FAR Study Group Q2 2016 - Page 76

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  • April 30, 2016 at 4:50 pm #764796
    MaLoTu
    Participant

    duplicate … is anyone else having trouble with the board today?

    April 30, 2016 at 4:58 pm #764797
    Spartans92
    Participant

    Hey guys, sorry for not posting the answer. It's actually 1,100,000. They took 8000*5 = 40,000. 40% of 1,000,000 = 400,000. Total is 440,000/40% = 1,100,000.

    BEC- PASS

    April 30, 2016 at 5:02 pm #764798
    MaLoTu
    Participant

    So we don't have to depreciate the depreciable assets? Also, why does the question ask about Ottos FV when they only own 40% the FV at 100% is 1100000 …

    ETA – just seen it said Penn's FV …

    April 30, 2016 at 5:04 pm #764799
    MaLoTu
    Participant

    oh, and Spartans, you have to amortize the excess over FV like a premium (like on bonds). You asked for an explanation, but do you understand it now?

    April 30, 2016 at 5:13 pm #764800
    Just3Letters
    Participant

    Oh geez,

    I got that 40,000 part but I doubt I would have ever gotten the other part :/

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

    April 30, 2016 at 5:14 pm #764801
    Claudia408
    Participant

    Spartans / Just3 – I saw that question last night and I remember seeing it the day before when I was brushing up on Equity Method. Here's the explanation…

    If Otto, with a 40% ownership interest in Penn, is recognizing $8,000 in amortization for the year, amortization of 100% would be $8,000/40% or $20,000. With a remaining useful life of 5 years, the amount being amortized would be $20,000 x 5 or $100,000 indicating that the fair value of the asset was $1,000,000 + $100,000 or $1,100,000.

    I would never have gotten this question correct. Can anyone explain in a different way?

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

    April 30, 2016 at 5:17 pm #764802
    Spartans92
    Participant

    Haha thanks claudia, that explanation offers a different angle than Becker. Yea, I would just have guessed on this one.

    BEC- PASS

    April 30, 2016 at 5:18 pm #764803
    MaLoTu
    Participant

    I used algebra … .4 * X = 40000(8k*5) so it = 40000/.4 = 100000 … basically I wanted to know what was multiplied by .4 to get 40000. Then you add it.

    April 30, 2016 at 5:22 pm #764804
    Claudia408
    Participant

    I heard Becker tells you the release dates of the practice question. If this is from 1999, I'm not trippin. LOL

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

    April 30, 2016 at 5:26 pm #764805
    Spartans92
    Participant

    it's from 2014 unfortunately.

    BEC- PASS

    April 30, 2016 at 5:27 pm #764806
    lolo
    Member

    @Claudia408 & Spartans92, could you clear the mess on audit forum please? that guy doesn't seem to be convinced of what I say!

    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

    April 30, 2016 at 5:29 pm #764807
    MaLoTu
    Participant

    Becker questions are mostly harder than what you see on the actual exam.

    April 30, 2016 at 5:30 pm #764808
    Just3Letters
    Participant

    Claudia, I like that explanation a lot!

    Hopefully I get exactly that question on the test! (in my dreams)

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

    April 30, 2016 at 5:49 pm #764809
    Claudia408
    Participant

    LOL Sunshine… I see you guys worked it out. 🙂

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

    April 30, 2016 at 5:50 pm #764810
    Spartans92
    Participant

    LOL haha that's pretty hilarious. I just skimmed over the post.. Will read and give my thoughts 🙂

    BEC- PASS

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