[jeff]

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

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

[Spartans92]

Is it just me or is it normal to not fully recall everything even when doing comprehensive mcq? I just did a 30 mcq over all topics and several questions like full goodwill under GAAP vs IFRS partial goodwill I drew blank.. I had to look up my notes to figure out. Does this ever happen to anyone? I just feel like I'm not prepared at all :/

BEC- PASS

[mcohen1993]

Hi all,

It seems Ninja and Becker have questions quite different for FAR. Is studying mostly Ninja going to cost me? I usually do both but focus on Ninja because it's faster for me.

Are the actual questions close to how Becker presents?

REG: 91!!
BEC: 80!!
AUD: TBA
FAR: TBA

In the order I plan to take the exams.

[Spartans92]

What am I missing on this question:
When the allowance method of recognizing uncollectible accounts is used, the entries at the time of collection of a small account previously written off would:
a.
Increase the allowance for uncollectible accounts.
b.
Increase net income.
c.
Have no effect on the allowance for uncollectible accounts.
d.
Decrease the allowance for uncollectible accounts.

Answer is A.. I thought C. Heres my thought on JE.

Write off uncollectible : DR: AFDA CR: A/R

Recover/Reverse: DR: A/R CR: AFDA

Cash Collection: DR: Cash CR: A/R
Thought theres no effect since it offsets.

BEC- PASS

[mcohen1993]

The collection causes both of your JEs to be done simultaneously. AFDA increases (by a credit) and AR is restored.

REG: 91!!
BEC: 80!!
AUD: TBA
FAR: TBA

In the order I plan to take the exams.

[Namstut]

@Spartans92 I think you are looking at the cumulative effect on the balance of the allowance account but the question is asking how specific entries at the time of collection will effect the account.

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

[A1lessio]

@spartan92 – how are you scoring on Becker mcqs and progress tests? I'm at like 65-70% and exam is in 9 days. Still need to review 5-9, maybe some 10.

AUD (08/02/2016)

[NYaccountingstudent]

Kent, Inc.'s reconciliation between financial statement and taxable income for Year 2 follows:

Pretax financial income $ 150,000
Permanent difference (12,000)
138,000
Temporary difference-depreciation (9,000)
Taxable income $ 129,000
Additional information:
At
12/31/Year 1
12/31/Year 2
Cumulative temporary differences (future taxable amounts)
$11,000
$20,000
The enacted tax rate was 34% for Year 1 and 40% for Year 2 and years thereafter.
In its December 31, Year 2, balance sheet, what amount should Kent report as deferred income tax liability?
a. $3,600
b. $7,340
c. $8,000
d. $6,800

[NYaccountingstudent]

Kent, Inc.'s reconciliation between financial statement and taxable income for Year 2 follows:

Pretax financial income $ 150,000
Permanent difference (12,000)
138,000
Temporary difference-depreciation (9,000)
Taxable income $ 129,000
Additional information:

Cumulative temporary differences (future taxable amounts)
12/31/Year 1 $11,000
12/31/Year 2 $20,000

The enacted tax rate was 34% for Year 1 and 40% for Year 2 and years thereafter.
In its December 31, Year 2, balance sheet, what amount should Kent report as deferred income tax liability?
a. $3,600
b. $7,340
c. $8,000
d. $6,800

Why do they multiply 40% by $20,000 rather then multiplying the 40% by the temporary difference of $9,000??

Beckers explanation says we take the $20,000 because it says “future taxable amounts”

So we just ignore the normal rule of multiplying the tax rate by the temporary differences for this question?

[Spartans92]

@A1, I haven't been doing much progress test actually. I just finished going through the individual chapts. earlier today I did around 20 MCQ per each optional section. Im gonna start Ninja. I range anywhere from 60-70's too LOL. Hopefully I can do as many MCQ/ Sims in these next 4 days.

I find my biggest weakness to be F2-F6. Mine is in a few days too and I honestly think my chance of passing is .00001% LMAO.

BEC- PASS

[A1lessio]

I think because They are Asking for deferred income (income taxed in future) for yr 2. So multiply 40% by the future taxable amount. I forgot the rules for depreciation. Reviewing this chapter tomorrow morning before work.

AUD (08/02/2016)

[mcohen1993]

@NY,

DTA & DTL is done by looking at the future amounts owed. How questions will present themselves is to ask based on the current year only, that's where you may get confused. Use CY to find current income tax expense.

Back to my original question, how does the Ninja questions compare to actual exam and Becker compare to actual exam? I have used both for my other exams and found a mix of both sadly. But actual does seem to have less long winded questions and more direct. Less info thrown at you kind of thing.

REG: 91!!
BEC: 80!!
AUD: TBA
FAR: TBA

In the order I plan to take the exams.

[Anonymous]

Hey everyone,

So I've been studying for FAR the last three weeks and have made it through all the sections. I started my review yesterday. I have yet to do any progress tests but have started my own notes and redoing the MCQs and Sims (I have Becker). My exam is scheduled January 21st due to my traveling for work and having to move at the end of January. I've noticed I'm seriously forgetting stuff I thought I had down and am struggling with a lot of the long calculation problems. Does anybody else feel the same way with this section? It's my first go at it and I'm really getting nervous…also looking for any tips during my review stage? Thanks!

[Anonymous]

@NYaccountingstudent,

From what i remember, it is presenting the cumulative temporary differences which would include the depreciation amount. I'm pretty sure the depreciation amount above is extra information trying to trick you. Hopefully that helps!

[Anonymous]

Can anyone tell me how much is the loss from discontinued operations in Year 2? Thanks guys!

On December 31, Year 1, the Board of Directors of Maxy Manufacturing, Inc. committed to a plan to discontinue the operations of its Alpha division. The decision represents a major strategic shift and will have a significant effect on its operations and financial results. Maxy estimated that Alpha's Year 2 operating loss would be $500,000 and that the fair value of Alpha's facilities was $300,000 less than their carrying amounts. Alpha's Year 1 operating loss was $1,400,000, and the division was actually sold for $400,000 less than its carrying amount in Year 2. Maxy's effective tax rate is 30%.

In its Year 1 income statement, what amount should Maxy report as loss from discontinued operations?

a.
$1,400,000

b.
$1,700,000

c.
$980,000

d.
$1,190,000

Explanation

Choice “d” is correct. Since the fair value of Alpha's facilities was $300,000 less than its carrying value, there has been an impairment loss, and that loss should be recognized in Year 1. That $300,000 impairment loss plus the $1,400,000 Year 1 operating loss would be recognized in Year 1 net of tax. The total loss would be $1,700,000 x 70% (100% – 30%) or $1,190,000.

Choice “c” is incorrect. It includes the Year 1 operating loss of $1,400,000 but not the $300,000 impairment loss but does report the Year 1 operating loss net of tax.

Choice “a” is incorrect. It includes the Year 1 operating loss of $1,400,000, but not the $300,000 impairment loss, and reports the Year 1 operating loss gross of tax and not net of tax.

Choice “b” is incorrect. It reports the Year 1 loss from discontinued operations gross of tax and not net of tax.

[Anonymous]

Okay never mind, I saw the answer to my question above:

On December 31, Year 1, the Board of Directors of Maxy Manufacturing, Inc. committed to a plan to discontinue the operations of its Alpha division. The decision represents a major strategic shift and will have a significant effect on its operations and financial results. Maxy estimated that Alpha's Year 2 operating loss would be $500,000 and that the fair value of Alpha's facilities was $300,000 less than their carrying amounts. The estimate for Year 2 turned out to be correct. Alpha's Year 1 operating loss was $1,400,000, and the division was actually sold for $400,000 less than its carrying amount. Maxy's effective tax rate is 30%.

In its Year 2 income statement, what amount should Maxy report as loss from discontinued operations?

a.
$350,000

b.
$500,000

c.
$420,000

d.
$600,000

Explanation

Choice “c” is correct. The Year 2 loss from discontinued operations would include both the Year 2 operating loss of $500,000 (which turned out to be a correct estimate) and the “additional” loss (on disposal) of $100,000, net of tax, for a total of $600,000 x 0.70 or $420,000.

Choice “a” is incorrect. It includes the Year 2 operating loss of $500,000 but not the $300,000 impairment loss but does report the Year 2 operating loss net of tax.

Choice “b” is incorrect. It includes the Year 2 operating loss of $500,000, but not the $100,000 loss on disposal, and reports the Year 2 operating loss gross of tax and not net of tax.

Choice “d” is incorrect. It reports the Year 2 loss from discontinued operations gross of tax and not net of tax. The Year 2 loss from discontinued operations should include both the Year 2 operating loss of $500,000 and the loss on disposal of $100,000, net of tax, for a total of $600,000 x 0.70 or $420,000.

[Author]

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