[jeff]

Welcome to the Q2 2016 CPA Exam Study Group for FAR.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[Spartans92]

@sunshine, I believe so.

BEC- PASS

[lolo]

My question is: the new Becker version claims that we should use the lower cost and NRV under both IFRS and when we deal with problem that involves LIFO or retail methods under GAAP. Under GAAP For questions that involve methods other than LIFO and retail we should use the LCM!

In the past I knew that we always use LCM for GAAP and lower cost and NRV for IFRS! is the above effective for testing from now on or should we just follow this old rule! I am a bit confused coz lately I saw people arguing about this issue!

@Spartans92, thanks for the answer but I just want to make sure that you understand what I wrote in the previous post coz I was sorta unconscious when I was writing it 🙂

My Nick name is sunshine, but the fact is I have not been in touch with it since I started this CPA exam! IT HURTS

AUD - ✔ Passed Becker self study!
BEC - ✔ Passed Becker self study!
FAR - ✔ Passed Becker self study!
REG - TBD

[Titleistg0lfer]

I am interested in finding this out. I am still under the impression that we still just use LCM for GAAP and LC NRV for IFRS.

REG: 84 (10/5/15)
AUD: 83 (11/23/15)
BEC: 77 (2/27/16) - The bubble sucks
FAR: 90 (7/20/16) - AND DONE FOREVER!!!!!

[jayvaybay]

For those using Becker, do F7-F10 go a lot quicker than the first 6? Or are they about the same in length? (excluding F2 since that was a monster)

REG = 87 6/8/2016
FAR = 7/15/16
AUD = 8/27/16
BEC = 9/7/16

[lolo]

F7-F10 are a breeze …

My Nick name is sunshine, but the fact is I have not been in touch with it since I started this CPA exam! IT HURTS

AUD - ✔ Passed Becker self study!
BEC - ✔ Passed Becker self study!
FAR - ✔ Passed Becker self study!
REG - TBD

[pracap]

Hey,

Can anybody solve this?

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

[se7en.14]

In Becker FAR, marketable securities, there is an example that begins like this…

The following information pertains to Fox Inc.’s portfolio of marketable securities for the Year ended Dec 31, Year 1 and Dec 31, Year 2.

In the 4th part, how did they get $25,000 for Security GHI under Year 2 OCI Gain<Loss> (2nd column)?

(btw, where's the 3Q FAR thread?)

Thanks a bunch.

[CPA788]

Greetings ya'll. I haven't participated in the study forums much/this is probably my second post in a study forum. I'm back at it with FAR – 3rd attempt – and curious in feedback on NINJA. I've been using Becker, bought NINJA MCQ and notes this time around. The transition is kind of funny just because Becker and NINJA have different approaches and topics are organized differently. Do any of you used Becker and NINJA in parallel? Any tips on making the most out of using the two? Now that I have the NINJA I find that I need to shake my Becker mindset a bit and go full blown NINJA and it makes me nervous. Thanks you guys.

Yes, where is the Q3 thread? I didn't even notice until se7en.14 pointed it out.

BEC - 74, 77
FAR - 72, 71 (retake 7/29)
REG - 69
AUD - Q4 '16

CA Candidate

[CPA788]

@Se7ven.14 – I see the example you're looking at. Did you see the solution continues on the next page? There is a footnote explaining the $25k. Lmk if it still doesn't make sense?

BEC - 74, 77
FAR - 72, 71 (retake 7/29)
REG - 69
AUD - Q4 '16

CA Candidate

[se7en.14]

@CPA788 Hmm..my page isnt the most recent, i have this on page F3-9. That's it, it doesn't continue to the next page.

[CPA788]

Bummer, ok just wanted to make sure. Mine is F3 8 and 9.

So the GHI loss is calc'd by: 165,000 FV – 190,000 cost = (25,000) loss — goes to OCI

Full JE – you probably already see this – adding my notes

DR Cash – 175k – nice, money in
DR Realized loss – 15,000 (190k cost-175k sale price)
CR Security GHI 165k (written down to FV amount at 12/31/yr1)
CR Unrealized loss 25k (per notes above)

That help?

BEC - 74, 77
FAR - 72, 71 (retake 7/29)
REG - 69
AUD - Q4 '16

CA Candidate

[sagittarian]

[UghCPAz]

Can anyone help me with understanding the difference here?

The following information pertains to property taxes levied by Oak City for the calendar year Year 1:
Collections during Year 1 $ 500,000
Expected collections during the first 60 days of Year 2 100,000
Expected collections during the balance of Year 2 60,000
Expected collections during January Year 3 30,000
Estimated to be uncollectible 10,000
Total levy $ 700,000
What amount should Oak report for Year 1 net property tax revenues in its fund financial statements?
a.
$690,000
b.
$600,000
c.
$700,000
d.
$500,000
Explanation
Choice “b” is correct. The net property tax revenues would include the $500,000 collections during the year plus the $100,000 expected collections within 60 days of year-end, for a total of $600,000. The remaining expected collections of $90,000 ($60,000 + $30,000) would be recorded as deferred inflows of resources, not revenues, under the modified accrual basis of governmental accounting for revenues. The $10,000 estimated to be uncollectible would not be considered since revenues are accounted for net of the estimated uncollectible amount.

and then there is this:
The City of Ocean Oaks estimates that five percent of its property tax revenues are uncollectible. The city typically levies and collects all taxes within the tax year that the tax revenue is intended to benefit. For the fiscal year ended June 30, Year 1, Ocean Oaks levied $2,000,000 in taxes and would record the following amounts as revenue and receivable:
Receivable
Revenue
a.
$2,000,000
$1,900,000
b.
$2,000,000
$2,000,000
c.
$1,900,000
$2,000,000
d.
$1,900,000
$1,900,000
Explanation
Choice “a” is correct. Imposed tax revenues are recorded (accrued) as revenue when levied, subject to the measurable and available criteria. The property tax levy would be recorded as follows:
To record tax revenue from tax levy:
Debit (Dr) Credit (Cr)
Property tax receivable $ 2,000,000
Estimated uncollectible taxes $ 100,000
Property tax revenue 1,900,000

So in the second question do we consider estimated uncollectible taxes because we assume that it's the government wide f/s? If so, how would we know from this question that it's asking about the government f/s (not the funds)?

Thanks again for your everyone' s help! I have passed BEC AND REG with a 90 on both, but FAR governmental and NFP is really giving me a hard time.

Just AUD left

[se7en.14]

@CPA788 thanks. I did have those same pages. I thot u meant a page 10 lol.

Are they talking about OCI account balance here to CR 10k? I chose $10,000 Debit because I know there is a 10k loss.

The following information pertains to Smoke, Inc.’s, investments in marketable equity securities, classified as available-for-sale:
•On December 31 of the current year, Smoke has a security with a $70,000 cost and a $50,000 fair value. (No Market Adjustment account exists.)
•A marketable equity security costing $50,000, has a $60,000 fair value on December 31 of the current year. Smoke believes the recovery from an earlier lower fair value is per­manent.

What is the net effect of the above two items on the balances of Smoke’s Market Adjustment account for available-for-sale marketable equity securities as of December 31 of the current year?

A:Creates a $10,000 credit balance

[mastump317]

I have FAR coming up no later than Oct. 1 and am scared to death I won't pass this time. So I am going through my videos and paperwork again trying to UNDERSTAND all the concepts. This problem I don't understand.

This problem is asking what the depreciation basis for certain purchased machinery is.

Cash price of the machinery was $110,000. Machinery bought from dealer with $10,000 down payment and twenty-four monthly payments of $5,000 each for total cash payment of $130,000.
Salvage value $5,000
Buyer is using straight-line depreciation.

Answer is $10,500, FMV – Salvage value of $5,000. My question concerns the journal entry they give:

DR
Machinery 110,000
Discount on Note Payable 20,000 ($130,000 – $110,000)

CR
Notes Payable 120,000 (24 x $5,000)
Cash 10,000

My question: is the “discount” entry set up like this because it is the equivalent of purchasing a discount note? If it is I'm having a bit of a stretch understanding why.

I picked the right answer to this question because I just called it “interest expense”, but then realized you couldn't expense the entire $20,000 at once.

Is there an alternate way to show this in a journal?

As always, thank you.

Marc

[Author]

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