[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

[Operation_CPA]

@emichelle2321

Keep a notepad of all of the must know topics from each chapter and look them over every night before you go to sleep. This way all of the smaller details will be better retained during your final review. Having a one page summary of all the depreciation methods for example, will really help you have those formulas down cold come review time. Just my .02 cents!

Also – A lot of people say to try and do progress tests over and over, but having the topics nailed down with notes definitely helps the information stick.

@CPASF1

The table set up I use is as follows:

Date……Payments…..Interest*……Reduction……CV lease obligation

*For interest, use the actual amount calculated. On my bonds table I usually put the percentage there but for leases it is different.

[Mashhood Siddiqui]

hi,
i am currently studying for FAR using Wiley and Bob's lectures in Ninja Plus reviews. In investments Available for Sale Securities, Bob said in the lecture that all unrealized gains and losses from AFS portfolio go to OCI, while the Wiley book ( Module 16) says that if fair value option is used to reporting all AFS securities, unrealized gains and losses go to ?Income statement. I am really confused, what am i missing here, coz Bob also said that FMV method is used and unrealized G/L got to OCI.
plz help.

[Operation_CPA]

@Mashhood Siddiqui

AFS securities do not hit the income statement until they are sold. Changes in FV go to OCI. (unless the AFS security is determined to be impaired because of an OTHER THAN TEMPORARY decline in FV below cost. In this situation the asset must be written down to the lower FV by recording a (realized) loss that is recognized on the I/S).

Unrealized gains and losses go to Other Comprehensive Income.

Reference to help you as well (From my Becker book) page F3-4 –> “Realized gains or losses are recognized when a security is sold and when an AFS security is deemed to be impaired (as I stated above). All realized gains or losses are recognized on the Income Statement.”

[CPASF1]

thanks @operation_cpa 🙂

[vodrldnr]

@kemi22

Purchased Intangible asset is recorded at its acquisition cost.

If it has definite useful life, then amortized it over the U/L using S/L method (if other method is not specifically required)

Amortization expense xxx
Intangible asset xxxx

When it comes to computer software.

The answer can be different depending on whether it is internally developed for use or purchased.

[Claudia408]

can someone help explain why the answer to this question is the COST method and not EQUITY? My understanding is that when dividends are received, under the cost method it is recorded as dividend income on the income statement, and for the the equity method it is a reduction of investment. Not true for this question, what am I missing?

Pal Corp.'s 20X1 dividend income included only part of the dividend received from its Ima Corp. investment. The balance of the dividend reduced Pal's carrying amount for its Ima investment. This reflects that Pal accounts for its Ima investment by the:

A. cost method, and only a portion of Ima's 20X1 dividends represent earnings after Pal's acquisition.
B. cost method, and its carrying amount exceeded the proportionate share of Ima's market value.
C. equity method, and Ima incurred a loss in 20X1.
D. equity method, and its carrying amount exceeded the proportionate share of Ima's market value.

Answer A

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[OdellBj]

@Claudia408 It is not equity method because under equity method, you do not recognize dividend as income – It is only a reduction of the investment. In this situation, the parent's (PAL) total dividend income included income from its sub, therefore, it must be under the cost method because that is the only method that allows you to recognize your sub's dividends as income.

[emichelle2321]

Does anyone have any advice on how to wrap your head around Intercompany eliminating entries? I feel like Becker (F3) didn't really do a great job of this. The way the book explains it vs. the way that the MCQ are asking doesn't line up for me at all. Feel like I'm not conceptually grasping this in terms of what the exam is looking for….

[onthewaytocpaMom]

Hey @emichelle2321, you and I seem to be moving right along the same timeline. Working on F3-Acquisition topic right now and the inter company entries are confusing me. Not sure I grasp the questions…was hoping to move out of f3 tonight but I can already see that's not gonna happen!

[thebigguy1992]

17. Bayberry Co. has an asset with a cost of $200,000 and accumulated depreciation of $120,000. Driftwood
Co. has an asset with a cost of $250,000 and accumulated depreciation of $160,000. Both assets have a
fair value of $100,000. Bayberry and Driftwood find it mutually advantageous to exchange assets, and the
exchange results in improved future cash flows for both companies. What amount, if any, is Bayberry's gain on the exchange?
A. $0
B. $10,000
C. $20,000
D. $50,000

what are the journal entries for this?

[letsrun4it]

Did about 2000 questions from Roger and now I'm onto Ninja….trending at 52%. Wow this section is hard. I've spent more time studying for FAR already than I spent on any of the other 3 sections I've passed and it looks like I am about halfway there at this point. Props to everyone out there putting in the effort. Gotta keep grinding!

BEC: 85
REG: 74, 78
AUD: 86
FAR: October?

[CPASF1]

Can someone please clarify.

Government funds are modified accrual

Properietary funds are accrual

Fiduciary Funds are accrual

BUT

Government wide financial statements are accrual.

I keep getting confused with the mcq's for government funds and government wide funds?
thanks!

[thebigguy1992]

^ yes that is all correct

[thebigguy1992]

if anyone wants to know what one of the biggest takeaways that jeff said during the ninja audio MCQ, it was that expenses are always deducted from unrestricted revenues (this is for governmental/NFP)

[Claudia408]

@Odell – thanks, i think the question is worded all messed up! when i read “The balance of the dividend reduced Pal’s carrying amount for its Ima investment”, then I think ok, credit investment right, not dividend income. i mean, i get the difference between cost & equity method but this question is confusing!

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Author]

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