[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

[K.Asho]

Help!!!

I am using Becker and my test is scheduled for the 28th of this month. Currently I'm still on Far 9 and have yet to begin reviewing. Is there any hope for me to finish up with enough time to review thoroughly? Any advice will be greatly appreciated!

[kegenes]

Hello all!

I recently took my first CPA exam-FAR and got a 71 :(. I am retaking FAR again on 10/19.

I am using the Becker program and and reviewing all of the chapters prior to my re-examination date. One section I am really struggling with is consolidations and more specifically intercompany transactions. Can anyone help with this? Not sure where I can find extra guidance on understanding this.

Any help is greatly appreciated!

Thanks.
-Krista

[nib]

Pls tell me what is correct answer.AICPA or FASB ?
Ninja mcq answer is ” FASB ” .WHY ?

The Private Company Decision-Making Framework has been developed by the:
A.AICPA.
B.FASB.
C.IASB.
D.None of the answer choices are correct.

[lizbette]

I was doing this F1 MCQ on Becker, and I was wondering whether the answer would change if they were terminating a capital lease instead of an operating lease? Thoughts, anyone?

On March 1 of the current year, the board of directors of Lockwood Inc. voted to discontinue the operations of its fresh produce division, a reportable segment of the entity's operations. The sale of the division, which was finalized on December 15, resulted in a gain of $150,000. The division had operating losses of $500,000 during the current year and also paid employee termination benefits of $200,000 and $20,000 to terminate an operating lease. Ignoring income taxes, what is the loss from discontinued operations that Lockwood should recognize on its current year income statement?
a.
$720,000.
b.
$550,000.
c.
$570,000.
d.
$350,000.
Explanation
Choice “c” is correct. The net loss from discontinued operations will include the gain from the sale of the division, the operating loss, the employee termination benefits and the cost to terminate the operating lease. Exit and disposal costs related to discontinued operations are reported in discontinued operations on the income statement:

REG (8/11/16) -
FAR (TBD) -
AUD (TBD) -
BEC (TBD) -

[GeauxAwayCPA]

Hi everyone! This is probably really simple but it's the second time I've seen this question and it's just bothering me. The answer to the below question is D and the solution is below the question. What I don't understand is the second part of the question/solution. It states “From the prior year the funding of the benefits to the plan was made, but the projected benefit obligation had yet to be set up, and thus the plan was overfunded.” How the heck are we supposed to know the projected benefit obligation hasn't been set up? Is there some super subtle indicator in this question that I'm missing?! Or is there some rule that I'm supposed to know that I clearly don't? Thanks in advance!

Effective January 1 of the previous year, Flood Co. established a defined benefit pension plan with no retroactive benefits. The first of the required equal annual contributions was paid on December 31 of that previous year. A 10% discount rate was used to calculate service cost and a 10% rate of return was assumed for plan assets. All information on covered employees for the previous and current year is the same. How should the service cost for the current year compare with the previous year, and should the previous-year balance sheet report an underfunded or an overfunded funding status?
A. Service cost for current year compared to the previous year, Equal to; Funding status reported on the previous-year balance sheet, Underfunded
B. Service cost for current year compared to the previous year, Equal to; Funding status reported on the previous-year balance sheet, Overfunded
C. Service cost for current year compared to the previous year, Greater than; Funding status reported on the previous-year balance sheet, Underfunded
D. Service cost for current year compared to the previous year, Greater than; Funding status reported on the previous-year balance sheet, Overfunded

From the prior year to this year, service costs should usually be increasing because the employees are accruing more benefits with their additional service years. Service cost keeps track of the additional benefits owed to employees from their additional year of service. From the prior year the funding of the benefits to the plan was made, but the projected benefit obligation had yet to be set up, and thus the plan was overfunded.

[OdellBj]

@lizbette yeah you are right. The rule is to include termination of leases that are not capital (i.e operating). If it was a capital lease, you'd ignore it.

[Josh]

My exam is on the 11th. I'm wondering. Should I be doing MCQ's on my weak areas? or trying to get to the review stage. At this point I'm close to 70%. I don't feel I'll hit the review. I'm trending a 75%. It probably doesn't matter, does it? I just did some AICPA sample tests if nothing else for the sims. I typed the FAR notes, and it did take a week. Jeff also recommends watching Blitz in the last week. Maybe I haven't spent enough time doing questions because I'm not quite at 100 hours. I read the book, and did what I thought Ninja recommended. Only 5 days left, and I hope for the first time “using only ninja materials,” I make some improvements.

BTW, has anyone else attended the Accountingfly “Meet the Firms” webinar? I did, and I applied a few places. There's also a school fair going on right now if anyone is thinking of getting a masters. My opinion is that this is a good time to network even online.

When's your exam GeauxAwayCPA?

[vodrldnr]

Can someone plz explain new rules for BIC?

Carrying amount of Bond is reduced by BIC but then is BIC still going to be amortized over outstanding period of Bond ?????

[GeauxAwayCPA]

@vodrldnr the BIC are very similar to discounts on bonds. They “reduce” the carrying value of the bonds and have to be amortized. I know I just repeated what you typed haha but hopefully knowing that they are basically like discounts on bonds help you

[vodrldnr]

@ GeauxAwayCPA

Thank you for reply.

Because of the new rule, is BIC just classified as cost now ????

I checked FASB ASC and EY guidance regarding this issue. they said it is more like presentation issue rather than calculation. I don't understand what they mean by that.

Actually, I do not see the house change regarding amortization of BIC. it is just amortized over the outstanding period of bond as usual. but since the carrying amount of bond is reduced by BIC, does it mean that the effective interest decrease ??? (carrying amount x effective interest rate )

[garvatron]

Does anyone have any good resources for IFRS? Specifically some kind of chart that shows the major differences between GAAP and IFRS. I am using Roger CPA Review and he does a side by side comparison at the end of each of the 30 sections. I am looking for something higher level. Thanks!

BEC 66, 83 2/27/16
AUD 81 11/28/15

[livealittle]

can someone help me with this question?

Savor Co. had $100,000 in cash-basis pretax income for Year 2. At December 31, Year 2, accounts receivable had increased by $10,000 and accounts payable had decreased by $6,000 from their December 31, Year 1, balances. Compared to the accrual basis method of accounting, Savor's cash pretax income is:
a. Higher by $16,000.
b. Lower by $4,000.
c. Lower by $16,000.
d. Higher by $4,000.
Explanation
Choice “c” is correct. A $10,000 increase in accounts receivable means that $10,000 of the sales revenue recorded using the accrual basis during the year has not yet been paid by the customers. Under cash basis accounting, revenue is not recorded until the cash has been received, so this amount must be deducted to arrive at cash basis income.
The $6,000 decrease in accounts payable means that total cash payments to vendors during the year exceeded the current period's accrual basis expenses. Under the cash basis, expenses are recorded when payment is made, so the $6,000 must be deducted to arrive at cash basis income.
If cash-basis pretax income is $100,000, then accrual-basis pretax income must be $116,000 ($100,000 cash basis income = $116,000 accrual basis income – $10,000 increase in AR – $6,000 decrease in AP).
Choice “d” is incorrect. The increase in accounts receivable must be subtracted from, not added to, accrual basis income to calculated cash basis income, as explained above.
Choice “b” is incorrect. The decrease in accounts payable must be subtracted from, not added to, accrual basis income to calculated cash basis income, as explained above.
Choice “a” is incorrect. Both the increase in accounts receivable and the decrease in accounts payable must be subtracted from, not added to, accrual basis income to calculated cash basis income, as explained above.

I can read the explanation, but I keep getting it wrong in the practice homework. I think if someone can just explain it a little differently I'd get it. can anyone do so?

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

[onthewaytocpaMom]

Hey @emichelle2321 I do the same thing (for writing notes) ….which is partly the reason why I take so long to get through the material, but I find that it helps me not only remember it but as I'm writing it, but sometimes to understand it a little better.
BTW…how are you doing with your studies, I think we were moving along the same schedule….I'm just getting to F4 when I should be getting ready to start F5 on Monday…

[emichelle2321]

@onthewaytocpaMom – wow that makes me feel a little better. I have been sick for a week and a half so I'm a little behind. I am working on F4 homework now, but still have a ways to go before I'm through this one. Hoping to get to F5 on Tuesday so I don't get too behind. I keep meaning to work on progress tests but I feel like I never have time because if I do that it cuts into my schedule of moving forward with new material. Feeling pretty anxious about this damn thing….but trying to stay positive. I need more hours in the day! I'm so jealous of people that aren't working full time. I am so dead tired by the end of some work days it can be so tough. Ok, venting over 🙂 How are you doing??

[onthewaytocpaMom]

@emichelle2321- I'm working through F4 HW right now and hoping to get to sims tomm night but I don't think that's gonna happen. I've been trailing the schedule by about 3 days. I got stuck on F2 and F3 (and still didn't fully finish sims)….I work FT also, so coming home and studying for 3-4 hours every night is challenging most days. I'm trying to stay positive and hope that I retain enough but I'm not going to lie, I'm really concerned about getting through all the material…and then remembering it all by the time I start reviewing. I feel like I'm not giving myself enough review time (2 weeks) but I don't want to push my test…..

[Author]

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