[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

[Jen-J]

Heather – there are tests December 1st – 10th. On a side note, the test changes in January due to the new revenue recognition rules, so you'll probably need an updated book when they are released.

[mattypxam14]

Hey all,

Question about Available for Sale Securities/Trading Securities. I was under the impression when there is an unrealized gain for A4S Securities the journal entry was Debit to a Valuation Account and Credit the Unrealized Gain. In Becker's 4th chapter 1st Sim #4 they put the journal entry to a debit in investment in investee and a credit to unrealized gain. Am I missing something? Why is the valuation account used sometimes and the investment in investee account used other times?

[jeff]

Ask the NINJAs: Watching Videos vs Reading Book (with ninja goats)

Ask the NINJAs: CPA Review Videos vs Book

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

[jonm857]

This snipped image is from Becker's section on Bonds issued between interest dates.

I need help understanding why bond interest expense is being credited here. I don't know why it says at the bottom that the proper amount of bond interest expense is $25,000. The bond is dated 1/1/Year 1, so my thinking is that the correct amount of bond interest expense is actually $50,000.

An issue like this could easily pop up on a DRS sim dealing with Adjusting Journal entries. Can anybody assist??

B - 81
A - 87
R - 73
F - July 5th

[Lentilcounter]

@becomingKDCPA

Check out this link. Government-wide Financial Statements Program and General Revenue Classification

Program revenues = charges for services

Charges for services includes:

Fees charged for privileges
Payments for goods and services:
From other governments or individuals outside the reporting entity
Between governmental, fiduciary and proprietary fund types
Licenses
Permits
Lease or rental income
Operating special assessments (such as street cleaning or special street lighting) and any other amounts charged to service recipients
Fines and forfeitures resulting from direct charges to those who are “otherwise directly affected” by a program or service even though they receive no benefit

In the government-wide financial statements, what is the correct revenue classification of fines and forfeitures?

A.
Charges for services
B.
General revenues
C.
Operating grants and contributions
D.
Capital grants and contributions

The GASB has prescribed that fines and forfeitures are included in charges for services. They result from direct charges to those who are directly affected by a program or service, even though they receive no benefit.

My thought is that it would be a general fund revenue since it is a fine, but clearly I am thinking about it wrong. Does anyone have a further explanation or different way to think about it?

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

[Lentilcounter]

@jonm857

I just looked at the problem and I understand your confusion too. I think that Becker is making this problem harder than it needs to be. Just understand these concepts below and you will be okay.

1. interest paid/payable/payment = stated/coupon rate*face amount of the bond (if the bond interest is due semi-annually, then divide the rate in half)
2. interest expense = market/yield rate*selling price of the bond (if the bond is due semi-annually, then divide the rate in half)

interest expense>interest paid, then you have a discount and you amortize the difference to increase the carrying value (selling price) of the bond
interest paid>interest expense, then you have a premium and you amortize the difference to decrease the carrying value (selling price) of the bond

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

[Sturg]

I agree with Lentilcounter. Becker made it more confusing by combining Interest expense and Accrued Interest payable in the original issue JE.

[Sturg]

HIYA All..
I am taking FAR in 7 days and starting to feel the heat. I passed in 2014 but the score expired. I am dreading the DRS's, especially when I recollect how difficult the SIMS were in 2014. Does NINJA have a way to practice just DRS?

Pensions (ugh) question..

On January 1, 20X2, Paul Co.’s defined benefit pension plan had plan assets with a fair value of $750,000, and a projected plan obligation of $875,000. In addition:

Actual and expected return on plan assets – 7%
Interest cost – 9%
Service costs – $24,000
Unamortized prior service cost – $120,000
Employer contributions to the plan – $45,000
Distributions to employees from the plan – $60,000

Assume that pension expense is $80,000, what will be the projected benefit obligation at December 31, 20X2?

Correct Answer:
$875,000
+ $78,750
+ 24,000
– $60,000
= $917,750.

***My question – why is the unamortized prior service cost not included in calc for Ending PBO??? It is in my text and notes??
Any help would be awesome.

[Sturg]

Iwanna, if you do end up extending I would caution against getting lax on study time. I extended once and didn't put nearly enough time in, to the point where I was furiously cramming towards the end anyway. My point: take 30 MC questions a day and constantly hit flashcards (Brainscape) during downtime. It sounds like you know the material, just have to get it locked in more. You'll start to see your practice score's go up and more importantly your confidence as well.

Good luck!

[Lentilcounter]

@rstew

ending PBO formula = beginning PBO + service cost + interest cost + past service cost from plan amendments in the current period +/- current period actuarial losses/gains – benefits paid

past service cost from plan amendments in the current period flows into accumulated other comprehensive income and becomes unrecognized past service cost

unrecognized past service cost = unamortized prior service cost that becomes amortized as part of pension expense.

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

[Lentilcounter]

@rstew

Ninja is not a good resource to do simulations in my opinion. It sounds like you have Becker right?

Check out “POTENTIAL FAR SIMULATION TOPICS STRAIGHT FROM THE AICPA” thread

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

[Anonymous]

Hello, everyone-

I was going through F7 SIM 1 (#3 and 5), and I for the life of me don't understand why when they are recording the net periodic pension cost they are crediting the asset???? I went through F7-M2 over again yesterday and today and it clearly is credit to the liability.
Dr Net periodic pension cost
Cr Pension liability

Then why the heck is the SIM crediting the asset? Is it a mistake???? If anyone has done these or has access to Becker to look at the solutions, can you please reply? Also, of course the solution doesn't offer an explanation, just JEs…. Thank you!

[Bianca]

Tomorrow is test day….2nd time taking this tsunami of an exam

In the last few days I have just been reading the Becker book from the beginning and taking notes on any additional information I find useful. Unfortunately, I probably should have been doing this from the very beginning. Although it may be difficult to sit there and read through the information from start to finish, it really has helped me better understand the material and in my opinion, it is the key to actually making sense out of this boat load of information. Praying for a pass so I never have to study FAR again.

1 pass.. 3 more to go

Good luck to all!

[Anonymous]

Good luck @Bianca Nardella!

[jeff]

Ask the NINJAs: How to Recover from a 36 on the CPA Exam

Ask the NINJAs: How to Recover from a 36 on the CPA Exam

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

[Author]

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