[jeff]

Welcome to the FAR CPA Exam study group for July & August 2018 exams. 🙂

Please introduce yourself & when you’re taking your exam (approximate timeframe).

FAR Study Group Links and Resources:

1. NINJA Monthly – Full FAR Course for $67/mo
2. How to Study for FAR with NINJA Only
3. How to Pass FAR in 20 Days
4. How to Retake FAR After Failing
5. Video: Study Advice for FAR
6. CPA Reviewed Podcast
7. CPA Exam Score Release Dates
8. NINJA MCQ Trending vs Actual FAR Scores
9. I Passed the CPA Exam!
10. I Passed FAR!
11. NINJA FAR SIMS List by Topic
12. Free Downloads: NINJA FAR

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Ryan]

My study goals this week include learning the direct vs. indirect method for statement of cash flows and reviewing all material that I have gone over thus far (about 25% of FAR material).

[cbl]

@rainbow butterfly- makes sense!!! Thanks for all your help!

[cpaswag]

the answer is d) but i'm having trouble following the explanation. can anyone walk me through this one? specifically they say for 2015 beginning construction costs were 600,000 and in addition 400,000 was spent during the year making weighted average 800,000 for 2015 but wouldn't 1,000,000 / 2 =500,000? I ask because I get exactly how they got 2014 weighted average accumulated expenditures for 2014 of 300,000 (600,000 / 2)

thanks!

Sylvester Co. takes out a 12% loan of $500,000 on 1/1/2014 to finance construction of a building for the company’s own use. Construction begins immediately, and $600,000 is spent on the construction at an even pace during 2014. Another $400,000 is spent at an even pace during 2015, with construction completed on 12/31/2015. No other construction loans are taken out. Sylvester incurred unrelated interest expenses of $10,000 and $15,000 in 2014 and 2015, respectively, on loans that bear interest at 10%. How much interest can Sylvester capitalize in 2014 and 2015?

2014 2015

a

$60,000 $96,000

b

$36,000 $96,000

c

$60,000 $60,000

d

$36,000 $75,000

[Globetrotter]

CPAswag,
The weighted average for 2015 would consist of 2014’s $600K that was there for entire 2014 and weighted average of $200k for 2015. $600k gets” full” weight in 2015. Thus, $800k.

Second part of the problem is to be mindful of the fact that capitalized interest cannot be more than TOTAL interest accrued. This is where it becomes a problem in 2015. Total interest paid is $500k*12% plus $15k unrelated interest paid in 2015. Thus, $75K is maximum that you may capitalize.

[Lidis]

Hello
I am reading 2016 NINJA Book and watching BISK 2014 videos with Bob Monette and my plan is read the entire book and watch the videos, take a lot notes and after that do a lot MCQ's.
Best regards,
Lidis

[jennijill]

I am retaking FAR for the third time. If I don't pass I will lose REG. I plan to take it Aug 27th but I am still waiting on my NTS, per usual. I am using NINJA 100% this time around.

[To0ld2Pass]

Hey All,

I am scheduled to take FAR on September 6th. It is my first attempt at any section and so far the material has been pretty overwhelming and hard to juggle with life.
One thing I have found that helps me is to read the questions out loud and discuss it with myself as I read it(Not sure Prometric will be happy with that). It feels like I am running out of time even though I still have a month to go!

[jeff]

NINJA Monthly winners selected:

https://www.another71.com/cpa-exam-forum/topic/study-group-giveaway/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[jeff]

To0ld – are you using the free ninja study planner?

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[heysuehuang]

Made the worst decision ever in my life to take Far on 8/22 and Audit on 9/10, or my NTS expires. It's hard to find that ideal test seat in New York City but I'm sure with enough studies and luck there might be a chance that i can pass these 2 exams in my first try LOL

[jeff]

Video: What To Study During CPA Exam Test Week

https://www.another71.com/video-what-study-during-cpa-exam-test-week/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

Can someone help clear up this question for me? I'm not understanding why we are only accruing interest for 3 months and not the entire year since the borrowings were 2+ years ago….?

Pane Co. had the following borrowings on its books at the end of the current year:
$100,000, 12% interest rate, borrowed five years ago on September 30; interest payable March 31 and September 30.
$75,000, 10% interest rate, borrowed two years ago on July 1; interest paid April 1, July 1, October 1, and January 1.
$200,000, noninterest bearing note, borrowed July 1 of current year, due January 2 of next year; proceeds $178,000.
What amount should Pane report as interest payable in its December 31 balance sheet?
A. B. C. D.
A.
• • •
$ 4,875 $ 6,750 $26,875 $41,500
Correct! Interest payable at December 31 will consist of
Three months’ accrued interest payable at 12% on the $100,000 borrowing, or $3,000, and
Three months’ accrued interest payable at 10% on the $75,000 borrowing, or $1,875, for a total of $3,000 + $,1875, or $4,875.

[krstnam]

Can somebody help me with this one? I'm not quite getting int. If the gain/loss is normally deferred, why is this loss recognized immediately? Also isn't an undepreciated cost the historical cost and not the carrying value?
On January 1, Year 1, a shipping company sells a boat and leases it from the buyer in a sale-leaseback transaction. At the end of the 10-year lease, ownership of the boat reverts to the shipping company. The fair value of the boat at the time of the transaction was less than its undepreciated cost. Which of the following outcomes most likely will result from the sale-leaseback transaction?
A. The shipping company will not recognize depreciation expense for the boat in the current year.
B. The boat will not be classified in property, plant, and equipment of the shipping company.
C. The shipping company will recognize in the current year a loss on the sale of the boat.
D. The shipping company will recognize the total profit on the sale of the boat in the current year.

C. If the sale-leaseback transaction qualifies as a capital lease (the lease provides for the transfer of ownership), the gain or loss on the sale is normally deferred. A loss occurs when the carrying amount is greater than the fair value. In this instance, the full loss is recognized immediately. As the undepreciated cost (carrying amount) is greater than the fair value of the boat, the company will recognize the full loss immediately in the current year.

[Globetrotter]

Elainellbi,
They are asking for Interest Payable. Since on the first two notes it is paid on 09/30 and 10/1, you only need to accrue for three months. Now, if they asked for interest expense, you would use the whole year.
Assume that interest for 9/30 and 10/1 was paid on time, this clearing the liability.
Hope this answers your question.

[Globetrotter]

Krstnam,
It’s weird with the losses on “sale leasebacks”.

There is an “artificial” loss and “real” loss.
Artificial loss happens when sales price is less than book value. Seller does it for some economic goal.
In this case, we amortize the loss over the term of the lease. We do not know if this is the case in this question.
In our case, FV is less than book value. We have a “real” loss. “Undepreciated” kind of threw me off. But maybe, it’s an asset that was kept in a warehouse and never used?
Anyway, since your FV is less than carrying value, you would recognize loss immediately like in any other capital asset sale.

[Author]

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