[jeff]

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

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

[cdn]

So answer is B.
But what I thought would be D. Because CS were issued after the BS date and I thought would be $500,000 as short term. Per Becker we should accrue if litigation, A/R or some other as bancruptcy of major vendor. Issue of stock is for me just a disclosure. The more I try to understand the more I get confused. I know that in my company when we do refunding or issue bonds after B/S but before issueance of financial- we only disclose no J/E.

FASB ASC 470-10-45-14 requires that short-term obligations be reported as long-term liabilities if a company (1) intends to refinance the short-term obligation on a long-term basis and (2) demonstrates the ability to refinance it a long-term basis. The intent is stated in the problem. Verona's issuance of common stock for $400,000 before the statements were issued demonstrates the ability to refinance $400,000 of the short-term obligations on a long-term basis. The balance of the obligation ($100,000) must be reported as a current liability.

[cdn]

Right @Ginic, that what I was thinking. The bonds existed at B/S date

[cdn]

And there is word “intended” not that they actually used it hrhrhr

[Holly]

For some reason it makes sense to me but I think that's why I hate auditing. I think in auditing that word “intended” would've mattered.

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

[mtaylo24]

The fatigue is real! I can barely stay awake 🙁

@hrsexton, Sounds like a plan. I did that last week, went copy and paste crazy and winded up with a 600 page pdf. Don't waste your time doing all of that, but focusing on the troubled questions is the way to go!

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)

[Holly]

I'm at 88% right now. I'm hoping to get through the rest of the questions not seen today! @mtaylo24 how are you feeling about those two upcoming tests?

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

[mckan514w]

Acquisition cost in a business consolidation- I just worked a question where everything including accounting and legal was expenses as incurred- except for the cost of issuing stock which reduced the APIC… however I am looking over my Business Combination notes and it says that All direct cost including accounting and legal should be debited to APIC….

Anyone know???

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

[mtaylo24]

@hrsexton, Its about a 80/20 split right now for BEC/FAR, so I feel alright about BEC, feel like I'm slacking with FAR. Still kind of struggling with some Econ and Cost, feel ok about IT and cap budgeting (for once) and feeling great about COSO. I'm going to have to do some serious catching up starting Saturday afternoon after my test. My notes and review are already set-up though, so I'll be ready to roll next week.

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)

[aatoural]

For some reason I cannot calculate the S/L method correctly. Help!

On January 2, Year 1, Nast Co. issued 8% bonds with a face amount of $1,000,000 that mature on January 2, Year 7. The bonds were issued to yield 12%, resulting in a discount of $150,000. Nast incorrectly used the straight-line method instead of the effective interest method to amortize the discount. How is the carrying amount of the bonds affected by the error?
At
December 31, Year 1 At
January 2, Year 7

a. Understated No effect

b. Overstated No effect (CORRECT)

c. Understated Overstated

d. Overstated Understated

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Holly]

@mckan514w my notes say as the questions said – current expenses were legal and accounting and registration costs reduce apic

@mataylo24 I'm impressed you're tackling both at the same time!

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

[GiniC]

My notes agree – acquisition costs are expensed when incurred; registration costs for issuing the stock used to acquire are taken out of the APIC part of the issuance. Similarly, if bonds are issued to finance the acquisition, Bond Issue Costs reduce the proceeds and are amortized with premium/discount.

[Holly]

@aatoural The discount is $150,000 over 6 years, SL would be $25,000 a year leaving a carrying amount of $875,000 at 12/31 for the bond. The carrying a mount using effective would be $872,000.

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

[aatoural]

Now I am confused, because when I look at the amortization schedule for S/L method in Becker book it also includes the interest expense. Why is this different?

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[mckan514w]

Thanks guys that's what I thought- but couldn't reconcile it with my notes-

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]

@aatoural which page and example

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

[Author]

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