[jeff]

Welcome to the REG CPA Exam study group for July & August 2018 exams. 🙂

Please introduce yourself & when you’re taking your exam (approximate timeframe).

REG Study Group Links and Resources:

1. NINJA Monthly – Full REG Course for $67/mo
2. How to Study for REG with NINJA Only
3. How to Pass REG in 20 Days
4. How to Retake REG After Failing
5. Video: Study Advice for REG
6. CPA Reviewed Podcast
7. CPA Exam Score Release Dates
8. NINJA MCQ Trending vs Actual REG Scores
9. I Passed the CPA Exam!
10. I Passed REG!
11. NINJA REG SIMS List by Topic
12. Free Downloads: NINJA REG

[El_Stillo]

@chandler Another SIM question from the AICPA PRACTICE exam if you are up to answering (getting worried that wiley is letting me down here). Need help with Accumulated adjustment account and Jennifer Sullivan Shareholders account, my answers are close but not correct. Seems like I'm missing a step or two. Similar to the previous question you answered.

The accumulated adjustment account balance answer is 484,000, I came up with 496,000 (100,000 beginning balance + NI of 426,000) less partner distributions of 30,000). Am I supposed to take an additional 20K for the MACRS depreciation then add back the deprecation expense from the income statement of 8K?

For Jennifer Basis, the correct answer is 252,000 I came up with 258K. 60K Beginning + .213K (426*.5) -15K (Distribution share) . What else else should I deduct here?

Details:
This is the Falcon Inc question

Falcon, Inc.

Income Statement

For the year ended December 31, year 4
Sales, less returns and allowances of $2,000: $ 1,200,000

Cost of goods sold: $500,000
Gross profit: $700,000

Salaries and Wage: $170,000
Repairs and maintenance $10,000
Depreciation expense $8,000
Charitable contributions $5,000
Payroll taxes $15,000
Penalties and fines $2,000
Business insurance $9,000
Rent expense $36,000

Total expenses $255,000

Income before other income (expense) $445,000

Other income (expense)
Bank interest income $1,000
Capital loss on sale of land (20,000)
Total other income (expense) (19,000)

Net income $ 426,000

The MACRS depreciation on our assets was $20,000 for year 4. We
did not purchase any new assets in year 4. The capital loss is for the sale
of land used in our trade or business to an unrelated third party.

Additional Info
Falcon, Inc. accumulated adjustment account balance at January 1, year 4 $100,000
Total distributions to shareholders during year 4 (distributed equally) $30,000
Jennifer Sullivan's shareholder tax basis at January 1, year 4 $60,000
Marvin Darby's shareholder tax basis at January 1, year 4 $75,000

Q1 Ordinary Business Income (easy) 445000 – Charitable contribution (5000) = 440,000
Q2 Separately Sated Items (Easy) Other Income/expense: -20,000 -5000+1000 = <24000> (5000 coming from charity)
Q3 Non deductible = Penalties and fines <2000>

[Anonymous]

I took the first mock exam last week (exam in about ten days). I went through the answers – should I take the first mock exam again or move on to the second?

[Anonymous]

Did you review the answer already? You should.
There's no point of taking ME1 again.
There are ME2 and ME3, go nail them both!

[sheskierk]

Hey CPAgoal,

I myself, am also taking REG in the near future (SEPT 10th). Personally, I would make sure you fully understand the mc and sims in the first exam, before moving on. Unless you scored significantly high on the first mock exam. I am also in that dilemma, with the best way to approach final review for these next few weeks. Personally, I have just been focusing on Becker MC supplementing with Ninja MC. I do have to dedicate more time with SIMS, but I like to focus on MC more, due to the fact that SIMS take a while to do, and the chances of seeing the same situation in the practice SIM on the actual exam is very low. Considering on the actual exam they always throw in a curve ball situation that you have never seen before. This approach has worked for me to pass AUD and FAR on first try, but everyone works and learns differently. The way I approach this exam, which may not be the smartest, is to score high on MC and pick up partial points within each SIM, hopefully enough to get me that 75. I am feeling really confident with the tax section, and finding the BLAW section to be more of a challenge. Especially with the secured transactions and bankruptcy sections. Just curious to see if a lot of you guys are feeling the same way, with tax being easier than BLAW? The feedback would be greatly appreciated. Good luck studying everyone, and just know that this struggle and stress will not last forever, and it will all be worth it in the end. Short term sacrifice for long term benefit!!!!!!!

[glopooka]

Just took the AICPA sample test……WOW. I have my exam on monday and this did NOT make me feel confident at all. The sims killed me. They were more challenging than the ones in Becker. Anyone else have this trouble? People who took REG already, were the sims comparable to these? Now i'm freaking out. I don't want to fail this last one. I just want to be done.

[glopooka]

@El_Stillo
I was stumped on this question too.
The accumulated adjustment account is the Beginning balance + ordinary income answer 1 – separate items answer 2 – nondeductible penalty answer 3 – $30K distributions.

[glopooka]

Also, Jennifer's basis I think is her $60K + 50% of $440,000 ($220,000) – 50% of -$24,000 (-$12,000) – 50% of -$2000 (-$1000) – her share of the distribution $15,000.
that looks confusing – this might look better:
beg bal 60,000
Ordinary income 220,000
Separate items (12,000)
Non deductible (1,000)
Distribution (15,000)

[wowwow93]

2. Parc contracted with Furn Brothers Corp. to buy hotel furniture on behalf of Global Motor House, a motel chain. Global instructed Parc to use Parc's own name and not to disclose to Furn that Parc was acting on Global's behalf. Who is liable to Furn on this contract.

Parc Global
a. Yes Yes
b. Yes No

The answer is “a”. but I think it should be “b” because according to Becker, an agent of undisclosed principal has liability but not the undisclosed principal. Here Global is the undisclosed principal without liability to the third part, Furn and Parc, as an agent is liable.

I think “a” could be correct if the facts state that Furn was partially disclosed, but that is not the case.

Can anyone help me understand this?

[Starved_Wolf]

@Chandler
You have seriously impressive scores. How do I get a score like yours on Reg? I read on one of your previous posts that you work in tax, would you say that having that advantage helped you with your reg prep more or would you say that becker prepared you well for the exam, or both? Just curious, Was there anything you saw on the exam that Becker didn't cover at all but you knew from working in tax?

[El_Stillo]

@glopooka thanks for the clarifications. Must reduce for those other items. Seems logical. So stressed September 8th is test day and these sims are kicking my @$$.

[Operation_CPA]

@El_Stillo
My motto – You rather them destroy you now then on the real thing. Keep your head up!

[Anonymous]

@El_Stillo, I think Glopooka already answered your question, but for me the easiest way to solve that sim would be:
Accumulated Adjustments Account beginning : $100,000
Plus Net Income: $426,000
Less Shareholder Distributions: $(30,000)
Less Tax Depreciation in EXCESS of book: $(12,000)
Ending AAA: $484,000

For Basis- same idea
Beginning basis: $60,000
Plus 50% of Net Income: $213,000
Less 50% s/h distributions: $(15,000)
Less 50% of Tax Depr excess: $(6,000)
Ending Basis: $252,000

[Anonymous]

@Wowwwow93, A is correct. A third party can elect to hold either the agent or the principal liable (but not both) in the case of undisclosed or partially disclosed principal. (See page R7-11).

Perhaps what is confusing you is that Becker states that in the case of a partially disclosed or undisclosed the agent is liable. This is true, but the third party can also hold the principal liable (Again- either/or, but not both). In comparison, in the case of a fully disclosed principal , the agent is never liable assuming (s)he acts within the scope of his/her authority, and only the disclosed principal is liable to a third party.

Let me know if this makes sense.
Chandler

[Anonymous]

@Starved_Wolf, thank you!
For me, I attribute my REG score to a few things (in order of importance I think):
1. Educational background – BBA in accounting and MSA in tax (58 hours of accounting, of which 24 were in tax + 6 hours of BLAW)
2. Work experience- Working at smaller firms I definitely had working knowledge of entity/individual tax at the level CPA exam tests
3. I studied more for REG vs. the other exams (especially AUD)
4. Luck- seriously, I expected to do well, but I was pretty surprised with a 98

As for your question about Becker, I think it is very good for REG. It is really all I used when I studied for REG. As far as questions on the exam not in Becker, I don't remember for certain. Honestly, if it was a question that I knew the answer to, I don't know that I could tell you I specifically knew it from something else vs. Becker. I can say with fair certainty though that if you are familiar with Becker you will do well on the actual exam.

Let me know if this helps/answered your question.

[Anonymous]

Chandler, your scores are awesome. You're only 3 points short for AUD and you'd have been qualified for EWS. Scoring a 98 in REG is rare, but I've seen many have scored 99's in AUD.

But still, you're awesome!

[Author]

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