[jeff]

Welcome to the Q1 2017 CPA Exam Study Group for FAR. 🙂

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

[Kala]

Thanks for making me feel like I'm not going crazy – at least not yet! I am just hoping that I can remember enough (or BS enough) to make it through. Best of luck to everyone!!

[mtaylo24]

Gleim Ch 5, is a silent killer. Why would you put cash, fvo, marketable securities, equity method, bonds, and cash surrender value in one chapter!?!?

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[mtaylo24]

Can someone confirm that this is now the correct answer (It used to be a)?

On January 1, Point, Inc., purchased 10% of Iona Co.’s common stock. Point purchased additional shares bringing its ownership up to 40% of Iona’s common stock outstanding on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?

A. 10% of Iona’s income for January 1 to July 31 plus 40% of Iona’s income for August 1 to December 31.
B. 40% of Iona’s income for August 1 to December 31.
Answer (B) is correct.
Once the ownership percentage increased from 10% to 40%, Point was presumed to exercise significant influence over Iona. Thus, Point applies the equity method prospectively from the moment significant influence is achieved (August 1). Given that Point held 40% of Iona’s common stock beginning August 1, it should recognize its share (40%) of Iona’s income for the period August 1 to December 31.
C. 40% of Iona’s full-year income.
D. Amount equal to dividends received from Iona.

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[NYaccountingstudent]

Just scored a 76 on the first Becker Practice Test (73 on MCQ and 81 on SIMS)

[NYaccountingstudent]

@mtaylo24 I would have answered A also…..was there a rule change or something?

[Mscfisher]

#aatoural I'm not sure if anyone answered your question but I first uses the effective interest method not straight line for bonds

[mckan514w]

@mtaylo- yes B is correct- the new accounting rules make recognition of significant influence gained / lost a prospective action. Look back @aa posted on where significant influence was lost over the weekend-

Managed to stress myself into a major migraine yesterday- also think its this weather and the early spring/ pollen counts- WTH! This thing truly sucks- I MUST PASS… off to it- Good luck everyone today!

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Holly]

Bach Co. adopted the dollar-value LIFO inventory method as of January 1, 20X0. A single inventory pool and an internally computed price index are used to compute Bach's LIFO inventory layers. Information about Bach's dollar value inventory follows:

Inventory:
at Base- at Current-
Date Year Cost Year Cost
———- ——— ———–
01/01/X0 $90,000 $90,000
20X0 layer 20,000 30,000
20X1 layer 40,000 80,000

What was the price index used to compute Bach's 20X1 dollar-value LIFO inventory layer?

I'm seeing different answers for this question on the internet. What do y'all think?

A. 1.09
B. 1.25
C. 1.33
D. 2.00

BEC - 79
REG - 85
AUD - 5/27/16

[GiniC]

@HRSexton – is it D 2.00?

[Holly]

It is 2. I got 1.33

BEC - 79
REG - 85
AUD - 5/27/16

[Anonymous]

Not looking forward to taking FAR for the 3rd time

[mckan514w]

Im going with 2 as well…. Price Index = Inventory at end-or year Price / Inventory at Base-year Price

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Holly]

I read in Becker that it is COST and not LAYER?

1/Year 1 $90,000 $90,000 $90,000
Year 1 Layer 20,000 30,000 21,818
[Note 1] 110,000 120,000 111,818
Year 2 Layer 40,000 80,000 53,333
[Note 2] $150,000 $200,000 $165,151

[Note 1] Price Index $120,000/$110,000 = 1.09 LIFO Layer $20,000 x 1.09 = $21,818
[Note 2] Price Index $200,000/$150,000 = 1.33 Answer “c” LIFO Layer $40,000 x 1.33 = $53,333

BEC - 79
REG - 85
AUD - 5/27/16

[GiniC]

@HRSexton – you added all three years' inventories together to get a “blended” ratio. What you're looking for is the ratio for that 20X1 year on its own, so you use 80,000/40,000=2.00

[Holly]

Ugh….

BEC - 79
REG - 85
AUD - 5/27/16

[Author]

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