[jeff]

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

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

[GiniC]

@scared_CPA – I'm pretty sure the NASBA folks work a 9-5 five-day week, so probably not. Give yourself a break though, the site was down all week so even if you HAD tried to get the NTS during the week (as I did, since my first FAR NTS expired 12/30) you would have had to wait until Saturday.

I'm told the NTS's are pretty quick after the first one, so I'm hoping they are emailed tomorrow so we can reserve our slots. In my area, there are rarely spots available within a week – you have to catch one someone just cancelled. I'm aiming for March 10, giving myself max time to study everything and do a final pull-it-together review in the last two weeks. Also taking the week of March 10 off from work!

GOOD LUCK!!

[Scared-cpa]

Thanks, Gini. There isn't a delay between when I get my NTS and I'm allowed to schedule is there? I can't remember if I have to wait a couple days or if that is just in my head. My first NTS was fast. I think I got it the next day but I expected a slight delay this time since I paid for it on a Saturday. My Prometric center isn't too busy and there are plenty of slots available every day this week, just not times I want (i.e. 8 am or 5 pm.) I'm kicking myself for not reserving it sooner but I wanted to make sure I was prepared for my retake. Good luck to you!!!

[Cjsr]

Conversion of preferred shares:
700,000 x 1/6 equals 116,667
680,000 x 1/3 equals 226,667
720,000 x 5/12 equals 300,000
684,000 x 1/12 equals 57,000
Total 700,334

Done the other way:
700,000 x 1 equals 700,000
(20,000) times 10/12 equals (16,666)
40,000 x 1/2 equals 20,000
(36,000) x 1/12 equals (3,000)
Still 700,334

What am I missing? Something right in front of my face? Difference between a 74 and 75.

BEC. 83. 9 Jan 2016
REG. 83. 30 Jan 2016
AUD. 92. 27 May 2016

Becker FastPass with in-class videos

[Leanne]

Oh!! That makes sense! Thank you!
I kinda mix the concept of ” common stock o/s” VS ” WASCO”. So for WASCO, we have to include the conversion shares bc it increases our shares o/s. For Common stock o/s, we just ignore the conversion shares… Am I getting it right?

[Leanne]

@yazoon81

Oh!! That makes sense! Thank you!
I kinda mix the concept of ” common stock o/s” VS ” WASCO”. So for WASCO, we have to include the conversion shares bc it increases our shares o/s. For Common stock o/s, we just ignore the conversion shares… Am I getting it right?

[Leanne]

@ Cjsr

I think the 20,000 (repurchase shares) should be: 20,000* 9/12=… it starts from 3/31, not 3/1.

[Cjsr]

@Lian, thank you!

BEC. 83. 9 Jan 2016
REG. 83. 30 Jan 2016
AUD. 92. 27 May 2016

Becker FastPass with in-class videos

[Anonymous]

Here's a nice not-for-profit problem:

XYZ, a not-for-profit organization dedicated to animal welfare, received a $70,000 contribution at the start of 20X1 with donor instructions to maintain the original principal as a permanent endowment and use income and net gains for wildlife rehabilitation. The endowment principal was invested in a number of equity securities and mutual funds using an investment management firm. Investment performance and transactions were as follows in 20X1 and 20X2:

Dividends received in 20X1 and 20X2 – $3,000 and $2,5000

Securities sold in 20X1 – $1,000

Rehabilitation expenses in 20X1 and 20X2 – $3,500 and $3,500

Year end fair market value in 20X1 and 20X2 – $72,000 and $69,000

XYZ believes that the donor intended for the endowment to remain at least at the original contributed value. What net asset values would be reported on the statement of financial affairs for 20X2 in relation to this endowment?

A. Unrestricted net assets $(500), temporarily restricted net assets $0, permanently restricted net assets $70,000

B. Unrestricted net assets $0, temporarily restricted net assets $(1,500), permanently restricted net assets $70,000

C. Unrestricted net assets $(1,500), temporarily restricted net assets $0, permanently restricted net assets $69,000

D. Unrestricted net assets $0, temporarily restricted net assets $(500), permanently restricted net assets $69,000

[Scared-cpa]

@BondVillain Since the endowment has to remain at the original amount of $70,000, that eliminates C & D. Now we are down to A & B. There are two ways I can think of going about answering this.

Firstly, the income that would “travel” through temp restricted will be completely used by the yearly expenses. So the end amount in temp restricted account will be zero, making answer A correct.

Secondly, you can actually track the cash flows to find the appropriate ending balance for unrestricted.
2011 Unrestricted Net Assets: +1,000 securities sold + 3,000 dividends – 3,500 expenses = +500 ending balance
2012 Unrestricted Net Assets: +500 ending balance + 2,500 dividends – 3,500 expenses = -500 ending balance

This also makes A the correct option. Am I right?

[Anonymous]

Yes, the answer is A. I calculated it somewhat differently but I like your method.

[Scared-cpa]

May I ask how you calculated your answer to see the different ways to go about it? Sharing different ways may help come exam day to a question you're not sure of how to work.

[Namstut]

Hey FARers, I am starting to study for FAR and have my test scheduled for 3/10.

Is it reasonable to aim for 2 chapters a week leaving 2 full weeks for review? I am aiming for 3-4 hours in the evening during weekdays and 5-7 hours on weekends?

I am studying with Becker. If you are already through the study material, which chapters are most painful? Again, I know it depends on the individual background but I just want to have an idea of what I am getting myself into.

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[Spartans92]

@Namstut, I would say F5 Bonds for me. F8-9 are not hard but they are SUPER Long! Still trying to finish up F9 right now and start final review. It's a little overwhelming. Make sure u have plenty of time to review cuz right now Im left with 1 week and I'll be surprise if I can pass, I doubt I stand the chance tho. With FAR you will need to budget more time cuz things never go as planned.. either from personal life or complexity of questions it takes longer (at least for me). Good Luck! FAR is a BEAST.

BEC- PASS

[Scared-cpa]

NuCorp. agreed to give Rand Co. a machine in full settlement of a note payable to Rand. The machine's original cost was $140,000. The note's face amount was $110,000. On the date of the agreement:

the note's carrying amount was $105,000, and its present value was $96,000.
the machine's carrying amount was $109,000, and its fair value was $96,000.

Assuming that this trade was made as part of troubled debt restructuring, what amount of gains/losses should NuCorp. recognize, and how should these be classified in its income statement?
A. Extraordinary gain/loss: $(4,000); Other gain/loss: $0
B. Extraordinary gain/loss: $9,000; Other gain/loss: $(13,000)
C. Extraordinary gain/loss: $9,000; Other gain/loss: $(4,000)
D. Extraordinary gain/loss: $0; Other gain/loss: $(4,000)

Ans is D.
FASB ASC 470-60-35-2 requires that a debtor in a troubled debt restructuring recognize a gain measure as “the excess of (i) the carrying amount of the payable settled…over (ii) the fair value of the assets transferred to the creditor.” Since extinguishments of debt and troubled debt restructurings generally are not unusual and infrequent (especially in light of the losses normally would not qualify as extraordinary items). Thus, the total gain/loss in this case is the difference between the carrying value of the debt, $105,000, and the carrying value of the machine, $109,000 and its fair value of $96,000 conceivably could be deemed to be an impairment loss. However, we do not have enough information to know that this $13,000 part of the loss qualifies as an impairment loss. Nevertheless, even if it did, it would be included in income from continuing operations. The best answer is that the $4,000 net loss should be recognized as an ordinary loss to be included in income from continuing operations.

I chose this answer via process of elimination (no extraordinary g/l), but I feel it should be a gain of $9,000. The explanation even says that the gain should be the difference in the CV of note (105) and FV of machine (96) so why the heck is it something else?

[A1lessio]

Namstut – For me F2 was and still is very confusing. 2 weeks review should be good. I couldn't handle 2 chapters a week. Some of the sections have so many problems and they are all long calculations. i've been re-watching the lectures after working the problems (on the treadmill or subway) and I think it helps. Stuff really pops out at you and you associate it with questions you got wrong.

AUD (08/02/2016)

[Author]

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