[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

AUD - 79
BEC - 80
FAR - 76
REG - 92

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

[wjxhahaha]

Hi guys, I just have a quick question, is bond premium a contra asset and bond discount a contra liability? If so, what's the reasoning behind it? I just somehow have a feeling that it should be accounted for in this way but I can't give a justified reason…..

[wjxhahaha]

@Claudia408
I think the CR should be something like Contribution Revenue-Temporary restricted

[Spartans92]

@Kanwal, I actually understand the question now after some reviewing. Let me know if you still need any clarification. 🙂 Thanks for posting the question.

BEC - 76
REG- 67, 85
AUD-63, 74, 80!!
FAR-65, 62, 57, 79

3 down 1 more to go. BEC is on the Line 🙁

BEC- PASS

[KJ]

@ Spartans…always open for explanation, sometimes different way of explaining helps as well.. Thanks!!

AUD - NINJA in Training
BEC - NINJA in Training
FAR - NINJA in Training
REG - NINJA in Training

"Everything should be made as simple as possible, but not simpler" - Albert Einstein

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[KJ]

@ JustAnotherWannaBe….try remembering this for Statement of Cash Flow…might help!!

INDIRECT method you are converting from Accrual to Cash basis:
So remember this: Every change in an account with a normal DR balance: has the opposite effect! – i.e. if the account increases, cash decreases! Every change in an account with a normal CR balance: has the same effect!- i.e. if the account increases, cash increases!

For the DIRECT method, you are converting from Cash to Accrual basis.
So remember this: Every change in an account with a normal DR balance: has the same effect! – i.e. if the account increases, cash increases! Every change in an account with a normal CR balance: has the opposite effect!- i.e. if the account increases, cash decreases!

AUD - NINJA in Training
BEC - NINJA in Training
FAR - NINJA in Training
REG - NINJA in Training

"Everything should be made as simple as possible, but not simpler" - Albert Einstein

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[Josh]

wjxhahaha – Thank you for your question. Both bond premiums and discounts are contra-accounts. If it's a receivable, it's a contra-asset and if a liability contra-liability, depends on if it's a bond-payable or receivable. Sounds like you're talking about a bond receivable, so both would be considered a contra-asset. I hope that helps. That's what I got off Google. I would research this further in my review for a better understanding.
(Check out http://www.accountingcoach.com or Allen Mursau on youtube)

Time for me to get back to journal entries for intangibles. FAR is a beast.

AUD - 75
BEC - 78
FAR - 76
REG - 80

Josh
“Focus on the future for 50%, on the present for 40%, and on the past for 10%." - Maasaki Hatsumi

[Spartans92]

I'll try my best. So I basically went with the formula.. Face of Note = Annual Pmt * PV of Annuity of $1.
20,000 = X * 3.993 (we use the stated rate similar to Bonds. The only time we use this rather than yield rate).
X = 5008.76 rounds to 5,009 annual * 5 years = 25,044 PV of note.

Similar to Bonds, to find the Interest payment you take the Annual Payment times the PV of annuity at yield rate.
5009 * 3.890 = 19485. PV of future interest payment.

Therefore the difference between the PV of future interest payment and PV of Note is the total interest revenue. Not sure if you have becker but F-5 (pg 35) helps a lot, though it is bonds but same concept. Hope that helps!

BEC - 76
REG- 67, 85
AUD-63, 74, 80!!
FAR-65, 62, 57, 79

3 down 1 more to go. BEC is on the Line 🙁

BEC- PASS

[Excel14]

Question for the group….

I'm not using Becker (using Gleim), but I was wondering something as it relates to “impairments” concerning AFS or HTM investments. I know that with AFS securities we first report them at cost, and then revalue them at the BS date, using the fair value. Any unrealized holding gains/losses flow through OCI. What I don't understand, is why we use the “amortized cost” basis for comparison, when a “permanent decline” is recognized. Is this just one of those “it is because” situations? Lol

What do they call an accounting person, who only managed a 75 on all four parts of the CPA exam....you got it, CPA!!!

BEC (2/28/16) ----- 78
FAR (09/10/16)-----
AUD
REG

CIA, CGAP, CFE

[wjxhahaha]

@Excel14
I don't know if this makes sense but my explanation is that:
Impairment is essentially the same as revaluation, we match CV against FV to figure out G/L. The difference is that impairment happens when we determined that the loss is permanent and we don't expect it recover(revaluation is temporary and might recover). So revaluation is unrealized G/L. Impairment is realized loss. We have to write off the portion of the loss.
If I remember correctly, investment recorded in the balance sheet is at cost, we just write a loss or gain in OCI and set up a contra investment account(valuation). Our cost basis, or CV is not gona be affected by unrealized G/L. Since we are writing off the impairment from the balancesheet. We are writing off the amount from whatever amount of investment is shown in balancesheet, which is the Cost
So we decrease the unrealized G/L to 0 from OCI and valuation account from asset(because it is realized now, we don't need this anymore), then we decrease investment down by impairment amount.
DR valuation account
CR unrelaized loss
DR impairment loss
CR investment

[wjxhahaha]

Hi guys, a quick conceptual question regarding subsequent event if anyone has any ideas.
A land is held for resale. It is sold after BS date but before the issue date.
Is it current asset for our current year?
The answer says yes.
——————————————————–
I wana know the reason. Is it solely because it was turned to cash within one year after the BS date? Or is it because a subsequent event occured before issue date and we had to take this item into our current year consideration?
———————————————————–
Let's say it is sold after issue date. What now?

[patelhj1]

On December 31, Moss Co. issued $1,000,000 of 11% bonds at 109. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the bondholder to purchase one share of $5 par common stock for $25. Immediately after issuance, the market value of each warrant was $4. On December 31, what amount should Moss record as discount or premium on issuance of bonds?

Answer: $110,000 Discount

J/E
Dr: Cash 1,090,000
Dr: Discount on Bond 110,000
Cr: Bond Payable 1,000,000
Cr: APIC-Warrant 200,000

Can someone please help explain how to get the APIC-Warrant of 200,000? Thanks!

PASSED ALL CPA EXAM AUG 2016

BECKER / NINJA MCQ

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
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[Excel14]

@patelhj1:

Someone else may want to verify, but the market value of the warrants is $4. Since we issue 50 warrants per 1,000 bond, that would equal 50,000 (50×1,000). 50,000 warrants x $4 = $200,000. This is charged to APIC-Warrants.

What do they call an accounting person, who only managed a 75 on all four parts of the CPA exam....you got it, CPA!!!

BEC (2/28/16) ----- 78
FAR (09/10/16)-----
AUD
REG

CIA, CGAP, CFE

[Excel14]

Found a Roger video on the Internet, that I believe best answers my earlier question about impairment losses. With temporary gains/losses, we are hitting a valuation account, because we believe any gains/losses will fluctuate over time; however, with permanent declines, we are actually hitting the “investment” account for a permanent decline that we will not recover from, so the written down cost becomes our new basis for evaluating the investment. Makes more sense now.

What do they call an accounting person, who only managed a 75 on all four parts of the CPA exam....you got it, CPA!!!

BEC (2/28/16) ----- 78
FAR (09/10/16)-----
AUD
REG

CIA, CGAP, CFE

[Spartans92]

@patel, Excel got it!

BEC - 76
REG- 67, 85
AUD-63, 74, 80!!
FAR-65, 62, 57, 79

3 down 1 more to go. BEC is on the Line 🙁

BEC- PASS

[KJ]

Thanks Spartans92!!

AUD - NINJA in Training
BEC - NINJA in Training
FAR - NINJA in Training
REG - NINJA in Training

"Everything should be made as simple as possible, but not simpler" - Albert Einstein

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[Author]

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