[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

[mb0363]

Thanks Gabe! I didn't think to do a ratio for the taxes. I was just multiplying 1050 by the appropriate percentage…hm…

BEC - PASS
AUDIT - PASS
REG - PASS
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[juuustin]

mb: The sales tax rates given are basically a distractor. They are just telling you that the state keeps two-thirds of the revenue, while the city gets one-third. By listing the actual tax rates, the examiners are just trying to see if you will actually use the tax rates… which is what you did.

MD Candidate: 10/1/14

FAR - 87 (11/23/14)
REG - 87 (1/30/15)
BEC - 89 (4/19/15)
AUD - 98 (5/30/15)

Ethics - 100

Experience - In Progress!

[juuustin]

mb: The sales tax rates given are basically a distractor. They are just telling you that the state keeps two-thirds of the revenue, while the city gets one-third. By listing the actual tax rates, the examiners are just trying to see if you will actually use the tax rates… which is what you did.

MD Candidate: 10/1/14

FAR - 87 (11/23/14)
REG - 87 (1/30/15)
BEC - 89 (4/19/15)
AUD - 98 (5/30/15)

Ethics - 100

Experience - In Progress!

[mb0363]

@juuustin EXACTLY what I needed to understand what was going on here! Thank you!!

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

[Gabe]

When looking at the answers for any CPA question I immediately eliminate the “easy” answer…you start to see what they try to trip you up with and steer away from those answers. So, even if I can't get to an exact answer, I know which ones are definitely wrong. Hope that made sense…

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

[Gabe]

Ok…these foreign exchange questions are the death of me.

Anyone?

On November 2, 20X1, Platt Co. entered into a 90-day futures contract to purchase 50,000 Swiss francs when the contract quote was $0.70. The purchase was for speculation in price movement. The following exchange rates existed during the contract period:

30-Day Futures Spot Rate

---

---

November 2, 20X1 $.62 $.63

December 31, 20X1 .65 .64

January 30, 20X2 .65 .68

What amount should Platt report as foreign currency exchange loss in its income statement for the year ended December 31, 20X1?

A.

$2,500

B.

$3,000

C.

$3,500

D.

$4,000

Answer is A.

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

[Rocky123]

@future ninja

Ahhhhh!!! I'm blind!! What kind of question was that????

The tallest oak in the forest was once just a little nut that held its ground.

AUD-PASS
BEC-PASS
REG-PASS
FAR-PASS

Rocky123, CPA

[Rocky123]

@gabe

I need to study that stuff. Thanks for reminding me.

You take the .70 and subtract it from the .65 rate at 12/31. Then multiply 50,000 x .05 = 2,500. It's a loss because the value of the dollar went down.

Sorry I can't get into more detail than that 😉

P.S. Which chapter in Becker is that? Is it 2 or 10?

The tallest oak in the forest was once just a little nut that held its ground.

AUD-PASS
BEC-PASS
REG-PASS
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Rocky123, CPA

[Gabe]

More exchanges!

The following information pertains to Flint Co.'s sale of 10,000 foreign currency units under a forward contract dated November 1, 20X1, for delivery on January 31, 20X2:

11/01/X1 12/31/X1

---

---

Spot rates $0.80 $0.83

30-day future rates 0.79 0.82

90-day future rates 0.78 0.81

Flint entered into the forward contract in order to speculate in the foreign currency. In Flint's income statement for the year ended December 31, 20X1, what amount of loss should be reported from this forward contract?

A.

$400

B.

$300

C.

$200

A is correct.

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

[mb0363]

The State levies a 4% sales tax on merchant sales volume while the local government levies a 2% tax on the same activity. Merchants are required to remit the full amount of all levied taxes to the State government within 15 days of month end and the State is required to remit collected taxes to local authorities within 30 days of receipt. Assume the State and local authority had June 30 year-ends, and that sales volume for the months of June and July were $100,000 and $200,000, respectively. At June 30, each government would accrue the following related to sales activity:

State local

Tax Revenue- $4,000

Payable -$2,000

Tax Revenue -$2,000

Government

Tax Revenue – $2,000

How come with this particular question we are not using the ratios?

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[Rocky123]

@Gabe

Got me on this one… What's the explanation? I keep getting 300.

The tallest oak in the forest was once just a little nut that held its ground.

AUD-PASS
BEC-PASS
REG-PASS
FAR-PASS

Rocky123, CPA

[mb0363]

Gabe- I struggle with these as well.

For #1 since we entered into a forward contract we will use the future rate not the spot rate. We are interested in December 31 so we will take the .65. Because we went from .7 to .65 it is considered a loss. 50,000*-.05 = 2500.

For #2 well…im not sure…

BEC - PASS
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REG - PASS
FAR - PASS

[hudnetj]

@Gabe… Maybe this is why? At 11/1 he enters into a 90 day forward contract @.78 = 7,800

Since you need to take the gain/loss at 12/31.. that is 30 days from Jan 31? The rate at 12/31 for a 30 day contract is .82 = $8,200..

That's all I could think of.. Is this Becker?

BEC - 76
REG - 76
FAR - 77
AUD - 63, 89

DONE!!

CPA 3/15

[Gabe]

Glad #2 wasn't stumping just me…

#2's rationale is:

.82 (12/31 forward rate because it has the amount left on the exchange)

.78 (11/1- the date it was entered in to)

_______

.04 * 10000= $400

Still don't get it. No spot rate was used?!!

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

[Gabe]

@mb Are those the answers posted? I'm confused…

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

[Author]

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