[jeff]

SO I know every test is different but does anyone have any insight on what has been heavily tested recently? I take the exam Monday and I need to narrow my focus….Thanks!

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

[Iggy1985]

@aspiring1accountant well, they said the 20X1 balance included the cost of printing, so they should have been prepaid expense in 20X1. Whether they were physically printed or not (if they just prepaid it) in 20X1, the part that matters is that they weren't used until 20X2, meaning the expense applies to 20X2.

Hopefully I'm understanding your question right.

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Anonymous]

@Iggy, you answered my question exactly. Thanks.

Still having trouble with rev. recog. concepts so I completely missed that part.

[umkcfuturecpa]

Is there a mnemonic or something out there to help me remember how to calculate cash flows from operations using direct or indirect? I seem to be ok if I'm looking at them in MCQs, but when it comes to doing a SIM where I have to recreate one, I get all fuzzy about what I actually need to pull for each.

REG - 87 (Becker)
AUD - 96 (Becker & Ninja MCQs)
FAR - 85 (Becker, Ninja MCQs, Audio and Blitz)
BEC - Last one! Waiting on score release 11/24!

Remember: a journey of a thousand miles begins with a single step

[Anonymous]

Lets start with direct method, easy way to determine it by doing JEs. So when they are asking for how much cash is paid to revenues of 3,000 with AR increasing 5,000, you set it up like this:

AR 5000

Cash 295000

Revenue 300,000

You know AR is an asset account so when it increases, it is debited.

For the indirect method, I look at it if an asset is increasing, cash is decreasing and vice versa. So if if AR increases 5,000 from the previous example, that means cash has gone down 5,000 so it is an deduction from operating section. When prepaid expenses decrease, that means you are using less cash and would add it to net income from operating section. I know I wasn't very clear but I hope this helps a little. If not, I will try to explain it more clearly after my exam on the 1st LOL.

[Iggy1985]

@umkcfuturecpa, with cash flows it's much easier to actually understand what's going on rather than try to memorize increase/add/decrease/subtract by some sort of mnemonic. JEs really help me with the indirect method, and talking yourself through it. You start with N/I and your goal is to figure out what cash inflows are not included in N/I and need to be added, what non-cash expenses included in N/I need to be added back, what non-cash income is included in N/I and needs to be subtracted, and what cash outflows are not included in N/I and need subtracted.

For example. Inventory goes down, therefore COGS go up = non cash expense included in N/I = add back to N/I.

A/R goes down, therefore cash goes up = cash inflow not included in N/I = add to N/I.

Prepaid Expense goes up therefore cash goes down = cash outflow not included in N/I = deduct from N/I

T accounts help with the direct method, making t-accounts for A/R, A/P, and related accounts, filling in the blanks to figure out what cash was received from customers, what cash was paid to vendors, and so on.

also, practice practice practice

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Anonymous]

Quick question, what is the proper way to record reclassifications from TRNA to UNA? I thought they were like this:

Initial:

DR Cash

CR TRNA (Contribution Revenue)

As it is spent:

DR. Reclassification TRNA

CR Reclassification UNA

DR. Expense (UNA)

CR. Cash

But in the Ninja Notes this is how Jeff puts it:

Initially, the JE to record the Temporarily

Restricted Contribution looks like this:

Cash – TRA 500

Contributions 500

§ Once the terms of the restrictions are met,

the funds can be reclassified

Reclass 500

Cash – TRA 500

Cash – Unrestricted 500

Reclass 500

§ Later, when an expense arises

Expense 500

Cash – Unrestricted 500

[Anonymous]

How is the Discount calculated in this example? Also what would the JE be?

Dec 30, 20X3, Fort, Inc. issued 1,000 of its 8%, ten-year, $1,000 face value bonds with detachable stock warrants at par. Each bond carried a detachable warrant for one share of Fort’s common stock at a specified option price of $25 per share. Immediately after issuance, the market value of the bonds without the warrants was $1,080,000 and the market value of the warrants was $120,000. In its December 31, 20X3 balance sheet, what amount should Fort report as bonds payable?

Answer $900,000

The proceeds of bonds issued with detachable warrants are allocated between the bonds and the warrants based upon their relative FMV at the time of issuance. Since the bonds had a fair value of $1,080,000 and the warrants a fair value of $120,000, the total of the fair values is $1,200,000.

– The bonds account for $1,080,000/$1,200,000 or 90% of the proceeds of $1,000,000 or $900,000.

– The warrants account for $120,000/$1,200,000 or 10% of the proceeds of $1,000,000 or $100,000.

The bonds will be recorded at face of $1,000,000 minus a discount of $100,000 for a net amount of $900,000.

[jstay]

CPAHOPEFUL, id go with jeffs way on the journal entries. your j.e. are a little off with the reclassification. I Would write down those journal entries on a separate paper a few times and then just keep going over it in your head

[Anonymous]

Really? That's how it is in the Roger book including the Wiley one but I'm really not sure. I guess I will go with Jeff's way then. A few more questions, how do you differentiate between remeasurement and translation?

What is the JE for the acquisition of land when it includes stuff like legal fees, cost of razing, sale of scrap of old building?

And what is the rule on convertible bonds with the basic eps method? I was under the impression you only add them for the diluted eps not basic eps?

[Anonymous]

Oh, last but not least, what would the answer be to this LCM question:

OC 4

RC 7

NRV 6

NRVLM 5

[jstay]

remeasurement vs translation= remeasurement- goes to I/s. transaltion to OCI.

JE for acquistion–will include all legal fees, cost of razing, LESS sale of scrap

Correct about convertible bonds and eps.

LCM= OC of 4.

[Anonymous]

Um, so not sure why in the Ninja MCQ there was a question asking for the basics eps and included the shares converted to C/S from preferred stock and bonds.

So it would be a simple:

DR Asset

CR Cash

For acquisition of land?

[jstay]

yepp, believe so

[Anonymous]

And the last question I promise (LOL), for pensions are these JEs correct?

INT/SERVICE cost

DR Pension Exp

CR Pension Liability

PSC

DR OCI

CR Pension Liability

Actual Return of Plan Assets

DR Pension Liability

CR Pension Expense

Gains

DR Pension Liab

CR OCI

Losses

DR OCI

CR Pension Liability

So OCI decreases with losses and PSC, while increasing with gains. Liability decreases with return of plan assets along with gains, while increasing with PSC, IC, and SC?

[jstay]

yep looks good. just remember you have to take into account for the taxes

[Author]

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