[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

[Anonymous]

Yeah, that section is lengthy-my average is 2 min, vs. 1 min in other sections…I think practice makes perfect. Also, read the question first, then look for info to answer it…. Good luck to us!

[Tim]

Sitting for this tomorrow (10/12). I'm out of school for 4 years now so I was very rusty. It will be my first section taken so I'm admittedly quite nervous.

I've spent the last 3 months going through the Gleim material. I followed their guidelines except I didn't watch the video lectures nor did I take the pre-quiz as they seemed like a waste of time. I finished the last unit about 11 days ago. First thing I did after that was multiple choice study sessions based on all material to get an idea of areas I needed to brush up on more. Then I re-read a section I wasn't confident in and did MCQ's for that section until I was confident in it. I also went back and did one simulation from each study unit (20 total) so I could have some more sim practice.

I've done almost 1000 MCQ's in the last 11 days and got 82% correct. Based on people saying Gleim's questions are more difficult than the actual test questions I'm feeling pretty confident. But I'm still worried about getting sims I don't know the answer to on the actual exam. Also, with the score release being two months off I'm not looking forward to the anxiety of waiting for my score.

Anyway, wish me luck and here's me wishing luck to anyone else in this thread that's taking it.

[Andria – Another71]

Test Your Might: AUD – NINJA MCQ
Post your answer in the Facebook thread for a chance to win a NINJA Sniper Package of your choice (Book, Notes, Audio, Videos, MCQ/SIMS, Audio, & Flashcards – $197 Value).
One winner will be randomly chosen on Friday. HIYA!

[F&F]

@Andria-Another 71- A

[Lentilcounter]

How would the declaration and subsequent issuance of a 10% stock dividend by the issuer affect each of the following when the market value of the shares exceeds the par value of the stock?

Common stock
Additional paid-in capital

The correct answer is common stock increases and so does APIC. I said common stock stays the same and APIC increases. Below is the journal entry and please correct it if is wrong.

I think I just overlooked that that even though the small stock dividend is valued at fair value, common stock still goes up at par value*the shares increased. Thoughts?

Treatment of stock dividend (<20-25%):

Debit retained earnings (#of total shares*stock dividend%*market price on date of stock dividend)

Credit common stock (#of total shares*stock dividend%*$ par value)
Credit APIC (RE-CS)

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

[JJK94]

Hi guys,anyone know solution to this?

Alp, Inc. had the following activities during 20X3:

Acquired 2,000 shares of stock in Maybel, Inc. for $26,000. Alp intends to hold the stock as a long-term investment.

Sold an investment in Rate Motors for $35,000 when the carrying value was $33,000.

Acquired a $50,000, four-year certificate of deposit from a bank. (During the year, interest of $3,750 was paid to Alp.)

Collected dividends of $1,200 on stock investments.

In Alp’s 20X3 statement of cash flows, net cash used in investing activities should be:
The answer given is 41000(-26000+35000+-50000),but dividend and interest received on stock investments we add to the
investing activities right??

[Jj]

@jjk94 dividends received are operating, dividends paid are financing under GAAP. Interest rec is also operating under gaap but optional under ifrs. That question is weird because I thought sale of investment cv goes to investing, and the gain on investment is deducted from operating??? That might be only equ though?

[Nikki]

For Governmental Accounting – If a bond obligation is issued to finance a capital project do proceeds from bond issuance get reported on the debt service fund or capital projects fund? Is debt always paid off in the debt service fund?

[Lentilcounter]

@jjk94
@jj

You include the sale price of the investment in inflows from investing activities and not the carrying value. If you think about it, that's why you then subtract the gain or add the loss back to operating activities.

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

[Lentilcounter]

I got a bonds question. Just some practice. Please respond with your answers.

Face value of the bonds is $200k
Carrying amount on January 1, year 1 is $235,961

Stated rate is 8 percent.
Yield rate is 4 percent. Interest is payable semi-annually on June 30th and December 31.

What is the journal entry for the bond issuance?

What is the journal entry for the interest paid on 06/30/yr 1?

What is the interest accrual amount for 06/30/yr 2?

What is amount amortized as a result of the 06/30/year 2 payment?

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

[Jj]

@lentilcounter you're right. I took the test last wed. Can't believe I mixed that up ugh.

[IwannabeaCPA2017]

Question: On January 1, Year 3, Starlight Construction Co. began a construction project qualifying for capitalization of interest. The total amount spent on this project during Year 3 was $250,000, spent uniformly during the year. To help pay for construction, $200,000 was borrowed at 10% on January 1, Year 3, and funds not needed for construction were temporarily invested in short-term securities, yielding $3,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was a $150,000, 10-year, 7% note payable dated January 1, Year 1. How much interest should be capitalized by Starlight during Year 3?

a. $25,000

b. $9,500

c. $12,500

d. $22,000

My question is shouldn't the 30,500 amount be avoidable interest instead of the actual interest?? Since if the project wasn't taken we wouldn't have incurred the 200k * .1 and the 150k *.07 interest.. so that is avoidable, right? Versus the Actual spent 250k?? I got the right amount but just wanna make sure the classification is making sense cuz I don't wanna use the wrong classification for what it shouldn't be. Thanks!

[beaudityoucanbe]

@AngelikaM22 I'm in central NJ and taking FAR in early Nov… would be happy to meet up at some point to review material!

[Lentilcounter]

@iwannabeacpa2017

avoidable interest = interest computed on the weighted-average amount of accumulated expenditures

actual interest = total interest incurred on the project

FASB says that you capitalize the lower of the two amounts.

Anyone got any answers on that bond problem I posted? I'm just trying to check my work to see if I am right.

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

[EStone]

@Lentilcounter

Journal Entry

DR Cash 253,961
CR Premium on Bond 35,961
CR Bonds Payable 200,000

DR Interest Expense 4719
DR Premium 3281
CR Cash 8000

Using the Effective Interest Rate Method

Date PMT (face*coupon rate) EXP (face*mkt rate) Amortize Amt Bond Value
6/30 8000 4719 3281 232,680
12/31 8000 4654 3346 229,334
6/30 8000 4587 3413 225,921
12/31 8000 4518 3482 222,439

I hope this helps and that I didn't make any mistakes. If I did please let me know.

[Author]

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