[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for FAR.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[Anonymous]

I knew about the 20,000 NI, but why is it included in its entirely in the consolidated F.S?

[Anonymous]

@ Cortes, I've been using Becker and complementing with Ninja! I just bought the 10 point combo and I am a bit lost on how to approach the material. I have 5 to 6 weeks left. How should I approach the material? What do you do? You passed two sections on your first try so I want your advice 🙂

[Anonymous]

Well this will be my fist time using the 10 point combo. For AUD I used the Wiley book and Ninja's notes and MCQs. For REG I used the Ninja book Notes and MCQs. I decided to buy the 10 point combo bc of the amount of material in FAR and so far I have liked all the features although I do not use all of them everyday. I do not have a specific strategy and have been kind of all.over the place with them as I have used them where and when I see I need them. I am more of a visual learner so my primary sources are the Book and MCQs. I went over the Ninja Book and as I completed the chapters I went over at least half of the MCQ making sure I understood well the important concepts. In my commute I hear the audio trying to keep the important concepts fresh and on the governmental offices that I have to visit bc of my work I go over the flashcards when I feel that I need to refresh various topics in little time. I use the notes to rewrite on them the answers I get wrong on the MCQs, I do this because when I look for a place that makes sense to write the answer I have to read the notes and when I do I feel that I review various topics ( writing this explanation makes me feel like I am a mess lol! ) But anyways just go with whatever you feel are your needs taking into account the way you learn best. I am kind of all over the place but I feel that it works for me. Also for all the exams I have had on google docs various documents per topic of MCQ that I copy paste from Ninja. I go over them when I am at the office to review difficult stuff.

[Anonymous]

@ Cortes, well I have very good picture memory and it helps me a lot to write my own notes, specially formulas and J/Es. I do not think I will have time to go over the NINJA Book considering that I am reading BECKER book again but I am reading NINJA notes and will start to write them this weekend. I am doing NINJA and BECKER MCQs as I finished each chapter as well as SIMS. I am planning on re doing the final Becker Exams and may be some of the NINJA ones if time allows.

I need to practice SIMS because it is my weak area! I know that the more I practice the better I will get at it. There is a lot of material in FAR and I feel like I am all over the place as well. I've been listening to the NINJA Audio in my car as well.

REG:77
BEC:73/74/81
AUD:58/76
FAR:74, retake Feb/2

[Anonymous]

Lots of material but one good thing that FAR has is that a majority of topics somehow interconnects and there is some logic behind the concepts if one looks for it (except modified accrual, it has some logic behind it I guess but I hate it) I hope we pass! I am trying to finish ninja MCQs, now I am averaging 74% and trending 84% thru almost 1,600 MCQs. On monday I am gonna start with SIMS and there I guess I will see were I need to focus more…

[marqzho]

struggling with Pension =( awwww

REG 90
FAR 95
AUD 98
BEC 84

[Tiesto]

QUESTION – do I really have to know ALL journal entries as if my life depended on it?

FAR 02/22/16- fail, 5/23/16 retake
AUD, BEC, REG - tbd

[Goldielocsss]

Hi! Any help is much appreciated. Here's the question:

On August 15, 20X1, Benet Co. sold goods for which it received a note bearing the market rate of interest on that date. The four-month note was dated July 15, 20X1. Note principal, together with all interest, is due November 15, 20X1. When the note was recorded on August 15, which of the following accounts increased?
a.
Unearned discount.
b.
Interest receivable.
c.
Prepaid interest.
d.
Interest revenue.

The answer is interest receivable. I for whatever reason can't copy and paste the solution explanation for context but am hoping it isn't needed. I understand why the answer would be interest receivable. Where my gap in understanding is, is in why it wouldn't increase interest revenue as well. I've sold the product why wouldn't I recognize the interest income earned? Any help on what I'm missing is, again, much appreciated. Thanks!

[MaLoTu]

@Goldielocsss – If I am not mistaken, the interest will not be recorded until it is received, which is when the note is collected. It was dated July, so in November it will collect on the note (4 months) … in August when the transaction is recorded the interest is just a receivable that is due to the company in November. In November the Interest receivable will be reduced and the interest revenue will be increased ….

[MaLoTu]

I have missed this question over and over again … I just don't understand why there would be 8 months of interest on the B/S if it was payable in August, bought in April, and the BS is Dec 31?! Why would it still have 8 months of accrued interest if August has past …

On Merf's April 30, 1993, balance sheet a note receivable was reported as a noncurrent asset and its accrued interest for eight months was reported as a current asset. Which of the following terms would fit Merf's note receivable?
a. Both principal and interest amounts are payable on August 31, 1993, and August 31, 1994.
b. Principal is due August 31, 1994, and interest is due August 31, 1993, and August 31, 1994.
c. Both principal and interest amounts are payable on December 31, 1993, and December 31, 1994.
d. Principal and interest are due December 31, 1993.

Explanation

Choice “b” is correct, principal is due August 31, 1994 (more than one year after the balance sheet date of April 30, 1993, on which it was reported as a noncurrent asset), and interest is due August 31, 1993, (since the accrued interest for eight months was reported as a current asset due within one year of the balance sheet date), and interest is due August 31, 1994, for the one year from Sept. 1, 1993, to August 31, 1994.

[Anonymous]

Goldielocsss that is a good question. This is what I think (I may be wrong here ). Assuming a 100$ sale price with a 75$ cost and a 10% note recevable this is what I would record:

COGS $75
INv $75

Int Rec $3.75
Not Rec $100
Unearned Int $3.75
Sales Rev $3.75

This is new to me bc instead of the Unearned interest revenue I would have increased the Interest Revenue, but what I think is happening here is that the interest is connected to the note and not the transaction. In other words the interest is recorded with the passage of time as long the note is outstanding. The sale could have been made in cash and no interest would have been recognized so the interest is separable from the sale, it is not an essence of the sale. I do not know if I am explaining myself correctly so forgive me if I am writing nonsense lol! I recognize this can look like a shady explanation but honestly I cannot see any other reason for not recording the int revenue at the sale. Does anyone has a better reason?

[MaLoTu]

@cortes – I don't think the interest can be recognized until the note matures … for 3 months the interest receivable will accrue until the note is paid. They have not collected anything tangible accept a promise to pay in November … Or at least that is what I understand.

[Anonymous]

Maybe I am mixing two diferrent things but with bonds with the passage of time the investor records Int Rec and Rev and when the debtor pays the investor debits cash and credits Int Rec. but this is with the passage of time not at the begginig when the investor purchases the bonds. Here the Seller did debit an Interest Recevable at the beginning, I do not remember seeing that elsewere, does that always happens with notes?

[Anonymous]

I honestly do not remember, maybe that is a bad sgin for me lol!

[MaLoTu]

notes receivable are similar to accounts receivable. I think the primary differences are that notes are in writing and usually from a vendor rather than a customer.
I am fairly certain that since they are receiving the note that they are not accounting for it as they would a bond since a bond is a liability.
There is no passage of time in the question, it is asking when they received the note what increases … since it was with interest, it should have increased the carrying amount of an interest receivable account. Due to the matching rule, on accrual basis, the receivable account has to be created to match the sale, but interest revenue will offset the receivable … does that make sense?

[Author]

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