[jeff]

Welcome to the Q4 2016 CPA Exam Study Group for FAR.

If this is your first post in the study group – please post your target exam date (just the time frame to preserve your anonymity), and your past history with this exam (optional, of course).

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

[mckan514w]

@The_TURK9311 – you subtract the gain out of operations because you have already accounted for it (the gain) in the investing section of the statement. So if you sell that you bought for 10 and sold for 20 in your investing section of the CF you would show a cash inflow of 20 to reflect the sale- but that really isn't reflective of the transaction so the gain of 10 needs to come out of the operating section.

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[mckan514w]

man I feel like FAR just kicked me in the teeth today– struggling to get above 60-70% on my quizzes ugh… I'm going to go cry somewhere and hope for a better day tomorrow I can't take anymore tonight…

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Anonymous]

Gains are increases to net income, but there is no cash flow.
Revenues + gains – expenses-losses = net income

A gain is just the difference between the selling price of an asset and the basis of said asset.

And the cash flow from the sale(in total) is just accounted for under the investing section..

And remember the SCF Goes (for the indirect method)

Net Income
-Gains
+Losses
Non Cash items(e.g. depreciation)
then:
Operating
Investing
Financing

[mtaylo24]

@Mckan – I know the feel, Im only getting like 50-60s on all of my random 20 MCQ quizzes. I do a little better on Gleim because they repeat your incorrect questions immediately in the next session. There are way too many topics to master, so we just need to be familiar with all of them and not an expert. Remember that the questions on the exam will be crappy regardless of how well u know the Ninja or Roger questions, and we will feel crappy regardless of a 50 or 80 final score. You felt crappy about your BEC exam and u passed and I felt crappy about both of the exams I passed. Don't forget that 15 of the MCQ are pretest anyways and so is 1 sim. Thats my pep talk for the day (😂). Hang in there!

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[livealittle]

keep studying guys!

even if you don't feel like you are retaining it, you certainly aren't going to learn any more if you don't look at it at all.

BEC - 8/8/16
REG - 66, 77
AUD - 81
FAR - 9/8/16

[Anonymous]

Felt the exact same way today @mckan. Seems like the more I study, the stupider I get lol.

Oh well, tomorrow is a new day. Going to try to get up earlier than usual to get more done before work since I seem to learn best first thing in the morning.

[emichelle2321]

I am so mentally and physically tired…but really thankful for this message board. Gonna rally and go work on pensions for a few hours. I wish there were more hours in the day!

[Anonymous]

This is weird I got the same answer a different way..

I said 1000000 FV of note – (950000-40000 interest forgiven+ 30000 interest required) I hate it when this happens

n Year 1, May Corp. acquired land by paying $75,000 down and signing a note with a maturity value of $1,000,000. On the note's due date, December 31, Year 6, May owed $40,000 of accrued interest and $1,000,000 principal on the note. May was in financial difficulty and was unable to make any payments. This situation was unusual and infrequent for May Corp., and is considered material. May and the bank agreed to amend the note as follows:
The $40,000 of interest due on December 31, Year 6, was forgiven.
The principal of the note was reduced from $1,000,000 to $950,000 and the maturity date extended 1 year to December 31, Year 7.
May would be required to make one interest payment totaling $30,000 on December 31, Year 7.
As a result of the troubled debt restructuring, May should report a gain, before taxes, in its Year 6 income statement of:
a.
$60,000
b.
$40,000
c.
$50,000
d.
$90,000

[Anonymous]

You know you have been studying too much when you catch typos in becker book……. just saying

[mckan514w]

Charlie is it 60? How did they say to work it? I did Savings on note of 50,000 plus savings on interest of 40,0000 less Cash of 30,000.

OMG exactly allison213— the more I study this the stupider I seem to become….

Thanks all for the pep talk- it helps to read all of it this morning!!! I honestly do not know what I would do without this board and a group of sympathizers….

Lets make today great!

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[mckan514w]

How do you know that the equipment here will be used for an “alternative use”? For instance if I got this question on the exam would I just infer “various R&D projects” means it will eventually be used for something other than R&D? It was my understanding that you expensed everything and only took depreciation on equipment that would be used for other things besides R&D????

During the current year ended December 31, Metal, Inc., incurred the following costs:

Laboratory research aimed at discovery of new knowledge $ 75,000
Design of tools, jigs, molds, and dies involving new
technology 22,000
Quality control during commercial production, including
routine testing 35,000
Equipment acquired 2 years ago, having an estimated useful
life of 5 years with no salvage value, used in various R/D
projects 150,000
Research and development services performed by Stone Co.
for Metal, Inc. 23,000
Research and development services performed by Metal, Inc.
for Clay Co. 32,000
What amount of research and development expenses should Metal report in its current-year income statement?

Incorrect A. $120,000

B.$150,000

C.$187,000

D.$217,000

Correct answer B. 150,000
Quality control during commercial production, including routine testing, is not included. Depreciation on equipment with alternative uses is included. Contract services for another entity are not included.

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Anonymous]

@mckan I just did a problem almost exactly like that a minute ago. I had also thought you'd expense any equipment used for R&D, but I guess the rule is you only expense equipment being used for projects in the current period. I don't think you're assuming that it will ever be used for something other than R&D, just that it has a future economic benefit so the only expense you can recognize on it in this period is the depreciation. If that makes sense. Calling it an “alternative use” is confusing though

[mckan514w]

grrrr…. Thanks Allison- that makes sense… the wording on these questions trips me up as much as my feeble brain does… ha ha ha…

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[mckan514w]

Okay Fun Friday question for you guys- this one has now tripped me up twice 🙂

Abraham Company has a policy whereby research and development projects that are over 70 percent likely to succeed are capitalized and then depreciated over a five-year period with a full year of depreciation in the year of capitalization. In Year One, $500,000 was spent on Project One and it was 55 percent likely to be successful, $600,000 was spent on Project Two and it was 65 percent likely to be successful, and $700,000 was spent on Project Three and it was 75 percent likely to be successful. The company reported net income of $4 million for Year One. What was the appropriate net income that should have been reported?

$3.3 million
$3.44 million
$4.88 million
$5.1 million

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Anonymous]

So today is Governmental for me. 8 Days away and I am feeling good today. I am anticipating them nitpicking me with little did you read questions in the book so Today i am reading and Governmental MCQ.

[Author]

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