[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

[chvzgrca]

Thank you marqzho sometimes you can't see the forest for the trees.

[marqzho]

I still have less than 10 hours to my test lol

I need a miracle

REG 90
FAR 95
AUD 98
BEC 84

[nib]

Hello friends ,

I was wondering as the bond issue cost rule has changed .Is this answer correct ?

mcq : A company issues $1,500,000 of par bonds at 98 on January 1, year 1, with a maturity date of December 31, year 30. Bond issue costs are $90,000, and the stated interest rate of the bonds is 6%. Interest is paid semiannually on January 1 and July 1. Ten years after the issue date, the entire issue was called at 102 and canceled. The company uses the straight-line method of amortization for bond discounts and issue costs, and the result of this method is not materially different from the effective interest method. The company should classify what amount as the loss on extinguishment of debt at the time the bonds are called?

A. $30,000
B. $50,000
C. $90,000
D. $110,000

answer = 110000

When a bond is retired, the principal, unamortized pre­mium or discount, and any bond issue costs that were incurred and recorded as an asset (i.e., as a deferred charge) must be written off, reducing any gain that may be recognized on the retirement. The journal entry to write off the above bond is as follows:

Bonds Payable (face) 1,500,000
Loss on Bond Extinguishment (plug) 110,000
Bond Discount ($30,000 × 20/30) 20,000
Bond Issue Costs ($90,000 × 20/30) 60,000
Cash ($1,500,000 × 1.02) 1,530,000

[nib]

hello friends

my query is , in following question stock split took place in yr-2 – feb after year 1 ended . question has asked for yr-1 ending shares .so why stock split is considered in calculation . ,

Based on the stock transactions below, what is the weighted-average number of shares outstanding as of December 31, year 1, that should be used in the calculation of basic earnings per share in financial statements issued on March 1, year 2?

Date Transactions
January 1, year 1 Beginning balance 100,000
April 1, year 1 Issued 30,000 shares for cash
June 1, year 1 50% stock dividend
February 15, year 2 2-for-1 stock split
March 15, year 2 Issued 40,000 shares for cash

A. 147,500
Incorrect B. 183,750
C. 295,000
D. 367,500

corect answer = D. 367,500
explanaton :
\Earnings per share (EPS) is a comparison of the earnings applicable to common stock with the number of shares of common stock of that enterprise. Basic EPS is based on the weighted-average number of actual common shares (WACS) outstanding during the period. In computing WACS, retroactive application is given to stock splits and stock dividends. WACS is computed as follows:

1/1 100,000 × 1.5 × 12/12 = 150,000
4/1 30,000 × 1.5 × 9/12 = 33,750
183,750
Effect of retroactive split 2
367,500
Y

[marqzho]

Disaster. Orz

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

marqzho – how did your FAR exam go? you think you passed?

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

[KJF1031]

My FAR exam experience was good up until the simulations. MCQ's were fair; first testlet easy, second harder, and third the same difficulty as the second. Simulations were out of left field, didn't know what the heck was going on with them. Anyone else have a similar experience?

BEC: Passed (8/31)
AUD: Passed (11/20)
FAR: Passed (2/26)
REG: 5/22

[marqzho]

i think i failed. lol

my first testlet was piece of cake but my second testlet was brutal and my third testlet was obviously not as difficult as my second one which was a bad bad bad indication. Orz

Short Questions were ok and as expected.

REG 90
FAR 95
AUD 98
BEC 84

[rlee45]

My MCQ was brutal. The questions in my testlets were all like a paragraph long. Does that mean my testlets got more difficult? Not sure if there is a correlation between long questions and difficulty.

SIMs were fair, not too bad..

[Claudia408]

marqzho – you don't need 2 hard testlets to pass. you just need to do better in SIMs. how were those?

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

[Claudia408]

how should i think about this question? it gave me increases not balances and i don't like Roger's explanation here… can someone dumb it down for me?

The following changes in Vel Corp.'s account balances occurred during 20X2:

Increase
Assets $89,000
Liabilities $27,000
Capital stock $60,000
Additional paid-in capital $6,000

Except for a $13,000 dividend payment and the year's earnings, there were no changes in retained earnings for 20X2. What was Vel's net income for 20X2?

ANSWER: $9,000

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

[rlee45]

@Claudia408

Since NI is part of RE, I would calculate what stockholder's equity(SE) is.

SE= A-L
SE= $89,000-$27,000
SE=$62,000

Now break up the components of SE, with the information you're given:
Capital stock + APIC – Dividends Paid + NI = SE

Plug in your numbers and solve for NI.

[marqzho]

Claudia408

Sims were relatively easy and straight forward. And they are all on big topic. no surprise.

REG 90
FAR 95
AUD 98
BEC 84

[nib]

@PleaseDontDeleteThanks

MCQ:
A donor gives $10,000 to a nongovernmental, not-for-profit organization with instructions that it must be used to fund the organization’s general operating expenses during the following fiscal year. The donation will increase the organization's:

A. unrestricted net assets.
CORRECT = B. temporarily restricted net assets.
C. restricted net assets.
D. restricted retained earnings.

I see the correct answer as B.
i dont understand why it is C ????

[Andyred04]

@bin, I always thought of the restricted net assets similarly to the permanent fund for governmental accounting. The initial contribution amount for both restricted assets and the permanent fund can never (unless specified at a later date by the donor) be spent, only the proceed from those funds can be spent (interest, dividends, etc.), . Therefore, if the donor in your question is stating that they want the donation spent, it cannot be fully restricted. However, since the donor DOES state the way (s)he wants the donation spent it cannot be unrestricted so it must be temporarily restricted. It is only temporary because as the entity incurs expenditures for “the organization's general operating expenses” this donation may be used to fund those expenditures.

I probably went into WAY to much detail there but I hope that helps you understand.

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[Author]

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