[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

[hasy]

@mchels85, audio everyday. I think I've consistently listened to audio everyday for the past 2 weeks. Test is saturday and I'm still going to listen to it until I drive to the test center. I'm actually using Wiley test bank too. I'm in my last week of review. So I've been doing 100 mcq a day. I would definitely recommend just keep doing MCQs, I was really adamant on reviewing my notes. But doing the MCQs helps you understand ways the question can be asked.

Otherwise, do MCQs until you hate it.

Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved - Helen Keller

-

BEC 80 (10/23/15)
FAR 72 (4/2/15); 83 (7/11/16)
REG 52 (4/28/15)
AUD (9/9/16)

Roger + NINJA MCQ + WTB

[SONA]

EUROADDICT, Thank you so much.

Feels like i m not reading the question well 🙁

Anyway thanks much.

[thebigguy1992]

Lang Co. uses the installment method of revenue recognition. The following data pertain to Lang's installment sales for the years ended December 31,
Year 3 and Year 4: Year 3 Year 4
Installment receivables at year-end on Year 3 sales $ 60,000 $ 30,000
Installment receivables at year-end on Year 4 sales – 69,000
Installment sales 80,000 90,000
Cost of sales 40,000 60,000
What amount should Lang report as deferred gross profit in its December 31, Year 4, balance sheet?
a.
$43,000
b.
$38,000
c.
$33,000
d.
$23,000

i understand why year 4 is = $23,000 [33.3% x $69,000]
but i don't understand why year 3 is = $15,000 [50% x $30,000]. Why is it 30,000 and not 60,000? isn't 60,000 receivables at the end of year 3?

[KJ]

@ Excel14, I hope this helps!!

If the fair value (FV) of the asset given up cannot be determined, assume it is equal to the fair value of the
asset received.

c. Three exceptions exist to the fair value treatment:
(1) If fair value is not determinable;
(2) If it is an exchange transaction to facilitate sales to customers; or
(3) The transaction lacks commercial substance.

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

[thedude]

Really having trouble with this one for Personal Financial Statements. I selected B but as incorrect

On May 31, 20X1, Quay owned a $10,000 whole-life insurance policy with a cash surrender value of $4,500, net of loans of $2,500. In Quay's May 31, 20X1, personal statement of financial condition, what amount should be reported as investment in life insurance?
A. $4,500
B. $7,000
C. $7,500
D. $10,000

Aud: 42 (ouch)

All others TBD

[KJ]

@ thedude…Correct answer is A. Assets are reported on personal statement of financial condition on their estimated current FMV.

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

[thedude]

@kanwal78…. Thanks and that makes a lot of sense. Why would I not factor the $2,500. That part is throwing me off.

Aud: 42 (ouch)

All others TBD

[KJ]

@ thedude…You will factor $2500. The asset (Cash surrender value) of life insurance should be reported net of any loans against the policy. In this question $4500 is net of loans of $2500 or $7000-2500. You will have take out the loan from cash surrender value of $7000. Hope that makes sense.

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

[Spartans92]

Ok so this may be a dumb question but can someone provide some examples so I don't just memorize it. Why do we have to subtract an increase in prepaid expense from Net income and add a decrease in prepaid to find operating expenses? This is my logic, prepaid went up because we paid money in advance but we haven't use the money yet so no cash inflow we deduct. When a decrease that means we are using it so we are getting the benefit of it so we add back (positive inflow). I don't know if that really make sense. I hope someone can provide a better explanation. Thanks

BEC- PASS

[KJ]

Try this question?

The following information pertains to an insurance policy that Barton owns on his life:

Face amount $100,000
Accumulated premiums paid up to
December 31, 20X1 8,000
Cash value on December 31, 20X1 12,000
Policy loan 3,000
In Barton's personal statement of financial condition on December 31, 20X1, what amount should be reported for the investment in life insurance?

A.
$97,000

B.
$12,000

C.
$9,000

D.
$8,000

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

[Spartans92]

@Kanwal, B? I just went off your explanation. What chapter is this exactly?

BEC- PASS

[KJ]

@ Spartans92…Special Purpose Framework…

To your cash flow question…This is how understand prepaid expenses which is probably similar to what you interpret…we are paying in advance for an expense which is a cash (outflow) not available for us to use anymore. Cash is being paid out so we subtract it from income (credit what goes out, cash has debit balance/asset account). When I am trying cash flow questions I am looking for how the cash movement is affecting the cash flow.

Don't know if I confused you more or if it makes sense. If not just stick with your interpretation :-), don't confuse yourself more.

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

[Excel14]

@kanwai:

I realize that, but both fair value amounts in the example, stated they were “estimated”. In my mind then, you could not firmly decipher the fair value given or received. Hope that makes sense.

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

CIA, CGAP, CFE

[Spartans92]

How do you guys study for governmental and NFP accounting. Becker's mnemonic isn't really helping (GRaSPP Nu CAR) seriously? Theres already so much to know and all those random words don't really make any sense :/ LOL

BEC- PASS

[kcoops44]

Althouse Co. discovered that equipment purchased on January 2 for $150,000 was incorrectly expensed at the time. The equipment should have been depreciated over five years with no salvage value. What amount, if any, should be adjusted to Althouse's depreciation expense at January 2, the beginning of the third year, when the error was discovered?

A.
$0

B.
$30,000

C.
$60,000

D.
$150,000

So I got the answer correct of $0 which is A. However I just have a question about what the journal entry would be. The explanation of the answer is below but I'm just curious how I would record the error as a J/E. Thanks!

Depreciation expense would not be adjusted at the beginning of the year. Accumulated depreciation would be adjusted at the beginning of the first year presented in the financial statements. Retained earnings would be also be restated at the beginning of the first year presented in the financial statement. Depreciation expense of $30,000 will be reported at the end of the third year.

The FASB uses the term “restatement” to refer to the method to report a correction of the error. “Restatement” is essentially the same as the “retrospective” method.

[Author]

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