[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]

Other comprehensive income explained

Sorry about that. Yeah, I think testing with notes defeats the purpose. Refer to the notes after to address things you got wrong.

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

[jeff]

Ask the NINJAs: FAR CPA Exam Review Taking Too Long

Ask the NINJAs: FAR CPA Exam Review Taking Too Long

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

[Anonymous]

is the amortization of bond discounts always done semi annually even when the question states that interest is paid annually? I feel like Becker doesn't specifically say either way.

[jonm857]

Is “Income tax benefit – deferred” a B/S account? I need to reduce this section down to the absolute bare bones.

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

[Ana]

@cpa are you sure it doesn't say? usually the mcq will state whether it's paid semi or annually or say June 1 and dec 1 aka semi

@jon all deferred tax asset and deferred tax liability are reported on the the balance sheet, non-current, and you can net them to one total amount. not report a A and L separately

[Lentilcounter]

@C.P.A. the third

The interest rates in the problems are usually given as an annual rate. You need to adjust them accordingly based on the interest payment frequency. If interest is paid only once a year, no adjustments need. If it is paid semi-annually, then you need to take the rates and divide by 2.

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

[jonm857]

@Ana –

I believe I have figured out the confusion I was having with “Income tax benefit – deferred” account.

Basically this…

When a deferred tax liability reverses, it is offset by a credit to “income tax benefit – deferred”.

Likewise, when a deferred tax asset reverses, it is offset by a debit to “income tax expense – deferred”.

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

[IwannabeaCPA2017]

I know this question has been asked but the response wasn't so clear. here is the question again and Becker answer was Accrued liability of 3.5 mill.
On November 25, Year 1, an explosion occurred at a Rex Co. plant, causing extensive property damage to area buildings.
By March 10, year 2, claims had been asserted against Rex. Rex's management and counsel concluded that it is probable Rex will be responsible for damages, and that $3,500,000 would be a reasonable estimate of its liability. Rex's $10,000,000 comprehensive public liability policy has a $500,000 deductible clause.
Rex's December 31, year 1, financial statements, issued on March 25, year 2, should report this item as:

A. A footnote disclosure indicating the probable loss of $3,500,000.
B. An accrued liability of $3,500,000.
C. An accrued liability of $500,000.
D. A footnote disclosure indicating the probable loss of $500,000.

Answer is B. But in the past the response was 500k based on some old thread I googled. I'm really confused..

[Lentilcounter]

@IwannabeaCPA2017

I think this is a question that is worth emailing Becker about it. The only thing that makes me agree with B. being the answer is the statement in the problem which says “Rex's management and counsel concluded that it is probable Rex will be responsible for damages, and that $3,500,000 would be a reasonable estimate of its liability…”. While they mentioned insurance information in the problem, there is nothing definite to tell us that insurance will pay. So, maybe Rex's management and counsel think that the insurance isn't going to cover the damage in this case for whatever reason? I would have guessed C as the answer. The insurance policy is much higher than the estimated damage amount. The only thing Rex should have to pay is the deductible. Please email Becker and let us know what they say.

Thanks.

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

[Anonymous]

@IwannabeaCPA2017 I agree with Lentil. I would think it is C also. I searched it myself and the explanation I found is below. I'd check with Becker on this one, seems like a mistake on their end.

Choice “c” is correct. The claims asserted in Year 2 are recognized subsequent events that must be reflected in the Year 1 FS because the explosion occurred in Year 1. An accrued liability of $500,000 should be reported on the Year 1 FS issued on March 25, Year 2 because the explosion occurred before year-end, the loss was probable, and an amount could be reasonably estimated. However, insurance covers losses in excess of $500,000 and the total policy limit of $10,000,000 exceeds the $3,500,000 estimate; therefore, only the “deductible” of $500,000 need be accrued.

[IwannabeaCPA2017]

Thanks guy, yea C was my guess too. Glad I wasn’t the only one that found the answer to be off. I’ll email Becker and see what they say. Thanks again

[Jen-J]

I know there are several of us taking the test next week. How's it going?

Today was day 3 of my 5 day study marathon. Took the 2nd Becker test, and I'm done Final Review. I'm spending the next week on the AICPA exam, working the SIMS in Becker Final Review, and answering free multiple choice questions I find online. Need to go back over a few of the oddball topics like foreign currency.

Can anyone who has NINJA tell me how their questions compare to cpareviewforfree (in general). I'm not sure if the free ones are too easy or not.

[jonm857]

This always trips me up and confuses me…….

Loss on an uncollectible receivable = recognized subsequent event.

Example –>

11/30/2017 – Customer has a $1 mill rec. balance

12/31/2017 – Year-end

1/31/2018 – Customer files bankruptcy

2/28/2018 – Financial statements are issued

What is the difference between that example and the definition I have below from Becker for the “nonrecognized” subsequent event??

Loss on receivables resulting from conditions occurring AFTER the B/S date = nonrecognized subsequent event.

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

[Anonymous]

Took FAR today. All I can say is be sure to know the details!

It will make all the difference.

Also had 4-5 DRS which were not THAT bad.

Finished MCQ in 2 hours. The remaining 8 SIMs in another 2 hours. My last SIM I believe was pretest because it was random and impossible…had only 5-10 minutes left for it and ended up leaving it completely blank.

[Lentilcounter]

A subsequent event is an event that occurs after a reporting period, but before the financial statements for that period have been issued or are available to be issued.

If the conditions for the event existed before the balance sheet date, then you would recognize the subsequent event.

The keywords are the conditions existed after for the nonrecognized event.

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

[Author]

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