[jeff]

REG Resources:

Free REG Notes & Audio – https://www.another71.com/cpa-exam-study-plan

REG 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

REG Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[Kenada]

Yes A

FAR 05/27/14; 786/110 - Done !

[Kenada]

A CPA audited the financial statements of Dodd Company. The CPA was negligent in the audit. Sanco, a supplier of Dodd, is upset because Sanco had extended Shelly a high credit limit based on the financial statements which were incorrect. Which of the following statements is the most correct?

States that use the Ultramares decision will allow both Dodd and Sanco to recover.

In most states, both Dodd and Sanco can recover from the CPA for damages due to the negligence.

In most states, Sanco cannot recover as a mere foreseeable third party.

Generally, Sanco can recover but Dodd cannot.

My question is – who is Shelly?

FAR 05/27/14; 786/110 - Done !

[Kenada]

A CPA audited the financial statements of Dodd Company. The CPA was negligent in the audit. Sanco, a supplier of Dodd, is upset because Sanco had extended Shelly a high credit limit based on the financial statements which were incorrect. Which of the following statements is the most correct?

States that use the Ultramares decision will allow both Dodd and Sanco to recover.

In most states, both Dodd and Sanco can recover from the CPA for damages due to the negligence.

In most states, Sanco cannot recover as a mere foreseeable third party.

Generally, Sanco can recover but Dodd cannot.

My question is – who is Shelly?

FAR 05/27/14; 786/110 - Done !

[Future_FLCPA]

Beckler & Associates, CPAs, audited and gave an unqualified opinion on the financial statements of Queen Co. The financial statements contained misstatements that resulted in a material overstatement of Queen's net worth. Queen provided the audited financial statements to Mac Bank in connection with a loan made by Mac to Queen.

Beckler knew that the financial statements would be provided to Mac. Queen defaulted on the loan. Mac sued Beckler to recover for its losses associated with Queen's default.

Which of the following must Mac prove in order to recover?

I. Beckler was negligent in conducting the audit.

II. Mac relied on the financial statements.

I only.

II only.

Both I and II.

Neither I nor II.

B - 80 (Aug 2012)
A - 89 (Jan 2013)
F - 77 (May 2013)
R - 83 (Nov 2013)

[Future_FLCPA]

Beckler & Associates, CPAs, audited and gave an unqualified opinion on the financial statements of Queen Co. The financial statements contained misstatements that resulted in a material overstatement of Queen's net worth. Queen provided the audited financial statements to Mac Bank in connection with a loan made by Mac to Queen.

Beckler knew that the financial statements would be provided to Mac. Queen defaulted on the loan. Mac sued Beckler to recover for its losses associated with Queen's default.

Which of the following must Mac prove in order to recover?

I. Beckler was negligent in conducting the audit.

II. Mac relied on the financial statements.

I only.

II only.

Both I and II.

Neither I nor II.

B - 80 (Aug 2012)
A - 89 (Jan 2013)
F - 77 (May 2013)
R - 83 (Nov 2013)

[smsingla]

LOL…..Shelly must be some officer of Dodd company.

Is answer C?

REG 81
BEC 74,65,78
FAR 79
AUD 85 DONE!!!

[smsingla]

LOL…..Shelly must be some officer of Dodd company.

Is answer C?

REG 81
BEC 74,65,78
FAR 79
AUD 85 DONE!!!

[smsingla]

@Future….I think answer should be C. Third party has to prove negligence and reliance both

REG 81
BEC 74,65,78
FAR 79
AUD 85 DONE!!!

[smsingla]

@Future….I think answer should be C. Third party has to prove negligence and reliance both

REG 81
BEC 74,65,78
FAR 79
AUD 85 DONE!!!

[Kenada]

Yes it is C… i kept looking at this and wondering who is shelly eheh..

Now i remember once Qlad ask this question on what is AMT. I think this question is good way to define what AMT is

The alternate minimum tax (AMT) is computed as the

a The tentative AMT, plus the regular tax.

b Excess of the tentative AMT over the regular tax.

c Lesser of the tentative AMT or the regular tax.

d Excess of the regular tax over the tentative AMT.

B is correct. The requirement is to determine the correct statement regarding the computation of the alternate minimum tax (AMT). A taxpayer is subject to the AMT only if the taxpayer’s tentative AMT exceeds the taxpayer’s regular tax. Thus, the alternative minimum tax is computed as the excess of the tentative AMT over the regular tax.

FAR 05/27/14; 786/110 - Done !

[Kenada]

Yes it is C… i kept looking at this and wondering who is shelly eheh..

Now i remember once Qlad ask this question on what is AMT. I think this question is good way to define what AMT is

The alternate minimum tax (AMT) is computed as the

a The tentative AMT, plus the regular tax.

b Excess of the tentative AMT over the regular tax.

c Lesser of the tentative AMT or the regular tax.

d Excess of the regular tax over the tentative AMT.

B is correct. The requirement is to determine the correct statement regarding the computation of the alternate minimum tax (AMT). A taxpayer is subject to the AMT only if the taxpayer’s tentative AMT exceeds the taxpayer’s regular tax. Thus, the alternative minimum tax is computed as the excess of the tentative AMT over the regular tax.

FAR 05/27/14; 786/110 - Done !

[Kenada]

@ Future_FLCPA I would pick I only as Becker knew Mac would be given the FS so no need for Mac to prove they relied on it.

Mac was a foreseen party

FAR 05/27/14; 786/110 - Done !

[Kenada]

@ Future_FLCPA I would pick I only as Becker knew Mac would be given the FS so no need for Mac to prove they relied on it.

Mac was a foreseen party

FAR 05/27/14; 786/110 - Done !

[Future_FLCPA]

Answer is C.

Since Beckler knew the financial statements would be used by Mac, the only issues that remain are negligence and reliance. Both must be proven. If Beckler used due care and was not negligent, then it is not liable to Mac. Also, Mac must prove that it relied on the misstatements. If Mac knew the statements were incorrect, for example, it cannot recover.

B - 80 (Aug 2012)
A - 89 (Jan 2013)
F - 77 (May 2013)
R - 83 (Nov 2013)

[Future_FLCPA]

Answer is C.

Since Beckler knew the financial statements would be used by Mac, the only issues that remain are negligence and reliance. Both must be proven. If Beckler used due care and was not negligent, then it is not liable to Mac. Also, Mac must prove that it relied on the misstatements. If Mac knew the statements were incorrect, for example, it cannot recover.

B - 80 (Aug 2012)
A - 89 (Jan 2013)
F - 77 (May 2013)
R - 83 (Nov 2013)

[Author]

Replies