[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

[vodrldnr]

Can someone please help me with this MCQ ?

Cobb Company sells appliance service contracts agreeing to repair appliances for a two-year period. Cobb’s past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year.

Receipts from service contract sales for the two years ended December 31, 2008, are as follows:

2007 : $500,000
2008 : 600,000

Receipts from contracts are credited to unearned service contract revenue. Assume that all contract sales are made evenly during the year. What amount should Cobb report as unearned service contract revenue at December 31, 2008?

a. $360,000 b. $470,000 c. $480,000 d. 630,000

It's from wiley.

Wiley says calculation for this problem is like this:

Unread Revenue for Y1. 500,000*60%* 1/2 =150,000
Unearned Revenue for Y2 $600,000*40%*1/2 + 0,000*60%= 480,000

150k + 480k = 630 k

Part of salutation that I do not understand is 0,000*60%= 480,000

Why do I have to add 480,000 ?

Wiley says that the year 2 calculation for 480K is Sum of one and one half year and all of second contract year. Just I do not get why they add whole portion of unearned revenue at the end…

Please Help me. I spent whole day yesterday to figure it out..

[r0ng1zz1e]

I'm taking FAR later this month. I went through the entire Wiley CPA Excel Book and did all the questions and sims. Now I am going through the Becker questions. For my learning style I prefer the format of the Becker questions. I seem to be retaining the information a lot better. The Wiley CPA Excel book is great but the format of the information is sort of complex. I have the Yaeger videos but I scrapped them early on be cause they weren't much help and took up too much time. This has definitely been a journey. LOL..good luck everyone

[Ariah]

Hello All,

FAR exam in 2 weeks. Using Becker notes, Ninja notes and Wiley MCQ/sims
There is so much content, I am overwhelmed…I have to pass this one. Rest of the sections are out of the way and my 18 mo window is until 12/31 when BEC expires. I work full time and am full time mom; this has taken almost 16 mos and just need to get done.

@kemi22- cost of a website domain you have purchased to own – should be capitalized (purchased intang asset with useful life known)

@Operation_CPA Boot is paid = No gain. If there is a loss then there is a debit
Boot rcvd = recognize a proportion of the gain (If under 25%)
If over 25% recognize all of the gain
To get percentage –> Boot received / FV received = %

[Operation_CPA]

@Ariah

I'm not too sure if thats right. I remember being confused by this in Becker initially, but I did some digging/research. In the text it states, “Boot is paid = no gain (<25% rule). My interpretation of that is if the boot is paid, you do not recognize a gain IF it is under 25%. This implies that if it is over 25% then you would recognize it. Maybe someone can chime in here to clarify but I'm almost positive thats correct.

[Aditi Shah]

Hey everyone,

I gave the test yesterday and there were 2 questions that I am confused about:

1) When creating a fund for funds by the City Council the entry should be:

a) Assigned funds Dr and Committed funds Cr
b) UnAssigned funds Dr and Committed funds Cr

2) Current Assets presentation – Cash 70,000; Cash restricted for sinking fund 325,000 and Accounts receivable 40,000

a) Cash 70,000 AR 40,000 Restricted Cash 325,000
b) Cash 70,000 AR 40,000

Can someone help me with the answer?

[Ariah]

@Aditi Shah – how were the sims? any tips?
Current assets – Cash and AR
Other question- is unclear

@thebigguy1992 the entry for the exchange is:
New 100K
accum. dep 120K
OLD 200K
Gain 20K

[Ariah]

Didn't tag you correctly. hope you respond..

[Ariah]

@Operation_CPA :

I re-read. So Commercial substance – Recog G/L
lacks commercial subs – Loss recog . Gain use < > 25% rule only when cash received.

[Claudia408]

can someone please help to go through the JEs for this?

At the end of year 1, a company reduced its inventory cost from $100 to its net realizable value of $80. As of the end of year 2, the inventory was still on hand and its net realizable value increased to $150. Under IFRS, what journal entry should the company record for year 2 to properly report the inventory value?

Answer: Debit inventory for $20 and credit expense for $20.

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

[Aditi Shah]

My exam experience was:

For the MCQs : The test went from medium to super difficult to medium / difficult. I'm not sure of the difficulty level of the third testlet since there were few easy questions and few tough ones. That definitely worrying me at this point.

For the task based simulations : It was a mixed experience. 2 questions were tough. Whereas the rest were medium difficult I would say.
Question 1: Research
Question 2: Investments
Question 3: Bonds
Question 4: Foreign Currency
Question 5: DTA / DTL
Question 6: US GAAP vs IFRS
Question 7: Document review and reconciliation of inventory

I'm not sure of how it went though considering this was my first paper ever at the CPA exams. Its exactly a month to the results on 11/04. Time will tell!!

[Claudia408]

Do I have a chance to pass FAR on this next attempt?

Reviewing the 2015 and 2016 moderate AICPA released questions my average score is in the 80s. But for the difficult questions 40s.

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

[emichelle2321]

Did anyone buy the Becker Final Review for FAR? Any thoughts on it?

[Ariah]

Thanks @Aditi Shah – surprisingly no GOVT or NFP sims. I had govt once and NFP the second time. MY exams were NFP heavy. Your results will be same time as mine.

@Claudia408 – Answer is A
It says dividend income included only part of the dividend and balance of the dividend reduced Pal’s carrying amount for its Ima investment

Under cost Method – dividend is income until only unto the carrying value. The rest is ROC (becker 2015 F3 – page 12)

In regard to the exam, they are unpredictable, it just depends. Sorry couldn't help 🙁

[Ariah]

@emichelle2321 – Becker final review is for quick summary (if you know the chapters well) But doesn't help much if you only depend on them.

[Ariah]

@rsg149 – in regard to the Stated interest rate – WileyCPAExcel has 12% as the answer.

[Author]

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