[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

[zkk]

Hi,

thank you for replying me. Since GAAP has been updated, so both of the two gains are ordinary gains now. They should go to IS. Yes, you are right

Julia.C

[qfolmar]

Good morning,

Wagner, a holder of a $1,000,000 Palmer, Inc., bond, collected the interest due on March 31, 20X1, and then sold the bond to Seal, Inc., for $975,000. On that date, Palmer, a 75% owner of Seal, had a $1,075,000 carrying amount for this bond. What was the effect of Seal's purchase of Palmer's bond on the retained earnings and noncontrolling (minority) interest amounts reported in Palmer's March 31, 20X1, consolidated balance sheet?
Can someone explain why this answer is “A”?

Select an answer:
A.
Retained earnings: $100,000 increase; Noncontrolling interest: $0

B.
Retained earnings: $75,000 increase; Noncontrolling interest: $25,000 increase

C.
Retained earnings: $0; Noncontrolling interest: $25,000 increase

D.
Retained earnings: $0; Noncontrolling interest: $100,000 increase

FAR-79
REG-82
AUD-83
BEC- August 31st

[hitmi]

A CGU comprises the following assets;
Building 700 , PP&E 200 , GW 90 , Current Asset 20 , Total = 1,010
one of the machines carried at 40,000 is damaged and will have to be scrapped. the recoverbale amount of the CGU is estimated 750 .
what will be the carrying amoun of the building when the impairment loss has been recognized ?

A. 597
B. 577
C 594.
Dd 548

Can You please elaborate this. many thanks

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[rachelbostwick]

Just started studying FAR the other day. Scheduled for January 28th (my late grandma's birthday, hoping it's good luck). This material is already getting to me. My first and last was AUD and it was all words and concepts and procedure and although I hated it because I'm a tax person, it wasn't incredibly difficult to memorize and understand. This is like I'm back in Intermediate (that I took two years ago the semester my mom died – not very focused) and it's gonna be brutal. Is this why everyone hates FAR so much or is it a combination of material and the textbooks being twice the size of the other exams? Yuck. Hoping I can stay focused enough to be clear on most topics by my exam day. Reconsidering my decision to get a puppy next week.. gonna be hard to CPA instead of puppy..

Prayers for us all!

AUD - 79
FAR - 82
REG - 78
BEC - 80

Done in 5 months with a wedding, finishing my Masters degree, a new public accounting job, a small business, a puppy, and a house in the mix. If I can do it, you can do it. I'm not normally good at things, it's just God is awesome.

[Anonymous]

@qfolmar from what I understand the logic behind consolidated F.S. is that you represent the companies as a single economic entity (if I am not wrong) So as a single economic entity Palmer is treated as having retired the Bond while having a carrying amount of 1,075,000.

@hitmi I was looking for more info on impairment treatment on IFRS bc my textbook does not have many. Indo not knownthenanswer to your question.

@rachelbostwick to me is the amount of material. Once you get thru it you will see that overall the material is not that complicated, there is not one super difficult subject. What makes FAR difficult (super difficult) to me in general is the amount there is to learn.

[rzrbkfaith]

@qfolmar and @cortes123 – I agree. Because the consolidated entity “retired” (through repurchase) the bond at a $100,000 gain ($1,075,000-975,000), retained earnings would increase. Because it was the parent company's bonds that were retired, there is no effect on the non-controlling interest.

@hitmi – I believe the answer is A. first subtract the 40 from the PPE, then reduce goodwill to zero, then allocate the remainder (130)

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[Anonymous]

hey there @rzrbkfaith can you.please elaborate more? I do not have a source for the calculations of imparment thru CGU so I don't have any idea how we are suppose to do them. Do we always go and substract first goodwill if there is no indication of a specific damaged asset on the CGU?

[rzrbkfaith]

@cortes123 – Because the term CGU was used, this is under IFRS. Under IFRS, the impairment is first allocated to goodwill and then to the other assets. I allocated the impairment first to the specific item damaged, then to goodwill.

Bldg 700 700 -103 597
PPE 200 -40 160 -24 136
Goodwill 90 -90 0
Other 20 20 -3 17
Total 1,010 -130 880 -130 750

I don't know that its correct, but that is how I would do it.

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[qfolmar]

Got it!!! Thanks, guys!

FAR-79
REG-82
AUD-83
BEC- August 31st

[Anonymous]

Thanks…. We will see. I had only done one MCQ on CGU but the explanation did not say much. I was more confused after lol!

[hitmi]

Other Candidates who i think are more familier in IFRS answered that question in a facebook group in the below way:

Company should carry its assets not more than its recovable amount ,When the carrying amount more than the recoverable amount will led to impairment for its assets , in this case assets in CGU should impair all group by prorating the impairment and first we have to impair the goodwill then the rest of the assets

1010-40=970 -90=880 -750=130/860(160+700)*700=106-700=594

i don't know how correct its.

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[hitmi]

Luge Co. , which began operations on January 2, Year 1, appropriately uses the installment sales method of
accounting. The following information is a-.ailable for Year 1:
Installment accounts recei-.able, December 31, Year 1 $800,000
Deferred gross profit, December 31, Year 1 560,000
(before recognition of realized gross profit for Year 1)
Gross profit on sales 40%
For the year ended December 31 , Year 1, cash collections and realized gross profit on sales should be:
Cash Realized
c.alle.c.tiaas. gm.s..s. amtit l
a. $600,000 $320,000
b. $400,000 $320,000
C. $600,000 $240,000
d. $400,000 $240,000
Explanation
Choice “c” is correct. Cash collections and deferred gross profit are computed as follows:
Sales ($560,000 + 40%) $ 1,400,000
Accounts recei-.able (800, 000)
Cash collected 600,000
Gross profit x 40%
Realized gross profit $ 240,000
Note: The year-end deferred gross profit is 40% of $800,000 or $320,000. Subtracting $320,000 from $560,000
also yields the realized gross profit.

Don't we use A/R when calculating GDP . isn't suppose to be 800*40% = 320 GDP?. A/R is giving in the question and it has been used to calculate the collections as well.
why did he calculte GDP as sales * GP% . 1,400 *40% = 560

i appreciate your input

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[Anonymous]

@hitmi I know you know the answer already but you are mixing things a little bit 🙂 The MCQ is asking for the amount of profit on DGP that is recognized not the ending balance on the DGP.

Beg DGP 560,000
– End DGP 320,000
Realized GP of 240,000

[hitmi]

Lolz usually when i over study or stressfull i dont read the Question probably.
but still i can't swallow it. doesn't Deferred gross profit, December 31, Year 1 560,000 is the End why Beg ?

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[marqzho]

When Luge made sale
Dr. Installment A/R 1,400,000
Cr. Installment Sales 1,400,000 (Because it said deferred gross profit before recognized GP is $560000, so sales would be $560,000/40% = 1,400,000)
Dr. COGS 840,000
Cr. Inventory 840,000
Dr. Unrealized GP 560,000 (I/S -against Sales)
Cr. DGP 560,000(B/S – against A/R)

Luge ending A/R is $800,000, meaning they received 1,400,000-800,000 or 600,000 cash.

Dr. Cash 600,000 <–Ans
Cr. Installment A/R 600,000

When you rec'd cash in a installment sale, you recognize profit by hitting DGP
Dr. Deferred GP 240,000 (600,000*40%)
Cr. Realized GP for Installment Sales 240,000 <—Ans

This is the whole picture for the question =)

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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