQ.

[Lentilcounter]

The functional currency of Nash, Inc.’s, subsidiary is the euro. Nash borrowed euros as a partial hedge of its investment in the subsidiary. In preparing consolidated financial statements, Nash’s translation loss on its investment in the subsidiary exceeded its exchange gain on the borrowing. How should the effects of the loss and gain be reported in Nash’s consolidated financial statements?

A.
 
The translation loss less the exchange gain is reported in other comprehensive income.

B.
 
The translation loss less the exchange gain is reported in net income.

C.
 
The translation loss is reported in other comprehensive income and the exchange gain is reported in net income.

D.
 
The translation loss is reported in net income and the exchange gain is reported in other comprehensive income.

The correct answer is A. I said C.

Is it because the exchange gain is a cash flow hedge? I know the effective portion of a cash flow hedge goes into OCI and the ineffective portion goes into earnings on the IS. In this instance, we have a exchange gain on borrowings. I am getting confused because I know that a perfect hedge is where there is no gain and loss.

What qualifies a cash flow hedge as “Effective” to be recognized in OCI and “ineffective” to go into earnings on the IS?

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

[Ana]

@lentilcounter per Becker, G/L on the ineffective portion of a cash flow hedge are reported in current income. G/L on the effective portion of a cash flow hedge are deferred and are reported as a component OCI until the hedged transaction impacts earnings.

I would've picked A too. I have to think about this one. Hopefully can get back to you soon.

Just realized we're taking our 4th FAR on the same day. Hopefully our last time…pllleeeeeeasssse.

[Meshach]

Hi, another question just came up.
14 A cash-generating unit comprises the following: $m
Building 20
Plant and equipment 10
Goodwill 5
Current assets 10
45

Following a downturn in the market, an impairment review has been undertaken and the recoverable amount of the cash-generating unit is estimated to be $25m. What is the carrying amount of the building after adjusting for the impairment loss?
A $10m B $11m C $12.5m D $20m
I was able to calculate the impairment and everything fine. However, they deduct 10 million from the 20 million dollar impairment to the building because of pro-rata reasons.
The goodwill of 5 gets wiped out first leaving 15 million for impairment. However they don't divide it in half and spread it across building – plant and equipment at 7.5 million each. Giving you an answer of 12.5 million.
The book gives the answer of 10 million for building because of a pro-rata basis.

[Author]

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