FAR Study Group Q1 2017 - Page 57

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  • January 31, 2017 at 10:01 am #1450842
    mtaylo24
    Participant

    @mckan514w and @aatoural

    I just love the blob of text that Gleim provides for answer explanations. They are so simple and easy to follow!

    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)

    January 31, 2017 at 10:10 am #1450848
    Holly
    Participant

    Has anyone who has Becker tried to log into their account to see the status of a question asked? Used to you could go in and edit or see past questions and answers.

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

    January 31, 2017 at 10:40 am #1450869
    mckan514w
    Participant

    LOL Mtaylo- especially for such simple topics like hedging and business consolidation- let me just say CRYSTAL CLEAR! LOL LOL LOL…. (clearly everyone now knows what I am studying today 🙂 )>

    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

    January 31, 2017 at 10:40 am #1450875
    Holly
    Participant

    So… I'm just getting to this question of classification of the deferred liability. I'm wondering if that because it specifically states that the company is using Statement 109, that we need to know how to apply it?

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

    January 31, 2017 at 10:43 am #1450877
    Holly
    Participant

    Question CPA-00779
    Hut Co. has temporary taxable differences that will reverse during the next year and add to taxable income. These differences relate to non-current assets. Under U.S. GAAP, deferred income taxes based on these temporary differences should be classified in Hut's balance sheet as a:
    a. Non-current liability.
    b. Current asset.
    c. Current liability.
    d. Non-current asset.

    Explanation
    Choice “a” is correct. Hut's temporary taxable differences add to taxable income, making them deferred tax liabilities. Under U.S. GAAP, deferred tax liabilities and assets should be classified and reported as a non-current amount on the balance sheet. This treatment aligns with IFRS. All deferred tax liabilities and assets must be offset (netted) and presented as one amount (a net non-current asset or a net non-current liability), unless the deferred tax liabilities and assets are attributable to different tax-paying components of the entity or to different tax jurisdictions.
    Choice “b” is incorrect. Hut's temporary taxable differences add to taxable income, making them deferred tax liabilities, not deferred tax assets. Furthermore, the liability is non-current. (See the correct explanation above for more detail.)
    Choice “d” is incorrect. Hut's temporary taxable differences add to taxable income, making them deferred tax liabilities, not deferred tax assets.
    Choice “c” is incorrect. Under U.S. GAAP, deferred tax liabilities are classified in the balance sheet as non-current. (See the correct explanation above for more detail.)

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

    January 31, 2017 at 10:49 am #1450883
    Holly
    Participant

    I just came across another Becker question that has the same explanation – aligns with IFRS….. So I'm going to assume the first question is right because of the explicit mention of the statement 109 being followed.

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

    January 31, 2017 at 10:49 am #1450884
    Cjsr
    Participant

    OK but but …. “has temporary taxable differences that will reverse during the next year and add to taxable income.” Soooo … the phrase “during the next year” governs the phrase “add to taxable income” as well as the phrase “will reverse.” That's the kind of thing that seems ambiguous to me and trips me up. English.

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

    Becker FastPass with in-class videos

    January 31, 2017 at 10:54 am #1450887
    mckan514w
    Participant

    Can anyone tell me what the fundamental difference between a consolidated statement and a combined statement is? I know the consolidated is prepared by the parent and includes the subs… whereas a combined is done when there is common ownership / management- but the accounting is the same for both correct? In other words both eliminate intraentity transactions?

    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

    January 31, 2017 at 12:23 pm #1450971
    Holly
    Participant

    That's confusing to me, too @mckan514w. I think it may just be a terminology thing?? You eliminate both but you're not “consolidated” because there is no parent/sub; accounting is same.

    Copied from a different question in another71
    A consolidation is when one company owns over 50% of another company.

    (Here we’re referring to parent and sub)

    A combination is when more than one company is over 50% owned by the same entity, is under common management, or cannot be consolidated due to bankruptcy or reorganization.

    (Here we’re referring to brother and sister companies, except for the bankruptcy/re-org situation which would be a parent/sub relationship that is being reported similarly to a brother/sister relationship)

    Difference in reporting:

    Intercompany transactions are eliminated in BOTH scenarios.

    HOWEVER, notice these differences:

    Consolidation (Parent/sub relationship):

    Equity accounts of the Sub are eliminated, therefore consolidated equity = Parent’s equity ONLY

    Net Income of the Sub is eliminated, therefore consolidated net income = Parent’s Net Income ONLY

    Combination (brother/sister relationship):

    Equity accounts of EACH of the combined companies are ADDED together.

    Net income of EACH of the combined companies are ADDED together.

    In general, I’ve noticed in the practice questions – if they are mentioning 3 businesses (i.e. A owns B and C), then they are often using the rules of combination.

    But, if they are referring to only 2 businesses where one owns over 50% of the other, then they are referring to the rules of consolidation.

    Hope that helps. Please let me know if anything above is incorrect!

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

    January 31, 2017 at 12:36 pm #1450995
    mckan514w
    Participant

    Thanks @HR! part about parent / child and brother/sister really helpful… much better than what I have in my notes. Thanks

    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

    January 31, 2017 at 1:41 pm #1451061
    mtaylo24
    Participant

    Uh oh…the Ninja book is back! Has anybody ever used it for other sections?

    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)

    January 31, 2017 at 2:47 pm #1451142
    mckan514w
    Participant

    I haven't mtaylo but considering I just got a 10% (yes you read that right 10%) on Gleims hedging and derivatives I am about to do something harmful to my gleim material and start looking for other alternatives… I honestly CAN NOT be this stupid can i???

    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

    January 31, 2017 at 3:07 pm #1451163
    mtaylo24
    Participant

    ^^^Dang homie…You're not dumb at all, it's just hard material, keep at it. Do you work the missed questions after each session? That's kind of helpful. I actually picked up the Ninja book because I did something similar with the cash flows chapter today. Not blaming Gleim at all, just needed a brief change of scenery.

    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)

    January 31, 2017 at 3:11 pm #1451166
    Holly
    Participant

    At this point I can't imagine reading any more than this freaking Becker book. I don't even feel like looking at flashcards. I hope I pass in March 🙁

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

    January 31, 2017 at 3:14 pm #1451169
    mckan514w
    Participant

    Ha- thanks for the vote of confidence on the intelligence Mtaylo- I am going back through the questions right now (or trying to- honestly I am near tears at this point)- I keep asking myself if I am really being productive with Gleim because I know that the exam is actually no where near this hard (especially with this particular chapter) But then that voice keeps saying “yeah but if you had known your s-t you wouldn't be here so keep at it). I am even lost on how to take notes on the questions I am seeing they are just so different from any other material I have seen in Rogers or Ninja-

    Sorry just needed to whine :-)….

    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

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