[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Post by Another71.

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

[rachel525]

@Gabe On page R2-51, the question adds back state income taxes but just basing it on rules, I can't find in the textbook where it says to add back state income tax.. in terms of taxes, it just says to add back taxes under the tax benefit rule.. :S

[rachel525]

@Mika You can skip those..

[Anonymous]

In Year 1, Starke Corp., an accrual-basis calendar year corporation, reported book income of $380,000. Included in that amount was $50,000 municipal bond interest income, $170,000 for federal income tax expense, and $2,000 interest expense on the debt incurred to carry the municipal bonds. What amount should Starke's taxable income be as reconciled on Starke's Schedule M-1 of Form 1120, U.S. Corporation Income Tax Return?

Im pretty confused about the allowed and not allowed for taxable income? Answer is $502,000 bc you add the book income and federal income tax expense and interest expense while subtracting the muni bond interest income. Can any explain

[blueberrycpa]

which chapter is incentive stock options?… i got a sim from a review course and not able to trace studying anything like that.. anyone?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[Anonymous]

@cpasucks23 First you have to know which are taxable or non-taxable items. All of those are non-taxable income/expenses so you have to deduct/add them from/to the book income to arrive at taxable income.

[Anonymous]

If this is a question in the actual exam, AICPA has a good sense of humor… Really? Who would use flashlight in direct sunlight?!? Genius…

M.A. Genius invented, manufactures, and distributes a flashlight needing no batteries if used in direct sunlight. Genius did not apply for a patent. Novelco bought one at a retail store, analyzed and copied it, and now sells an identical product under its own name. Which of the following is true?

A. Genius can enjoin Novelco’s activities because it clearly meets the novelty, utility, and nonobviousness criteria.

B. Novelco has not violated any legal duty owed to Genius.

C. Genius can enjoin Novelco’s activities on the basis of a trade secret violation.

D. If Novelco continues to make and sell the solar flashlights, it will have to pay Genius a royalty.

[s2sylvir]

@cpa sucks 23

Federal taxes paid – it is deducted on books. But not deductible for tax purposes. Since it was deducted on books, you have to take it put for tax purposes (increase income).

Interest from municipal bonds are not taxabltaxable for tax purposes. Also interest expense is only deductible to the extent of interest income for tax purposes.

since the interest is non-taxable, we remove it from book income (decrease).

The $2,000 interest expense is deducted to arrive at book income, but since it's not deductible for tax, the adjustment is an increase to book income.

Hope it helps. I typed this on my phone without double checking spelling so. Yeah. Ignore mistakes..

BEC - PASS (79)
AUD - PASS (63, 71, 74, 74, 83)
REG - PASS (88)
FAR - PASS (58, 89)

Becker for all + FAR 10 Point Combo

[s2sylvir]

@kicks

Idk what u are using, but it's R1 in becker. Last like 6 pages lol xD

BEC - PASS (79)
AUD - PASS (63, 71, 74, 74, 83)
REG - PASS (88)
FAR - PASS (58, 89)

Becker for all + FAR 10 Point Combo

[Mika]

During an audit of Trent Realty Corp.'s financial statements, Clark, CPA, reviewed the following instrument:

FRONT OF INSTRUMENT BACK OF INSTRUMENT

To: Pure Bank M. West

Upton, VT

Pay to C. Larr

April 5, 20X1 T. Keetin

Pay to the order of M. West $1,500.00

One Thousand Five Hundred and 00/100 Dollars C. Larr

on May 1, 20X1. Without recourse

(SIGNED) W. Fields

This instrument is a:

A.

note.

B.

check.

C.

draft.

D.

order paper.

This instrument is a draft, that is, a three-party instrument in which one party (the drawer, Fields in this case) orders a second party (the drawee, Pure Bank in this case) to pay to the order of a third party (the payee, West in this case) a sum certain in money. This instrument is not a check, since it is not payable upon demand. (Remember that a check is a type of draft.)

---

How to distinguish between a draft and a check? What does payable upon demand mean? Any example? Thanks

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[Gabe]

@mika Check is payable on demand. Payable on demand means payable right now. In the example above the draft was dated April 5th and payable May 1st so it was NOT payable on demand. Hope this helps 🙂

CPA, CFE
CISA- Experience will be completed by August 2016

[Mika]

@Gabe, thank you very much but I thought check was also a three parties instrument, i.e. the drawee (bank), drawer (the one who signed) and the Payee

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[Gabe]

@mika you're correct! according to my notes:

All checks are drafts but NOT all drafts are checks

Trick:

Three parties? Payable on demand- check

Three parties? Payable in future- draft

CPA, CFE
CISA- Experience will be completed by August 2016

[Gabe]

sec 179 exp: $25k, reduced $ for $ over $200k

The example in my notes shows:

Equipment: $215

$215-200= $15

$25-$15- 10k max deduction

So…if someone bought a machine for $250

$250-200= $50

Max deduction: 25k?

CPA, CFE
CISA- Experience will be completed by August 2016

[Anonymous]

@gabe no the sec 179 deduction would be completely phased out for equipment with a cost of 250K. No deduction allowed

[Anonymous]

@gabe no the sec 179 deduction would be completely phased out for equipment with a cost of 250K. No deduction allowed

[Author]

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