FAR Study Group Q1 2015 - Page 30

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  • January 16, 2015 at 1:18 am #654589
    Kuhnjm
    Member

    Thank you all so much for your help!! Good luck on your exams!!

    Reg 73, redo April 2015
    FAR Feb 2015
    AUD June 2015
    BEC Oct 2015
    CPA, the marathon of all marathons...I can do this.

    January 16, 2015 at 1:44 am #654590
    Anonymous
    Inactive

    @Determined, your first question has me confused. Unless I am reading it wrong the functional currency is the British pound, which is what the statements are reported in. In that case it would require foreign currency translation which used the weighted average rate for translating the income statement. I would have picked 1.55

    January 16, 2015 at 1:59 am #654591
    Determined CPA
    Participant

    CTM – according to Ninja, the explanation is as follows:

    Under FASB ASC 830-30-45-3, all elements of financial statements should be translated by using a current exchange rate. For revenues and expenses, an appropriately weighted-average exchange rate for the period may be used to translate those amounts.

    I picked 1.55 as well. super confusing.

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 16, 2015 at 2:05 am #654592
    Determined CPA
    Participant

    What about the second question? Do you understand that one? =(

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 16, 2015 at 2:06 am #654593
    Anonymous
    Inactive

    It looks like the explanation is saying it should be 1.55 also??

    As for your other question I'm lost on that one too. I would have picked the same answer you did. I'm running through my materials to try to find a journal entry for recording a capital lease by the lessor at lease inception but I can't find anything.

    January 16, 2015 at 2:18 am #654594
    Determined CPA
    Participant

    Yeah I agree. Both questions are pissing me off.

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 16, 2015 at 2:28 am #654595
    jinjuujii
    Participant

    Lyle, Inc., is preparing its financial statements for the year ending December 31, 20X1. Accounts payable amounted to $360,000 before any necessary year-end adjustment related to the following:

    On December 31, 20X1, Lyle has a $50,000 debit balance in its accounts payable to Ross, a supplier, resulting from a $50,000 advance payment for goods to be manufactured to Lyle's specifications.

    Checks in the amount of $100,000 were written to vendors and recorded on December 29, 20X1. The checks were mailed on January 5, 20X2.

    What amount should Lyle report as accounts payable in its December 31, 20X1, balance sheet?

    anybody want to attempt this? Part of the solution is that AP for $100,000 is still in its balance, although it was written and recorded. If it's written and recorded, why would it still be in AP?

    FAR: 2-27-2015

    January 16, 2015 at 2:30 am #654596
    excel monkey
    Participant

    I picked 1.55 as well. According to Becker you would use the weighted average to translate the Income Statement, the current rate for assets and liabilities, and the historical rate for common stock and APIC. Google seems to agree with us as well. Not really sure why it would be different in this question.

    I'm getting ready to look at the second question now. Hopefully I'll be able to shed some light on it.

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 16, 2015 at 2:56 am #654597
    Anonymous
    Inactive

    Pretty sure 60,000 is correct on the lease question. Since cost and FMV are equal it is a direct financing lease. You would record a receivable for the the total lease payments receivable. Entry as follows:

    Dr. Lease Receivable 60,000

    Cr. Unearned interest revenue 12,000

    Cr. Asset Leased 48,000

    January 16, 2015 at 3:10 am #654598
    excel monkey
    Participant

    I concur CTM, that's what I just found in Becker. It didn't agree with what I had learned in Intermediate II last spring, so I pulled out my textbook (what do you know, they actually do come in handy). It shows both ways and explains the difference being if the company uses the “net” method or the “gross” method. Since the question specifically asks for the “gross” lease receivable the answer is $60,000. If it had asked for the “net” lease receivable, we would have been correct with $47,910.

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 16, 2015 at 3:28 am #654599
    excel monkey
    Participant

    @jinjuujii

    I get $510,000 ($360,000 + 50,000 + 100,000).

    The $50,000 that is currently recorded as a debit to A/P should be listed as a prepaid asset, not as a negative A/P balance.

    The $100,000 that has checks written and recorded, but not mailed should be added back to the A/P balance (the checks should be added back to the cash balance as well). The checks were in possession of Lyle at year end, therefore they still had control of the cash and had not paid A/P at year end. Had they mailed the checks by 12/31, the $100,000 would not have been added back in.

    FAR - 91
    AUD - 88
    BEC - 86
    REG - 79

    January 16, 2015 at 4:04 am #654600
    Anonymous
    Inactive

    I found the same thing about this “gross method.” Apparently there is no discounting to present value. Becker never mentioned it and I haven't had an accounting course in years so that question completely threw me.

    As for the AP question, 510,000 is my answer too.

    January 16, 2015 at 2:16 pm #654601
    Determined CPA
    Participant

    CTM and Excel – you guys are right – it is asking for the gross, not the net! Hence, 60,000. Thanks for your help!!

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 16, 2015 at 2:44 pm #654602
    Determined CPA
    Participant

    jinjuujii – I get 510,000 as well for the same reasons mentioned by excel

    A - 75
    B - 78 God is good.
    F - 77 Answered prayers.
    R - 84! Done!!

    Paperwork sent - waiting for license!!
    Still on a cloud and in shock. Through God, all things will happen.

    January 16, 2015 at 9:42 pm #654604
    jeff
    Keymaster

    Here is the link to the NINJA MCQ FAR questions with answers:

    https://www.another71.com/cpa-exam-forum/topic/test-your-might-far-ninja-mcq-giveaway-x-3

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

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