[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

[Anonymous]

Finally home. Time to study.

[Future Ninja]

@ _Nick_ what topic are you on for tonight? I'm doing Equity. From time to time, I will post the difference between U and I (US and IFRS).

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Future Ninja]

did you know that:

Any dividend which exceeds the balance of retained earnings is considered a liquidating dividend

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Gabe]

Ok…still having trouble with non monetary exchanges. I thought if it had commercial substance we recorded it at fair value…anyone know the journal entry for this one?

On January 1, Feld traded a delivery truck and paid $10,000 cash for a tow truck owned by Baker. The delivery truck had an original cost of $140,000, accumulated depreciation of $80,000, and an estimated fair value of $90,000. Feld estimated the fair value of Baker's tow truck to be $100,000. The transaction had commercial substance. What amount of gain should be recognized by Feld?

A.

$0

B.

$3,000

C.

$10,000

D.

$30,000

I had:

new truck 100

cash 10

old truck 90

Thus, no gain.

Any help would be great!

CPA, CFE
CISA- Experience will be completed by August 2016

[mb0363]

Is the correct answer 30,000?

BEC - PASS
AUDIT - PASS
REG - PASS
FAR - PASS

[Gabe]

Yep!

So…commercial substance. The JE would be

DR new van 100

CR old van 60

CR cash 10

CR Gain 30

So basically the gain is difference between FV of NEW and CV of OLD +/- any boot received.

CPA, CFE
CISA- Experience will be completed by August 2016

[mb0363]

How I remember commercial substance:

Commercial Substance = Yes Gains, Yes Losses

Gain/Loss is the difference between the FV and BV of the OLD asset. (90k-60k)= 30

JE:

DR New Van (FV) 100

DR Acc. Depr 80

CR Old Asset (BV) 140

CR Gain 30

CR Cash 10

BEC - PASS
AUDIT - PASS
REG - PASS
FAR - PASS

[RZHANG13]

hi guys, got a diluted-EPS question

Hutchins Company had 200,000 shares of common stock, 50,000 shares of convertible preferred stock, and $2,000,000 of 10% convertible bonds outstanding during 20X1. The preferred stock was convertible into 40,000 shares of common stock.

During 20X1, Hutchins paid dividends of $1.00 per share on the common stock and $2.00 per share on the preferred stock. Each $1,000 bond was convertible into 50 shares of common stock. The net income for 20X1 was $1,000,000 and the income tax rate was 30%.

Basic earnings per share for 20X1 were (rounded to the nearest penny)?

The answer said the numerator of this question is (1,000,000+140,000). I can understand the 140 part, which means the bond converted into common stock, net of tax.My question is why don't we need to calculate the 1,000 part NET OF TAX?

Anyone would like to help? THX!!

[mb0363]

By 1,000 do you mean net income? Also, Is there anyway you could post the solution?

BEC - PASS
AUDIT - PASS
REG - PASS
FAR - PASS

[Missbots]

I would love to help but i would also like to see the whole question posted I don't get some of it..we only use net income as is..because it's already net of tax..

[Juliemiddle]

@NoraU – FAR was my very 1st attempt at a CPA exam, and I was completely unprepared going into the exam. For round 2 with FAR, I was still overwhelmed even though I had already passed the other 3 exams, but here's what I did:

->1st review: read study text for each section & typed notes, took MCQs/SIMs for the section, and made notes on the questions I missed (probably took me 2 mths. to finish)

->2nd Review: for each section, read through all my notes, then attempted all the questions I missed in the 1st review. Took more notes on questions I still got wrong or made a flashcard. If it was a big topic, made a chart (like Govt. Funds)

->3rd Review: took Diagnostic exams in CPAExcel (basically, more MCQs); again…more notes or flashcards on missed questions

->4th Review (last few days before exam): starting at pg. 1 of my notes, re-type as much as possible…or at least type the portions that I was still shaky on. You will be shocked at how helpful it is to re-type your notes just before exam day…you'll see stuff that will make you say “oh, i forgot about that”.

–>Listen to Ninja Audio everyday in the month before my exam. As many sections as possible.

This was obviously overboard, and maybe unnecessary to do so much. But, I REALLY didn't want to take FAR again 🙂 But, I think the real name of the game is to look at as much of the material as many times as possible.

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[Mehwish]

During the course of your audit the FS of H Co., a new client, for year ended Dec 31, 2010, you discover the following:

Inventory at Jan 1, 2010, had been overstated by $3000

Inventory had been understated by $5000

Insurance policy covering three years had been purchased in 2009 for $1500, and the whole policy expensed in 2009.

Unearned revenue was $1000 debited to sales.

Net income before adjustments was $20000

What is the proper income?

Solution in book: 26,500= $20,000+3000(overstatement of inventory)+5000(understatement of inventory)-500(insurance expense)-1000(overstatement of revenue)

My question is why is $500 insurance expense subtracted from the net income. Wasn't 2009 Income understated by $1000 when the whole $1500 was expensed ?

So, out of the $1500, $500 would go to 2009, $500 to 2010, and shouldn't the remaining $500 be added back to net income in 2010 as a correction of error, and then subtracted again in the next year's income?

So.Confused.

[Mehwish]

RZHANG13, For diulted EPS the numerator is usually Net Income available to common shareholders.

you're saving $140,000 of interest expense by converting the bonds. It is income available to you, so you'll be taxed….

But $1,000,000 is already net of tax if the problem says its net income.

[Gabe]

@Mehwish…that is odd. My only thought is they're taking out the $500 the was incorrectly expensed in 2009 (as it should have been a prepaid asset)…that's all I got so far…I'll come back and later after I've had some coffee

CPA, CFE
CISA- Experience will be completed by August 2016

[NoraU]

Mehwish: I think the assumption is that prior errors will be retrospectively corrected. So 2009 and 2010 ins. expense will be $500 each year. I guess overstatement of $3000 inventory in 2009 will also be retro correction – otherwise it does not make sense to me to add it to the current income.

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[Author]

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