[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

[Spartans92]

Thanks kjf, but I'm a little slow. Wouldn't the following month be November instead? But the rest of the explanation make sense.
Nvm. I think I got it now. Thank you. I'm not looking forward to the exam.

BEC- PASS

[marqzho]

Claudia408

Although most of the Roger lectures are well organized, there are a few of them that he just read you the whole section without much explanation. 15.03 is clearly one of the few. If this is just the first section in 15 chapters you feel this way, I'll say just mark and skip it for now. After doing thousands MCQ, come back and watch the lecture / read the book again, they will finally make sense for the first time.

You need to know the following:
what is cumulative and non-cumulative preferred stock?
How the dividend is distributed if you have dividend in arrear/ preferred stock/ Common stock?
How to account for stock option? For Employee? Equity or Liability?

There is a section in the middle talking about how to use difference pricing model to calculate the FV of the option, I skip the whole calculation part. =)

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

@marqzho – thanks, you're awesome. you got FAR in the bag… what're you gonna take after FAR?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Anonymous]

I need some help with recognizing a Voluntary health and welfare organization.

The Felix Nursing Home, Inc. is a health care provider organized as a not-for-profit organization whose activities are regulated by state licensure rules. The financial statements that the Felix Nursing Home, Inc. is required to produce are:

Would this organization classify as a VHWO?

[marqzho]

Claudia408

Next one is AUD in April and BEC in May.

I wish I could say I got FAR in my bag. But I have too much going on in my life and I can't really focus on the review. My test is on Feb 29 and I still haven't started my final review as planned.

REG 90
FAR 95
AUD 98
BEC 84

[MissionCPA]

Septer Corporation issued 2,000 of its $1,000, 8% ten-year bonds dated July 1,Year 1 on September 1, Year 1, at a time when the market paid 9% for bonds of similar risk. The bonds were quoted at 94 and pay interest quarterly on September 30 and December 31. What were the total proceeds of the bond issue at the time of sale?
a.
$2,000,000
b.
$1,880,000
c.
$1,906,667
d.
$1,893,333
Explanation
Choice “c” is correct. Septer Corporation would receive the priced value of the bonds plus any accrued interest computed as follows:
Bond face value
$ 2,000,000
Bond price
0.94
Bond proceeds after discount
1,880,000
Interest paid per quarter ($2,000,000 × 8% divided by 4)
40,000
Months expired (July and August) represent 2/3 of the quarter
0.667
Accrued interest
26,667
Total proceeds
$ 1,906,667

In solution, they used 8% for interest rate. In Becker book, p:34-35, they used the market rate(would be 9% for this question) to calculate the total proceeds. Can someone tell us when to use market rate & when to use stated rate? Thanks!

[marqzho]

Let's do a JE for this question:

Dr Cash (Face% + Accrued interest – BIC) 1,906,666
Dr. Discount on Bond Payable 120,000
Cr. Bond Payable (Always the face value) 2,000,000 (2,000*1,000)
Cr. Accrued Interest 26666 ( The bond supposedly will “PAY” 2000*1000*0.08*3/12 = 40000 on Sept 30. Two month already passed so in a sense the purchaser have to pay that two months interest up front. That's why we have accrued interest for 2month ie 26666. Noted we always use the stated rate to calculate accrued interest since this is real $ the company have to pay the purchaser no matter what the mkt rate is )

I don't know what becker said in the book since I am not a becker user 🙂

REG 90
FAR 95
AUD 98
BEC 84

[Kemi22]

Ehmmmm .. so is there any significance to the fact that the bonds pay interest quarterly or semi-annually or annually etc? In the example above, I still arrived at the correct interest accrued amount by multiplying 8% x 2/12 (versus the answer explanation of 8% divided by 4 then times 2/3 …. does it matter? I guess it's just a math thing?

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[Kemi22]

Thanks a lot for all the help, marqzho

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[Kemi22]

Another one that makes you go: dang! pay attention to dates!

A $100,000 bond payable is issued on June 1, Year One for 104. The bond pays annual cash interest of 12 percent per year with payments every June 1 and December 1. The bond was sold to yield an effective interest rate of 10 percent per year. If the effective rate method is being used, what amount (rounded) should be reported for the liability as of December 31, Year One?
$102,880
$103,060
$103,067
$103,200

Answer: B.

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[marqzho]

kemi22

In this question, annually, monthly or quarterly won't affect your answer. So yes, it is just a math thing.

REG 90
FAR 95
AUD 98
BEC 84

[marqzho]

I keep telling myself….when I see a question, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!, LOOK AT THE DATE!!!!!!!!!!!!!!

REG 90
FAR 95
AUD 98
BEC 84

[Kemi22]

Where's a Hiyya when I need it … Thanks @ marqzho 🙂

2010:
BEC: 74, 71, 74, 75
AUD: 71, 74, 83
REG: 71, 76
FAR: (I quit) 34, 45

2015:
BEC: 79
AUD: 78
REG: 67, 76
FAR: 56 (trial run), 74, 74, 74, 80!
Thank God. Your prayers are always answered! Do not give up. Thank you St. Joseph Cupertino.

[odela2428]

Hi..just wanna know if i can n stillmuse my 2013 wiley for far..thnks

[marqzho]

odela2428

Don't do that to yourself, you deserve a 2016 version lol. I would kill myself if I put in hundreds of hours of my time with a clearly outdated material and scored a 74.

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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