[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]

@IwannabeaCPA2017 – good luck today, hope it goes well!

[IwannabeaCPA2017]

Thanks Jen! My exam isn't until Friday morning. Going to be doing some light review then taking tomorrow off. At this point idk what else I could be doing. Just hitting some area I feel iffy about like inventory, Accrual–> cash, CF, Bonds, leases etc. Then taking a practice exam later tonight (took pto today to do some mcq). Im just hoping the best and hopefully be lucky enough to get some good SIMS (topics I feel comfortable). LOL. Last quarter I have no idea what I was doing given I was overwhelmed by the amount of info being tossed at me. I did all Becker and Ninja SIMS this time and hopefully that gave me a good foundation (though I was getting between 50-70's on those SIMS lol)- sometime got some points off because of the ordering of JE. Sorry for all this long paragraph.

Best of luck to everyone taking it between now and next week! Hopefully it will be my last retake. *Praying*

[IwannabeaCPA2017]

On November 1 of the current year, Mason Corp. issued $800,000 of its 10-year, 8% term bonds dated October 1 of the current year. The bonds were sold to yield 10%, with total proceeds of $700,000 plus accrued interest. Interest is paid every April 1 and October 1. What amount should Mason report for interest payable in its December 31 current-year balance sheet?

A.
$17,500

B.
$16,000

C.
$11,667

Incorrect D.
$10,667

Okay so im a little confused (not sure if its just anxiety and whatnot) but why am I not using 4% since its paid semi-annual instead the answer is 800,000 x 8% x 3/12 = 16000.. My answer calculation wasn't even given since I used 800000 x 4% x 3/12 but i just wanna know why its no 4%? – I just went with the closest number to 8k.

[candidate2017]

If your using 4% based on semi-annual payments then your calculation should be as follows: 800,000 x 4% x 3/6.

[IwannabeaCPA2017]

Im prob stupid for asking, but can you elaborate why 3/6 or 1/2??

So is it safe to say, whenever we calculate interest payable we always use the annual rate despite interest is paid semi-annual?

[IwannabeaCPA2017]

Sorry for all these post/questions. Accrued interest is prob one of the confusing area for me. In this question the accrued interest is 3/12..
On July 1, 2015, Eagle Corp. issued 600 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2015, and mature on April 1, 2021. Interest is payable semiannually on April 1 and October 1. What amount did Eagle receive from the bond issuance?

Is it because it goes from July – Sept (since next payment is Oct)?

Comparing this to my previous question:
On November 1 of the current year, Mason Corp. issued $800,000 of its 10-year, 8% term bonds dated October 1 of the current year. The bonds were sold to yield 10%, with total proceeds of $700,000 plus accrued interest. Interest is paid every April 1 and October 1. What amount should Mason report for interest payable in its December 31 current-year balance sheet?

The period is also 3/12 because Oct – Dec (since it was issued in Nov)? Thanks!!

[Wannafree]

@IwannbCPA , accrued means you have to pay but not paid or due.Say you rented a house and you are suppose to pay rent annually on 1st January next year ( year 2).You have stayed 12 months ( @100 dollar per month).
on 31st December you have accumulated rent payable $1200 ,right ? Now due is on 1st Jan year 2.
What you will do in year 1 ,31st dec ? You will accrue the rent and reduce your profit.You are not paying on 31st as it's due next day of next year.If you don't accrue on 31st ( a debit in IS ) ,your income will be overstated by 1200 and violation of matching principle .
Now let us come to bond accrual.
Pay attention to when interest is payable.If it's April and Sep 30th then till 30th Sep whatever interest was due was paid.Next payment will be say 1st April so on 31st December you have to accrue interest which you are not paying on 31st Dec but will pay next year when due ( say April ).
Now math : all dues paid till sep year 1 ,so Oct , Nov and Dec is not paid.So interest accrued for 3 months on 31st Dec.
Just keep in mind accrued means “liable but not paid on so and so date” .Now you can see why sometimes it's 3 months sometimes 6.There is no rule of 3 or 6 months ,just see when interest last paid and then on wards till 31st Dec ( assuming calendar year ).Let me know if I made sense.

[FJW92]

Can someone please explain to me why the Balance Sheet for governmental funds, Statement of Net Position for Proprietary funds and the Statement of Fiduciary Net Position all include: Assets plus Deferred OUTFLOWS and Liabilities plus deferred INFLOWS. Shouldn't it be the other way around? I thought a deferred outflow was a liability.

Any help is much appreciated!

[IwannabeaCPA2017]

@Frank, the way how I think is Deferred OUTFLOW – Since Im not paying now. Im saving that money so it is an asset.
Deferred INFLOW – I haven't yet received the money so it is still outstanding, hence a Liability I have.

[lam2848]

@Frank, deferred outflows = similar to prepaid expenses (assets). Deferred inflows = similar to unearned revenue (liability). This is the way I remember that.

[gguzman]

I know that I failed the last exam. My heart wasn't in as much as it was for REG. I think I let the shame of a defeat get to me in the beginning and it made me doubt my entire study method.

I don't know what else to say but know everything.

REG round 2 starts on Monday. Good luck everyone.

[Wannafree]

@ggujman , don't think in terms of shame as folks here are attempting 4th time and they know any topic of FAR cold but still not able to solve the questions in 4 hours.FAR is a beast hence don't feel low.
What happened can you share without disclosure violation ? Did you feel MCQ was difficult or you couldn't solve SIMs ? Did you see the Blueprint doc and any SIM topic familiarity or all were from left field.

[IwannabeaCPA2017]

DANG who else is mentally exhausted? I just took the becker practice and scored in the 60's on MCQ. Some I just didn't bother and guessed because the questions were so long

[gguzman]

I did not take that long on MCQ's and then on SIMS there were some that I had no clue and some that I knew a lot of material on. I did not waste my time on the material where I had no clue. I was also freaking out about time, but I finished with a little more than an hour left, which was also concerning.

Some of the MCQ I had to guess. I feel like a lot of the MCQ were things that I was not strong in, but that was my own fault, not Becker's. I let a lot of things effect the rest of my exam, for example if I thought I got an MCQ wrong I would doubt myself, and I would get discouraged.

I did not spend that much time on SIMS while studying, every time I would sit to do a SIM I would feel like I am wasting too much time on one thing. I think that doing sims is what would have helped mentally prepared me to be more patient with the exam.

Nothing could have prepared me for the SIMS I got. They are very immersive and put you in a potential position you would be in as a CPA, controller, or manager, as it relates to accounting.

Hope this helps. REG here we go.

[IwannabeaCPA2017]

Hey Gabe, Fellow Michigander here too! let me know if you wanna study together for FAR sometime? If I have to retake, that is 🙂

[Author]

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