[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

[mckan514w]

No 3letters- its a non-current “restricted” asset

and thanks for the reminder about being worth more than the exam- seriously studying for this is so degrading and humbling to my brain

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

[Just3Letters]

Thanks Mckan,

I'm getting down to these nitty-gritty questions now for the most part rather than not understanding big concepts which I think is a good thing!

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Spartans92]

Mckan, best of luck in 2 days! Thanks Just3 for the kind words!

BEC- PASS

[KJ]

Can someone give insight on Diluted EPS? What is included and what is not? I know it will depend on information given in the question but what is a take away in most of them?

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

[Just3Letters]

Kanwal,

a couple takeaways:

1. Potentially dilutive securities are only considered in dilutive eps calculations if the security would be dilutive to the eps

2. For dilutive interest-bearing securities, add the interest expense that you would have paid if you did not convert the bond into C/S and add that interest expense to the numerator of the eps calculation.

3. Always add the C/S that would come from dilution to the denominator of the eps formula

4. REMEMBER that, in determing if a security is dilutive, interest-bearing securities are considered AFTER TAX

Explanation for 4: Int Exp for dilutive security * (1-TR) / C/S resulting from dilution = X

X must be less than the basic eps in order to be considered in the dilution calculation

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Spartans92]

Kanwal, Diluted EPS is basically your Basic EPS + interest on dilutive securities. You get Basic EPS by NI – Pref. Dividends. Under Diluted EPS there is the “if converted” method for convertible bonds and preferred stocks. For that you have to determine whether the results are anitdilutive or dilutive. If it is Antidilutive then you do not include in the conversion. All you do is compare the basic EPS to diluted EPS, for instance, if you have Basic = .80 and Diluted = .64 then it is dilutive. The idea of diluted EPS is to reduce your EPS. Antidilution increases EPS. Like you are diluting a mix drink or something. Too much of alcohol and you want to reduce the effect by adding coke or OJ etc LOL. I dont know if that helped at all.

Haha Just3, you did a better job!

BEC- PASS

[KJ]

Thanks just3 and spartan!! Have more clarity now.

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

[Just3Letters]

Lol Spartans,

love the alcohol comparison. Your has more humor so you win.

Also, the treasury stock method for options and warrants can be tricky:

addt'l outstanding shares = # of shares issued for warrants/options – [(# of shares * Excercise price of shares) / Average market price for shares]

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Spartans92]

Thanks just3, I seriously need to do some more MCQ! seems like I can't retain a lot of these equations.

BEC- PASS

[Just3Letters]

Lol there is about a billion equations

I'm just hoping I can retain 75% of them 🙂

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Spartans92]

I know that is the craziest part. I think I will focus on the heavier stuff like Cash Flow, EPS, Pensions, Bonds, Leases. SO nervous at this point. Becker Final exam tomorrow night and hopefully some more MCQ on friday before testing.

BEC- PASS

[Just3Letters]

You got this Spartans! Just remember to add that accrued interest to your bonds 🙂

What time is your test scheduled for? I chose 9 a.m.

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Claudia408]

Can someone tell me what the 156,000- 60,000 represents in the answer to this problem?

A firm began the construction of its new manufacturing facility in January of 20×2. The following expenditures were made on construction in that year:
Jan. 1 $40,000
Mar. 1 120,000
Oct. 31 96,000
Debt outstanding the entire year:

6%, $60,000 construction loan
4%, $90,000 note payable not related to construction
6%, $90,000 note payable not related to construction
Compute interest to be capitalized using the specific method (use the construction loan first).

Answer: Capitalized interest = .06($60,000) + .05($156,000-$60,000) = $3,600 + $4,800 = $8,400.

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Spartans92]

I have it at 4pm. So I plan to study till like 3. Only takes me 15 mins to drive to the center.

BEC- PASS

[Just3Letters]

Claudia,

You have to use the weighted average accumulated expenditures for the non-construction specific debt

That is where the .05(156-60) comes from

40,000 * (12/12) = 40,000
120,000 * (10/12) = 100,000
96,000 * (2/12) = 16,000
40,000+100,000+16,000= 156,000 weighted average construction costs

Two interest rates for non-construction specific debt are 4% and 6%, average is 5%

Total construction interest =

Step 1: Construction Specific debt: 60,000 * 0.06 = 3600

Step 2: Non-specific debt: 0.05 * (156,000 – 60,000) = 4800

Note: you subtracted 60,000 because you already considered that 60,000 for the construction specific debt and you don't want to double count interest

Step 3: Add specific and non-specific interest = 3600 + 4800 =8400

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Author]

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