[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]

The answer is not in JE form, but that's how I tried to answer it and couldn't get it.
As of 6/2/X13, 5 years of the bonds 15-year life has elapsed indicating that 1/3 of the discount would have been amortized. The carrying value of the bonds for retirement purposes equals the face of $500,000 less the unamortized discount of $4,000 for a net amount of $496,000. Since half of the bonds are being retired, the carrying value for the purpose of computing gain or loss will be $248,000.

I actually had a similiar JE to yours but that's not right. 🙁

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

[pharaoh]

So the question is asking about the gain or loss, what is the right answer? What was your JE?

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

[pharaoh]

@claudia408 – ooooh the question is asking about the net amount to compute the gain or loss ……that's the 248,000 that you calculated which is in my JE Bond 250,000-Discount 2000. So you got it right. Where is the confusion?

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

[Claudia408]

i was getting hung up on the amortization of discount! omg i hate this!

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

[Claudia408]

jimmy you rock with JEs! thank you!

i'm trying to solve problems with them, but they don't come to me quickly or easy. when do you take FAR?

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

[pharaoh]

This coming Saturday 🙁

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

[Claudia408]

looks like you got it though!

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

[pharaoh]

Depends on the MCQ batch I am doing 😀
Sometimes I feel I am ready but then other times, I start thinking if I should push it out. I miss a lot of question because I don't pay attention to the critical words in the questions not that I don't know the concept, I can't tell you how many times I wanted to slap myself to wake up and focus. lol!! It is hard to study after work with half brain left. Right now I am at a stage that I just want to take the exam because I am tired of studying it not because I am ready for it 🙂

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

[CPYay]

I know the feeling. I sit Friday and I have no idea how prepared I am. The variability in these practice sets is keeping me humble. Last night, I got a 55% on my first batch of 20, then proceeded to reel off three at or above 80%. I feel like out of each set, there are at least 1 or 2 questions where I scream NO as I click next question while simultaneously realizing I was answering it wrong. Good thing the test allows us to go back to questions within the teslet before submitting!

[Jsn3004]

When the effective interest method of amortization is used for bonds issued at a premium, the amount of interest payable for an interest period is calculated by multiplying the:

A.
face value of the bonds at the beginning of the period by the contractual interest rate.

B.
face value of the bonds at the beginning of the period by the effective interest rates.

C.
carrying value of the bonds at the beginning of the period by the contractual interest rate.

Incorrect D.
carrying value of the bonds at the beginning of the period by the effective interest rates.

The correct answer is A. Am I missing something? I guess Interest Expense and Interest Payable are two different terms because I thought D was the obvious choice. Maybe because the bond is issued at a premium the answer isn't D.

[Operation_CPA]

On its December 31, Year 2, balance sheet, Shin Co. had income taxes payable of $13,000 and a current deferred tax asset of $20,000 before determining the need for a valuation account. Shin had reported a current deferred tax asset of $15,000 at December 31, Year 1. No estimated tax payments were made during Year 2. At December 31, Year 2, Shin determined that it was more likely than not that 10% of the deferred tax asset would not be realized. In its Year 2 income statement, what amount should Shin report as total income tax expense?

Can someone help me step by step with this problem?

a.$13,000
b.$10,000 <– correct answer
c.$8,000
d.$8,500

[CPYay]

@jsn3004

The premium reduces the expense.

Try the JE:

Dr Int Expense xx
Dr Premium xx
Cr Int Payable xx <– This represents the Stated x Face

Then when the interest is actually paid:

Dr Int Payable xx
Cr Cash xx <– This represents the Stated x Face

[CPYay]

@Operation_CPA

I think this might be it?

Dr Tax Exp 10 <– Plug
Dr DTA 5 <– Increase of $5k for x2
Cr Valuation Allow 2 <– 10% of the $20,000 asset
Cr Tax Payable 13 <– given

[klmrr2]

Found a website for governmental JE: https://sites.google.com/site/farnotes/gas-34/journal-entries–fund-based-vs-government-wide

[jolien]

Hi, can someone help me understand the question below for FAR?

Which of the following is generally associated with the terms of convertible debt securities?

a. An initial conversion price that is less than the market value of the common stock at time of issuance.
b. An interest rate that is lower than nonconvertible debt.
c. A noncallable feature.
d. A feature to subordinate the security to nonconvertible debt.

Correct Answer is: B. I agree with B, but I also think A is correct. If the conversion price is not less than the market value of common stock at time of issuance, then the convertible feature would not have been attractive. Then why do we pick B over A? Am I missing something?

Thanks so much!

[Author]

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