[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

[Wannafree]

@IwannabeaCPA2017 ,your score is more or less like mine.Have you already taken the exam or when are you taking ? I am taking on 2nd Dec.

[IwannabeaCPA2017]

1 day before you, sir!
I think Ninja is wrong on this Question.
As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Co.'s sole depreciable asset, acquired in 20X1, exceeded its tax basis by $250,000 at December 31, 20X1. The difference will reverse in future years. The enacted tax rate is 30% for 20X1 and 40% for future years. Noor has no other temporary differences. In its December 31, 20X1, balance sheet, how should Noor report the deferred tax effect of this difference?

A.
As a noncurrent asset of $75,000

Incorrect B.
As a noncurrent asset of $100,000

C.
As a noncurrent liability of $75,000

D.
As a noncurrent liability of $100,000

Can anyone confirm? If book depreciation is greater than tax meaning those depreciation are non-deductible which means we pay more income now and benefit in future.

[Wannafree]

@Iwanna ,correct answer should be Deferred Tax Liability 100,000.
In this problem, the financial income depreciation is LESS than the tax depreciation. The problem states “the financial reporting basis depreciable assets, acquired in 20X1, exceeded its tax basis by $250,000 at December 31, 20X1”

If the basis of the asset is higher on the books than it would be for taxes, that means less depreciation has been taken on the books and D is the correct answer because it is a deferred tax liability.
Yes the wording was tricky.Try to think in terms of sec 179 and you can see more dep was claimed in Tax .

[Anonymous]

Good luck this weekend Ninjas! Most offices are closed today and tomorrow so take advantage of your time off to hit the MCQs! No one loves thanksgiving more than I do, and decided to skip it this year! I am going to have some leftovers a little while later, but I am posted up at my desk today doing MCQs. I am ready for this journey to come to an end and I won't let 1 turkey dinner get in my way! Thanksgiving/ Black Friday will be here again, your opportunity to succeed may not! Get this thing DONE!

[gguzman]

Happy Thanksgiving everyone. Trying to get 4 hours in before dinner tonight.

Here we go!

[Anonymous]

Do proprietary Gov't funds have “Equity”? I just did a question in becker that asked for the “Proprietary Equity Balances” and I picked $0 and was wrong. I was under the impression there was NO equity in government funds because no one truly owns it!

[IwannabeaCPA2017]

CPA the third. Proprietary and Government funds are two different things.. perhaps could you post your question?
The following information pertains to Smoke, Inc.’s, investments in marketable equity securities, classified as available-for-sale:
•On December 31 of the current year, Smoke has a security with a $70,000 cost and a $50,000 fair value. (No Market Adjustment account exists.)
•A marketable equity security costing $50,000, has a $60,000 fair value on December 31 of the current year. Smoke believes the recovery from an earlier lower fair value is per­manent.

What is the net effect of the above two items on the balances of Smoke’s Market Adjustment account for available-for-sale marketable equity securities as of December 31 of the current year?

A.
No effect

Incorrect B.
Creates a $10,000 debit balance

C.
Creates a $20,000 credit balance

D.
Creates a $10,000 credit balance

Why is this a credit and not a debit? because there is an unrealized loss shouldnt it be debit

[gguzman]

@ CPA the third, I looked through the lecture, I do not see equity in any of the financials for proprietary funds.

[Sturg]

@Wannafree, are you giving yourself 45 min each for the first 2 MCQ testlets? You certainly don't want to rush but… I zip through the ones I'm most confident first and then double back and slog through the tough calculation ones keeping the clock in mind. Sometimes a question later in the testlet reveals info to that stubborn deferred taxes MCQ you had flagged which gives you the edge to make best educated guess and move on. I would never be able to finish SIMS without at least 2 1/2 hours – there's just too many moving parts (and I'm an awful multi-tasker!)

Anyway, for NFP tricky stuff I found temporarily/permanently/unrestricted net assets and how transactions/time/actions change the balances took me a lot of incorrect NINJA MCQ over time. Very tricky in the wording. Don't step on a rake! lol

[Wannafree]

Thanks Sturg ,I will keep the time suggestions in mind.Yes I need at least 2.30 hours for SIMs. Hope you did good on JE.I have done good rewrite of all analysis JE and now doing JE for all application type JE as per blueprint.Yes many people conformed Analsysis of Blueprint is “SIMable” but still I am leaving nothing for chance and doing JE cold for lease ,bond ,pension ,percentage contract ,completed contract ,Installments sales , Basic JE of Govt ,Hedge and Foreign currency.taking no risk this time.

[scattershot]

are you supposed to net journal entries together? working through Roger sims on consolidations and I can't tell if my answer is rejected for being formatted incorrectly, or if it's just the software being finicky.

i.e.

Gain on sale of equipment		21,000
Accumulated Depreciation 		7,000
	Accumulated Depreciation			15,000
	Depreciation Expense				7,000
	Equipment					6,000

	
	
vs

Gain on sale of Equipment		21,000
	Accumulated Depreciation			8,000
	Depreciation Expense				7,000
	Equipment					6,000

[IwannabeaCPA2017]

When the allowance method of recognizing uncollectible accounts is used, how would the collection of an account previously written off affect accounts receivable and the allowance for uncollectible accounts?
A.
Accounts receivable: Increase; Allowance for uncollectible accounts: Decrease

Incorrect B.
Accounts receivable: Increase; Allowance for uncollectible accounts: No effect

C.
Accounts receivable: No effect; Allowance for uncollectible accounts: Decrease

D.
Accounts receivable: No effect; Allowance for uncollectible accounts: Increase

Shouldn't the entry be: First when allowance account is recorded.
DR: AFDA
CR: AR

Then AR is received.
DR: AR
CR: AFDA
Then
DR: Cash
CR: AR

[rabbit]

The two situations you're confused on are different in nature so I think you figure it out soon.

1.) When you're journalizing the large sale you immediately credit an allowance.

Dr Accts Receivable 300
Cr Sale 270
Cr Allowance for DA 30

It's as simple as doing the math on whatever percentage of uncollectible are expected and remembering that you credit the allowance.

2.) When you're facing a question that has you finding the annual sales for a modified cash filer you shouldn't come into a MCQ that has a scenario where write-offs or allowances are essential to plugging. As you saw in the problem you posted, the 10K proved to be nothing more than a distractor which may sparked your confusion in the first place.

The calculation is cash payments from customers from March FY1 though December FY1 + the first 60 days of the following fiscal year.

[Pnbrock11]

Directed Becker FAR Studying

So I am in the Becker course, and I have about 2 weeks until the exam. I have come to realize that the course has some parts that aren't as important as others. Obviously, any question can come up, but in terms of maximizing my score it would seem I could do best by focusing on a couple areas. To me Becker makes Foreign Currency Translation and Cash Flow look equal in the chapters in its prep course. So my question here is what areas are a strong idea to exclude because they are unlikely.

Below are my ideas about what I should focus on, and I shouldn't focus on based on lurking in this forum. I'm just looking for some input about whether these are good subjects to not focus on and to focus on.

Becker Chapters I think I shouldn't be focused on

Derivatives (our teacher even said he is instructed not to teach it), Ratio Analysis, Sale-leaseback, foreign currency translations. Are there any other?

Becker Chapters I should really focus on

NFP/Gov't Accounting, Cash Flows, Non-monetary transactions, General Accounting Concepts, Bonds, Equity Method, Pensions, Leases, IFRS differences

[Dayvel]

New to the forum! I take FAR on Dec. 8th! It is the last section I need to pass. I can't wait to get it over with. Until then, may the odds be ever in our favor. Happy studying, everyone!

[Author]

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