[jeff]

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

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

[GiniC]

@HRSexton –

Let's see how well I absorbed what my son showed me:

OK, not perfect – but if you right-click on it you can open the image in a new tab to see a scan of my solution.

[RE2PECT]

Since I'm enjoying my time off from studying I figured I'd come in and say good luck to everyone taking FAR soon, especially mtaylo24 and mckan514w!

@mtaylo24- I know you crushed BEC this time! You're going to be a legend when you pull off BEC and FAR in the same week lol.

FAR: 75 Roger & Ninja (notes/flashcards/audio/MCQ)
AUD: 73, 81
BEC: 71, retake 8/29
REG:

[mckan514w]

Thanks @Re2pect! Am waiting for March 8th score release to celebrate with you 🙂 fingers crossed that you are done- and that I will be soon….

Took the night and morning off- my brain is reaching burn-out and needed a break- ready to get back to it now

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]

@ginic everything was right except the 12/24 and 12/26 inventory column
200 $11 $2,200
150 $11 $1,650

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

[GiniC]

@HRSexton – Oh well – with that many entries in a sim, those two wouldn't count for much! One of the things I have to watch for, rushing to the finish on long problems.

[Cruzer]

I just hit a speed bump. Just did Nonmonetary Transactions (Barter Transactions) MCQ's first time through (Only 20 questions) and scored terrible. Is there a chart or can someone explain to be how you remembered this stuff? That was completely embarrassing how s*#$%^ I just did on that testlet. Wow.

[Holly]

In-process research costs (IPRD): IPRD costs acquired in a business combination are recognized as assets at cost (i.e., fair value), even if a component is research. Subsequent expenditures on that project are accounted for as any other R&D cost.IFRS just an FYI

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

[Cruzer]

Recording the new asset based on if the transaction lacks/does not lack commercial substance is not the issue, the issue is calculating gain/loss on these transactions when boot (cash) is received. I thought the word “boot' was only used in tax. I believe this is a very important topic to have nailed down come exam day since the questions are computational but not lengthy. Examiners love this.

[Cruzer]

@HRSexton thanks for the info, I will note this. I am hitting Research & Development this afternoon and trying to make sure I have my GAAP v IFRS differences tied down.

[cdn]

Can you please explain why I have 20/30 not 20/60?

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

The correct answer is D

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

[aatoural]

The way this made sense to me was. What is the standing of your bond in year 10 mathematically speaking? One third of the bonds has been amortized and since our bond issuance cost are part of your amort schedule you would go about that like this;

you have a total discount of $30,000 of which only 1/3 has been amortized or $10,000. The reminder $20,000 still is unamortized or 2/3 (20/30 is the same).

The same happens with your bond issuance cost. 1/3 of it or $30,000 has been amortized and the reminder of $60,000 is still unamortized or 2/3 (20/30 is the same).

You also know you repurchase the bonds at 1.02 or $1,5030,000

The Loss would be a plug with the J/E if you have that entry learned

Dr Bond Pay 1,500
Dr Loss on BP (plug) 110
Cr Discount and Issuance cost on BP 80 (60+ 20)
CR Cash 1,530

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

[aatoural]

Does anybody know or has a good place I can read a better explanation of the if-converted method?

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

[nalratoss]

Sylvester Co. takes out a 12% loan of $500,000 on 1/1/2014 to finance construction of a building for the company’s own use. Construction begins immediately, and $600,000 is spent on the construction at an even pace during 2014. Another $400,000 is spent at an even pace during 2015, with construction completed on 12/31/2015. No other construction loans are taken out. Sylvester incurred unrelated interest expenses of $10,000 and $15,000 in 2014 and 2015, respectively, on loans that bear interest at 10%. How much interest can Sylvester capitalize in 2014 and 2015?

2014 2015
YOUR ANSWER WAS INCORRECT:
$60,000 $96,000
$36,000 $96,000 (My choice)
$60,000 $60,000
$36,000 $75,000 (Answer choice)

Can anyone explain this question to me? I don't know how to get the answers. More importantly, what's the relationship between loan interest vs interest related to weight avg expenditure. Shall I record the smaller amount of the two or the larger of the two?

This is how I got 96,000

600,000 + 2015 interest expense (400,000/2) = 800,000
800,000 * 0.12 = 96,000

Whether or not how much loan you issued doesn't matter, the entire 96,000 is related to your expenditure interest, they should all be capitalized, right?

[GiniC]

@cdn –

Because all the problem facts were given in years, they used years (instead of periods) in the solution. 10 of 30 years of amortization was used, so 20 of 30 years of amortization had to be accounted for in extinguishment. If done in periods, they would have used up 20 of 60 periods of amortization, with 40 of 60 left to reverse in the final journal entry.

[aatoural]

I got this for those of you that are still trying to get Diluted EPS a 100% right

If-converted

Treasury Stock

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

[Author]

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