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March 18, 2016 at 4:43 am #200895
jeff
KeymasterWelcome to the Q2 2016 CPA Exam Study Group for FAR.
Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz
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June 18, 2016 at 6:10 am #765966
pracap
ParticipantHey Guys,
Am retaking FAR, and new to Bond issue cost (new rules now).
Can somebody journalise the below for me please….
Ninja MCQ No. 463:Perk Inc issued $500000 10% bonds to yield 8%. Bond issuance cost were $10000. How should perk calculate the net proceeds?
June 18, 2016 at 6:17 am #765967Anonymous
Inactivepracap,
I am assuming this is issued at PAR
Dr. Cash 490 (Proceeds)
Dr. BIC 10
Cr. Bond 500June 18, 2016 at 6:46 am #765968pracap
Participant@DLu
No answer says, discount the bond at market rate of interest and deduct bond issuance cost.Basically, i wanted to understand the difference between old JE for Bond issuance and as per new rules.
June 18, 2016 at 5:28 pm #765969KJ
ParticipantThanks DLU for the clarification!!
FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein
June 18, 2016 at 7:57 pm #765970KJ
ParticipantHow do you suppose to remember 20 disclosures from pensions and other post retirement benefits?
FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein
June 18, 2016 at 9:10 pm #765971Anonymous
Inactivekanwal78, What materials are you using and plan for retake?
Man I am with you. I am retaking FAR as well, failed at 69 on Feb.
And I just found my REG score to be 73!!, F**K. So depressing.
June 18, 2016 at 9:26 pm #765972KJ
ParticipantDLu..I bought Ninja ten point combo initially (So I am using it) plus Ninja MCQ. I do have 2015 Wiley Excel book which I just use for reference or read it if I am not clear on something. I am not reading book again but while doing MCQ if I am not clear on a concept then I go back and read it. That is my plan for re-take, hopefully it works. FAR is crazy and I don't have a good feeling if I will pass it next time or not.
Here is what boggles my mind, not sure if these two similar questions are tricky due to wording or if one of them is wrong:
FROM NINJA MCQ – Which of the following disclosures is not required of companies with a defined-benefit pension plan?
A.
An overall description of the planB.
The amount of pension expense by componentC.
The weighted-average discount rateD.
The estimates of next year's contributionsThis one says A is correct. Is it because it says overall description of plan and D just says next year's contributions.
FROM WILEY – Which of the following disclosures is not required of
companies with a defined benefit pension plan?a. A description of the plan.
b. The amount of pension expense by component.
c. The weighted-average discount rate.
d. The estimates of future contributions for the next five
years.This one says D is correct. Is it D because it says next five years but not next year's distributions. How come then A is not correct. Is is because it just says description of the plan.
FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein
June 18, 2016 at 9:55 pm #765973Zyx
ParticipantI feel you! I'm taking far in 2weeks and I realdy forget pension, leases, stocks and many!
REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27June 19, 2016 at 12:59 am #765974Zyx
ParticipantA company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance. In a statement of cash flows, what amount is included in financÂing activities for the transaction?
A.Cash payment
B.Acquisition price
C.Zero
D.Mortgage amount
Is mortgage amount included in financing activities?
REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27June 19, 2016 at 2:00 am #765975KJ
Participantzyx11…C is correct. Mortgage payment is a non-cash activity and does not involve flow of cash, so Zero. Cash paid will be under investing activities as an outflow.
FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein
June 19, 2016 at 2:01 am #765976KJ
ParticipantMortgage will be included as non-cash activity at the bottom of the statement of cash flows.
FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein
June 19, 2016 at 5:47 am #765977pracap
ParticipantHey,
I have Becker simulation material which is old and does not include the new rules of Bond Issuance cost. Below is the SIM question on bonds, Can some body help to Jounalize the transaction for me please please please…..
On January 1, Year 1, Acorn Financial Corp. issued 800 convertible bonds. Each $1,000 face value bond is convertible into 5 shares of common stock. The bonds have a 10 year term to maturity and pay interest semi-annually. Acorn's common stock has a par value of $20.00 per share. The bonds have a stated interest rate of 4% and pay interest semi-annually. The convertible bonds were sold for $875,500. Bond issue costs of $50,000 will be subtracted from the bond sale proceeds to be received by Acorn. The bonds were sold to yield a market interest rate of 3%. Acorn will use the effective interest method to amortize the bond discount and/or premium. Round all amounts to the nearest dollar.
Requirements:
1) Record the journal entry for the issuance of the convertible bonds on January 1, Year 1. Select “no entry” if no journal entry is required on this date.
January 1, Year 1
2) Record the journal entries on June 30, Year 1 to recognize interest expense and the amortization of the bond issue cost for the first six months of Year 1.
June 30, Year 1
3) Record the journal entries on December 31, Year 1 to recognize interest expense and the amortization of the bond issue cost for the second half of Year 1.
December 31, Year 1
4) Assume that the bonds are converted on January 1, Year 2 and Acorn uses the book value method to account for the conversion of bonds into common stock. Record the journal entry for the conversion.
January 1, Year 2
5) Assume that the bonds are converted on January 1, Year 2 and Acorn uses the market value method to account for the conversion of bonds into common stock. Assume the market price of the common stock on the date of conversion was
$ 250.00 per share. Record the journal entry for the conversion.January 1, Year 2
June 19, 2016 at 1:49 pm #765978Zyx
Participantkanwal78, thanks. Non-profit cash flow is exact like pro-profit, is it?
REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27June 19, 2016 at 5:26 pm #765979Anonymous
InactiveQuestion on Comp Exp JE?
On January 1, Year 1, a company issued its employees 10,000 shares of restricted stock. On January 1, Year 2, the company issued to its employees an additional 20,000 shares of restricted stock. Additional information about the company’s stock is as follows:
Date on Fair Value of Stock (per Share)
January 1, Year 1 $20
December 31, Year 1 $22
January 1, Year 2 $25
December 31, Year 2 $30The shares vest at the end of a 4-year period. There are no forfeitures. What amount should be recorded as compensation expense for the 12-month period ended December 31, Year 2?
Correct Submit $175,000
I can calculate the expense for Y2, but I wanted to confirm if this is the JE for these transaction.
CAN SOMEONE CONFIRM?
1/1/x1 JE on Grant date:
Dr. Deferred Comp Exp (10 K * 20 for 4 yrs) 200K
Dr. Deferred Comp Liab 200KYE: 12/31/x1
Dr. Comp exp (200/4) 50K
Cr. Deferred Comp Exp 50K1/1/x2 JE on Additional Grant
Dr. Deferred Comp Exp (20K * 25 for 4 yrs) 500K
Dr. Deferred Comp Liab 5000KYE: 12/31/x2 – Year 1 Grant
Dr. Comp exp (200/4) 50K
Cr. Deferred Comp Exp 50KYE: 12/31/x2 – Year 2 Grant
Dr. Comp exp (500/4) 125K
Cr. Deferred Comp Exp 125KYr 2: Comp exp is 50 + 125 = 175, which is the correct answer.
Yr 4 payment 12/31/x4 for Grant in year 1
Dr. Deferred Comp Liab 200K
Cr. Cash 200KThis question was very similar to the SIM I had on FAR in Feb.2016, which I failed to book correctly. So, really wanted to get my JE right for any Comp or Def comp expenses.
Thanks for anyone to book this.
Dlu
June 19, 2016 at 6:28 pm #765980Claudia408
ParticipantDLu – how did you feel after you took Reg? I remember in another thread seemed like you got it down, especially corporate & SH basis.
BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8 -
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