[jeff]

Welcome to the Q3 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

[Claudia408]

Hi guys, can you help with this lease problem? It's taken from a SIM… My question is about the unearned interest for the Lessor. The solution provides a JE and it looks to be a plug. Is there another way to calculate it?

Inception, 1/1/x7
Lease term, 10 years
Both parties use 8% for capitalization purposes.
Present value factors for $1 at 8% for 10 years: single payment, 0.46319; ordinary annuity 6.71008
Case 1. The lease calls for a bargain purchase option payment of $20,000 at the end of the lease term. Lease payments of $30,000 are due each December 31. On Bentab's books, the book value and fair value of the equipment are equal.

JE for the Lessor:
Dr Lease Receivable 320,000
Cr Unearned Interest 109,434
Cr Equipment 210,566

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

[Pass and get mo money]

Anyone know why tax carryforwards are deferred tax assets? Doesn't it reduce taxable income but not book income in the future year? Thus Book income > Tax income which in turn is usually a deferred tax liability?

REG - 86
AUD - 78
BEC - 80
FAR - 6/9/16

[CPYay]

Just finished my exam. That was brutal. There were a lot of questions where I either: (1) knew the question, but a word or a change in a word made everything different or (2) the answer I was sure of wasn't an option.

Now the wait.

[Claudia408]

In stmt of CF, isn't sale of PPE in investing and the gain from sale of PPE in operating? In this problem it seems to indicate both proceeds and gain on sale of PPE are investing.

Karr, Inc. reported net income of $300,000 for 20X2. Changes occurred in several balance sheet accounts as follows:
During 20X2, Karr sold equipment costing $25,000, with accumulated depreciation of $12,000, for a gain of $5,000.
In December 20X2, Karr purchased equipment costing $50,000 with $20,000 cash and a 12% note payable of $30,000.

Answer:The equipment sold had a carrying value of $25,000 – $12,000 or $13,000. Since it was sold for a gain of $5,000, the proceeds from sale, an inflow from investing activities, must have been $18,000. The $20,000 cash portion of the purchase of equipment is an outflow for investing activities resulting in a net outflow of $2,000.

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

[cpaMD86]

@cpayay

I am sure you did great. The questions are what usually get me to it…usually it's my fault bc I want to read it fast and get it over with…so I need to pace myself.

Govt/NFP still the status quo on the exam?

FAR: 9/3

[pharaoh]

@Claudia408 – You put the full amount received in the investing and you deduct the gain from operating.

It is one of the areas where I didn't put much effort in understanding it but this is how I think about it if we do the JE for the transaction

Dr.Cash 18,000
Cr.Equipment 13,000
Cr.Gain 5,000

So the real cash from the transaction for the sale is 18,000, the gain is treated like depreciation as a non-cash item that is included in NI and we have to reverse it. Confused you enough? 🙂

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Teal]

@CPYay I finished mine too. I killed the multiple choice, I was so excited! Then I got to the SIMS and like each one was in one of my weakest areas. It's like it knew which topics I hadn't learned inside and out! Yikes! I am not sure about this one…

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[iputaspellonfar]

I have done 5351 with ninja mcq and a trending score of 74%. Will I ever get past the adaptive learning section and get to the review? How many more do I have to do? AHHHHH. Another Friday night of studying 🙁

[pharaoh]

@iputaspeelonfar – I think you have to choose “New Questions” so you can go throw all the questions, then the “Missed Questions” so you can answer all the questions right as far as I understand how that works

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Jsn3004]

Quick Bond Question. How would the journal entries work for issuing a bond with bond issuance costs and a discount? I always get confused when there are Bond Issue costs but think they should be subtracted from total cash received. If I get the initial journal entries right, I can do the rest of the problem (which I didn't include in this post).

For example:
A company issues $1,500,000 of par bonds at 98 on January 1, year 1, with a maturity date of December 31, year 30. Bond issue costs are $90,000.

Would it be:

Cash 1,380,000
Discount 30,000
BIC 90,000
Bonds Payable 1,500,000

[Claudia408]

jimmy – yes i see that now. hmmm would that be the same for other types of gains, like AFS?

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

[Jackobe24]

Question about Journal Entries in Simulation

if there are two of the same accounts in one JE, do we have to combine them or does it not matter??

For example, record Service/Interest for Pension

JE would be

Net period pension cost XXX
Pension Benefit Liability XXX
(for service cost)

Net period pension cost XXX
Pension Benefit Liability XXX
(For interest cost)

DO I lump them together??

FAR - 9/8/16 (Hopefully it's my last CPA exam, God bless me!)
REG - 80
BEC - 81
AUD - 69, 81

[memoiree]

The following information pertains to Comb City:

Year 3 real estate property taxes assessed and collected
in Year 3 $14,000,000
Year 2 real estate property taxes assessed in Year 1 and
collected in Year 3 1,000,000
Year 3 sales taxes collected by merchants in Year 3 but not
required to be remitted to Comb until January of Year 4 2,000,000

For the year ending December 31, Year 3, Comb should recognize revenues of:

A.
$14,000,000.

B.
$15,000,000.

Incorrect C.
$16,000,000.

D.
$17,000,000.

Hi all, is there any assumption suggests this is for Fund level F/S(don't see any hint in question), so I know this is using measurable and available recognition. Correct answer is D, but I picked C b/c I was thinking Gov. Wide F/S, accrual basis, recognize as earned.

[se7en.14]

On January 1, Year 1, SouthEast Co. entered into a 10-year lease for a chemical plant. The annual mini­mum lease payments are $100,000. In the notes to the December 31, Year 2, financial statements, what amounts of subsequent years’ lease payments should be disclosed?

The lessee in a lease context must make disclosures as to future required payments under the lease. One must disclose the payments required under the lease for the next 5 years (here that is 5 × $100,000, or $500,000), as well as disclosing the total amounts to be paid thereafter or $300,000 (the 3 remaining years' obligations at $100,000 a year).

Is that 5 year disclosure a rule? I don't recall seeing this unless I skipped over it in Becker. Does anyone know?
Thanks.

[thebigguy1992]

Can anyone give me a quick explanation of the 80% dividend rule and what it means in terms of a temporary taxable difference?

also, i posted a thread about this but didn't get many replies. i am taking FAR for the 3rd time, and i got a 73 last time so i was really close. i just think i have memorized all of the ninja MCQ by now and am wondering what everyone thinks the next best test bank that i should get? is it wileY? i heard wiley > CPA excel. I also have becker, so i will use that for the final exams but thats it because the questions confuse me too much.

[Author]

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