[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 RE: BIC, Becker F5-44 Pass Key: some cpa exam questions may make the simplifying assumption that bond issuance costs are recognized as interest expense on a straight line basis. I've def come across that in MCQ while studying, can't recall on the test.

[Lentilcounter]

@Ana. Thanks.

I think I read that if the difference between using the straight-line method and effective interest method is immaterial it is acceptable to use straight-line method. Maybe this is one of those cases? I think this rule is specific to U.S. GAAP though.

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

[Lentilcounter]

@jonm857
Will LIFO COGAFS always be the same for periodic and perpetual?

I want to say yes to your question assuming the problem starts from the perspective of the beginning of only one year. I think if you are dealing with a multiple year problem, then I would expect COGAFS to be different because COGAFS feeds from beginning inventory which is driven off ending inventory/cost of goods sold of the previous year. If there is no ending inventory/COGS from the previous year to feed beginning inventory this year, your question holds to be true.

@ellejay

Thank you.

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

[Ana]

@lentil if the difference is immaterial, straight line can be used for amortizing the bond (like you said). See F5-47, the last line. But more likely to appear is the effective method being used for the bond but the straight line method for the BIC to make it simpler to compute on the exam.

[Lentilcounter]

Thanks Ana.

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

[Lentilcounter]

On incorporation, Dee, Inc., issued common stock at a price in excess of its par value. No other stock transactions occurred, except treasury stock was acquired for an amount exceeding this issue price. If Dee uses the par value method of accounting for treasury stock appropriate for retired stock, what is the effect of the acquisition on the following?
A.

Net common stock: No effect; Additional paid-in capital: Decrease; Retained earnings: No effect
B.

Net common stock: Decrease; Additional paid-in capital: Decrease; Retained earnings: Decrease
C.

Net common stock: Decrease; Additional paid-in capital: No effect; Retained earnings: Decrease
D.

Net common stock: No effect; Additional paid-in capital: Decrease; Retained earnings: Decrease

The correct answer is B which is decrease, decrease, decrease.
and I guessed D which is no effect, decrease, decrease.

Why is treasury stock shown as (common stock) in the answer details below?

Journal entry for acquisition of treasury stock using par value method:

Dr. Cr.
Treasury stock (common stock) XXX
Additional paid-in capital XX
Retained earnings X
Cash XXXX

The debit to Retained Earnings is for the excess of reacquisition cost over original issue price.

Note

Common stock outstanding decreases.
Additional paid-in capital decreases.
Retained earnings decreases.

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

[sdaggan]

Hi. I just bought the FAR materials. I was wondering how to access them, like the audio and flashcards. Can anyone enlighten me? Thanks!

[Ana]

@lentil F7-46 – 47
After the original issue, using both the cost and par value method, the treasury stock account is always dr. and cr. Common stock is no longer used, even when reissuing shares. I'm not sure if that answers your question.

[Lentilcounter]

Hmm..is that why common stock decreases? I'll have to read that section again.

How does FAR compare to Reg in difficulty for you? I see you have experience as a controller and in audit. I am an enrolled agent and occasionally do personal returns but I'm wondering how freaked out I should be for Reg which is next for me.

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

[Ana]

I have no background in tax, I don't even do my own LOL. At the audit firm and as an Asst Controller I was only responsible for not-for-profit taxes and a bit of real estate taxes, both of which don't matter in the test. I failed my first time with Reg after studying for about 5 weeks. I knew I wasn't ready going in. The second time with a review of 4 weeks I was confidant I'd pass. The trick for me was memorizing all the rules and always looking at the tax forms when doing MCQ and studying. Also, my husband, 2 friends, and I that passed ignored the B-Law section when studying. I think it's about 10% of the test and not covered in SIMS. Whereas in the book it takes almost longer than the tax part because it goes into so much detail and is really hard to remember and keep distinct. If you want the Elijah award don't take that path. Otherwise, Reg is about 5 chapters and very doable. Reg compared to Far is soooooooo much easier! I have lots of experience with Far, studying and in real life, but the test is abhorrent and not reflective of the material in the new format. I wish I passed before it changed. There are so many things I would've done differently, like pass FAR first and not listen to Becker's and Roger's advice of passing BEC first with the upcoming changes in mind. Seems like with your background you'll do fine with REG, just give yourself enough time and print out all the forms tested. By the way, what city do you live in?

[Lentilcounter]

Thanks Ana for the info! I'm originally from central MD. But just moved to Lexington, KY for the wife's job. I'm doing everything through MD. How about you?

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

[Ana]

In So-Cal, the valley to be more specific. It's 94 degrees today and where I study looks out to my pool…it's torture. Have swam only a handful of times over these 2 years.

[Jen-J]

Lentilcounter – I took that “Treasury Stock (Common Stock)” name to mean that the company bought common stock as treasury stock (as opposed to buying preferred stock as treasury stock).

[Katie]

Can anyone help explain how to account for dividends when doing eliminating JEs for consolidations? I am using Becker, and in the text, dividends are eliminated as a part of retained earnings when using the equity method internally and in a SIM, dividends are eliminated through a separate entry when using the cost method internally.

[Lamis]

Hey all, I just started studying for FAR and was planing to write the exam on January , obviously after studying 2 modules of the first chapter , there will be an update for the revenue recognition rules beginning 2018
So confused now whether to set FAR aside and study AUD instead,
What do u recommend me doing ?

[Author]

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