[jeff]

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

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

[Stilgoin]

@mckan A change in depreciation method is not a change in accounting principle. It is a change in estimate and handled prospectively.

I wonder if this would be handled the same way?

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[mtaylo24]

Just making sure I got the facts straight with investments, if you own over 25% and pick the FV option, you do NOT recognize your share of NI, instead you recognize your share of dividend income and the change in FV? These business combo questions confuse me.

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)

[A1lessio]

mtaylor- Yes! I just got a question like that wrong. Only FV option though. Equity method would be NI less Dividends received and for cost method you actually recognize dividend income.

AUD (08/02/2016)

[mtaylo24]

@A1lessio Thanks, that clears it up. So Cost is <20% and Equity is >20%.

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)

[Stilgoin]

Cost < 20%, but if it is <20% and your company can exert significant influence, then treat as the equity method. Equal to or >20% and equal to or <50% is equity method. >50% is consolidation.

Jeez- I edited this like 3 times.

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[mtaylo24]

Geez! I just got a 90% on my last quiz in that chapter and I feel like I don't know anything. I'm not even sure that I've come across a question with the 18% rule.

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)

[Stilgoin]

That’s great!

The 18% was an example- that’s why I changed it. Sometimes I have trouble relaying what I am trying to say in type. LOL

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[A1lessio]

one tricky area in that chapter is going from Equity to Consolidations. Or was it cost to equity? You have to revalue assets up to their FMV. Anyone know what I am talking about?

AUD (08/02/2016)

[mtaylo24]

Oh HAHA, just read the edit. So let me get this straight…>20% is automatically significant influence and if you are <20%, you can STILL exert significant influence, so treat as equity? I guess the MCQ or sim will spell that out for us.

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)

[Stilgoin]

Yes! Some of the questions say – You own 15% and your company can exert significant influence. Those are the ones that you treat as equity, but the question specifies significant influence.

@A1lessio – there is a 2017 NINJA update that says:

Adopting the Equity Method of Accounting
Equity Method
o Gives “Significant Influence”
o Dividends received from Investee reduce the
Investment account and are not income o Changing to Equity Method
New with Simplification Initiative
Recognize Unrealized Holding G/L in Earnings Prospective F/S Treatment

Also when you consolidate, you have to revalue assets to FV.

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[Scared-cpa]

I appreciate everyone's responses on here to my questions about being prepared and taking AUD, as well. I apologize for not replying as often as I should, I'm just really busy right now between studying and school starting back.

I'm trying to make a list of everything important that I need to remember come exam day that I often forget just from so much cramming. Usually it's simple things that I don't review because I think I know it, then I start taking the exam and I wish I would've looked over it. So what I'm going to do is create a 1 or 2 page “cheat sheet” to take with me to prometric center and review it in my car before I go in to sit for the exam. So far these are the items I have written down:

-Qualitative characteristics and the subtopics
-List of governmental funds broken down into gov't, proprietary, fiduciary, and those within each of the three
-Rules for capital lease (BPO, 75% lease term and 90% FV…always get the 75 and 90% mixed up!)
-Journal entries for treasury stock under both cost and par method
-LCM and LCNRV
-Types of depreciation and their depreciable base
-Review/Examples of discounting bonds (I still struggle with knowing what % to use) Any tips on this would be great
-Financial Statements for governmental
-Review percentage-of-completion method

Anything else y'all can think of?

Also, does anyone have a link to where I can find examples of journal entries for leases or bonds? I struggle with those and I'm deathly afraid I will get a sim all about that!

[waffle_house]

If you own less than 20% investment in a company a you use the cost method unless you have significant influence then you may use the equity method.

If you own more than 20% but less than 50% you would use the equity method, unless you do not have significant influence then you would use the cost method.

It's really not that hard.

[waffle_house]

@scared_cpa

Goodwill & intangible impairment for GAAP and IFRS.
Installment sales, Long term construction contract (%completion & completed contract)
Pensions(SIRAGE) and funded status and related JE's
Bonds, convertible bonds, detachable warrants and their JE's

My list can go on. What are you having trouble in? Maybe I can help explain.

[Stilgoin]

https://www.principlesofaccounting.com/illustrative%20entries/entrieslist.htm

https://sites.google.com/site/farnotes/gas-34/journal-entries–fund-based-vs-government-wide

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[A1lessio]

like stillgoing said – Also when you consolidate, you have to revalue assets to FV

Be very careful about this.

AUD (08/02/2016)

[Author]

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