[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

[Just3Letters]

So I just did my first Becker final exam… 68.23%. Not too hot 🙁

The MCQ were easily my downfall. I rushed through them each in about 30 minutes because that is what I've been told is the best strategy in order to get more time for the sims. I finished the SIMS with an entire hour to spare. This was after lots of time devoted to the AL for checking.

Regardless, if the real SIMS are the same difficulty as Becker, I am going to take longer on MCQ…

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

[Spartans92]

Just3, I would say the SIMS are very similar to Becker's, can't say about the difficulty because it depends on what you get. But if you end up doing alright with SIMS in terms of time management I would say practice more MCQ. NFP and Govt was for sure the easy points. 🙂 Good luck in 2 weeks. You still got plenty of time.

BEC- PASS

[samer]

Just3letters,
Changes in AFS does not go on IS. Unrealized gains on AFS goes to OCI.

refering to your 2nd question, the reason why the reversal goes to IS is because the recovery of AFS in 2nd year is lower than the loss booked in IS in the first. They are allowed to reverse profit up to previosly recognized loss.

Hope this clear things up

[samer]

Just3letters,
Changes in AFS does not go on IS. Unrealized gains on AFS goes to OCI.

refering to your 2nd question, the reason why the reversal goes to IS is because the recovery of AFS in 2nd year is lower than the loss booked in IS in the first. They are allowed to reverse profit up to previosly recognized loss.

Hope this clear things up

[Just3Letters]

/

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

[Just3Letters]

Thanks everyone!

I feel that more than anything doing a practice exam helped me a lot because now I know that I have more time for MCQ. I'm thinking maybe 40 minutes/testlet rather than 30.

I'll do a couple more practice exams and a couple thousand more MCQ before the 13th 🙂

Keep it up Ninjas!

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

[Just3Letters]

“Which of the following is a common modification used to report modified cash basis financial statements?

A. Recognizing expenses based on methods and principles used in tax return
B. Recognizing revenues when earned
C. Capitalizing inventory
D. Matching expenses to related revenues

Answer is: C.

No matter how long I look at this question, I have no idea what it is even asking. Maybe I just don't get how it is worded or something. Can somebody interpret please?

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

[KJ]

I am bad at explaining but will try. When answering Modified cash method, first think: its a combination of cash and accrual, second: not GAAP and avoids GAAP complexities. When looking at all 4 options I would think Capitalization Inventory is not GAAP.

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]

This one almost tricked me:

25. Lease M does not contain a bargain purchase option, but
the lease term is equal to 90% of the estimated economic life
of the leased property. Lease P does not transfer ownership of
the property to the lessee at the end of the lease term, but the
lease term is equal to 75% of the estimated economic life of the
leased property. How should the lessee classify these leases?
Lease M Lease P

a. Capital lease Operating lease
b. Capital lease Capital lease
c. Operating lease Capital lease
d. Operating lease Operating lease

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]

Thanks Kanwal! That totally makes sense!

I just had to think about what modified cash basis consisted of (GAAP and Modification to current items)

Per your question:

Isn't the answer B? One of the capitalization rules is 75% of useful life, the 90% rule is for FV of lease payments

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

[KJ]

@ just3….Yes you got the answer right like me but in both cases it's saying economic life not FV of lease payments. Those % made me think the same. That's why I said almost tricked me, regardless we got the answer right but needs to read the question carefully.

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,

haha wow I didn't realize that. They really had it out for us there with the wording!

I think I'm going to make myself re-read each MCQ before moving on just so I don't make errors like that!

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

[KJ]

I got this one wrong because I did not read it carefully!! Uggghhh, read, read, read carefully…Loll

East Company leased a new machine from North
Company on May 1, year 1, under a lease with the following
information:
Lease term 10 years
Annual rental payable at beginning of each lease
year
$40,000
Useful life of machine 12 years
Implicit interest rate 14%
Present value of an annuity of one in advance for
ten periods at 14%
5.95
Present value of one for ten periods at 14% 0.27
East has the option to purchase the machine on May 1, year 11
by paying $50,000, which approximates the expected fair
value of the machine on the option exercise date. On May 1,
year 1, East should record a capitalized lease asset of
a. $251,500
b. $238,000
c. $224,500
d. $198,000

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

[Zyx]

Is the correct answer b?

REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27

[Claudia408]

I thought this Govt question was easy but I got it wrong!

When Rolan County adopted its budget for the year ending June 30, 2005, $20,000,000 was recorded for Estimated Revenues Control. Actual Revenues for the year ended June 30, 2005 amounted to $17,000,000.
In closing the budgetary accounts at June 30, 2005:

Answer: Estimated Revenues Control should be credited for $20,000,000.

But isn't the entry on June 30 Credit Estimated Revenues? So to close it out you reverse this and Debit Estimated Revenues?

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

[Author]

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