[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

[Determined CPA]

Wood Co.'s dividends on noncumulative preferred stock have been declared but not paid. Wood has not declared or paid dividends on its cumulative preferred stock in the current or the prior year and has reported a net loss in the current year. For the purpose of computing basic earnings per share, how should the income available to common stockholders be calculated?

Answer: The dividends on the noncumulative preferred stock and the current-year dividends on the cumulative preferred stock should be added to the net loss.

I thought that if dividends weren't declared, it was simply a footnote disclosure. why would the current-year dividends and the dividends in arrears on the cumulative preferred stock be included?

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Future Ninja]

@determined is there any franchise discussion in Becker? I forgot already

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

[Future Ninja]

@determined I think if its cumulative declared or not should be included.

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

[juuustin]

Cumulative preferred dividends are ALWAYS deducted from income available to common stockholders for the year that your are computing basic EPS, regardless of declaration.

The non-cumulative dividends are also deducted because they are, in fact, declared.

So, just remember, cumulative=deducted no matter what. Non-cumulative must be deducted only if declared.

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!

[Determined CPA]

huh? im sorry im confused with what you're saying =(

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[juuustin]

If the preferred stock is cumulative, its dividends are deducted from the income available for common stockholders (the numerator in basic EPS). They are deducted regardless of whether or not they are declared. Period. End of story. If you see cumulative preferred in an EPS question, the dividends need to be taken into account.

For non-cumulative, the dividends are only used in the basic EPS calculation if they are declared.

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!

[Determined CPA]

Ok juuustin, thank you!! so cumulative – ALWAYS deducted regardless if declared.

if the non-cumulative dividends weren't declared, would they be included?

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[juuustin]

No, the non-cumulative would not be included if they weren't declared.

The thinking behind this approach is that at some point in time (going concern), the cumulative dividends will need to be paid. When they are, EPS for the comparative financials would need to be re-calculated for every year that they weren't paid because the EPS would be too high if they weren't deducted. To avoid this, FASB says deduct the dividends in the year they should have been paid, even if they aren't declared.

Since non-cumulative dividends cease to exist after the year if not paid, there is no need to treat them in this manner. Hope that helps.

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!

[Determined CPA]

Got it! thank you! I think the timing of our responses back and forth was weird but I get it, thank you so much!

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[mb0363]

On September 1, Year 1, Cano & Co., a U.S. corporation, sold merchandise to a foreign firm for 250,000 francs. Terms of the sale require payment in francs on February 1, Year 2. On September 1, Year 1, the spot exchange rate was $.20 per franc. At December 31, Year 1, Cano's year end, the spot rate was $.19, but the rate increased to $.22 by February 1, Year 2, when payment was received. How much should Cano report as foreign exchange gain or loss in its Year 2 income statement?

a. $2,500 loss.

b. $0

c. $5,000 gain.

d. $7,500 gain

Does anyone else struggle with foreign currency accounting? I never know what numbers to take and subtract! Any help would be appreciated.

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

[Determined CPA]

On March 1, year 1, cain issued at 103 plus accrued interest, 200 of its 9% 1,000 bonds. bonds are dated jan 1, year 1 and mature jan 1, yr 11. interest is payable semiannually on jan 1 and july 1. cain paid bond issue costs of $10,000. under gasp, cain should realize net cash receipts from the bond issuance of:

answer $199,000

cash 206,000

accrued interest 3000 (200,000 * 9% * 2/12)

less deferred bond issue costs 10,000

question: i thought bond issue costs were amortized using SL? is the full amount shown here bc its asking for cash realized and not recognized?

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Future Ninja]

@determined – I think yes they are amortize so the original entry at issuance would include a separate bond issue cost = asset.

Debit Cash

Debit Bond issue cost

Debit Discount on BP (if discount)

Credit Bonds Payable

Credit Premium on BP (if premium)

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

[Determined CPA]

i really hate this test

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Future Ninja]

@determined is it under US gaap or 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]

hang in there determined. you're not alone. my test is tomorrow. scared.

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

[Author]

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