[Anonymous]

This was barely covered in the review course and it requires multiple steps and you have to know obscure things. Are exam questions going to be as hard as this?

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Main, a pharmaceutical company, leased office space from Ash. Main took possession and began to use the building on July 1, 2010. Rent was due the first day of each month. Monthly lease payments escalated over the 5-year period of the lease as follows:

Period // Lease Payment

July 1, 2010 – September 30, 2010—

rent abatement during move-in, construction $ 0

October 1, 2010 – June 30, 2011 17,500

July 1, 2011 – June 30, 2012 19,000

July 1, 2012 – June 30, 2013 20,500

July 1, 2013 – June 30, 2014 23,000

July 1, 2014 – June 30, 2015 24,500

What amount would Main show as deferred rent expense at December 31, 2013?

A. $50,658

B. $52,580

C. $68,575

D. $71,550

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Answer D. Add up all the payments that will be made to the lessor over the lease term:

(9 × $17,500) + (12 × $19,000) + (12 × $20,500) + (12 × $23,000) + (12 × $24,500) = $1,201,500 Total amount of rent paid

This total rent is divided equally over the lease term, giving an equal monthly rent amount of $20,025 a month:

$1,201,500 ÷ 60 months = $20,025/month

The rent expense, though paid late, is $20,025 a month. (The question specifically concerns how far behind in paying the rent the lessee is at December 31, 2013.) The rent for the months after December 31, 2013 is $360,450:

18 months × $20,025 a month = $360,450

The payments made to catch up on this deferred rent payable are $432,000:

(6 × $23,000) + (12 × $24,500) = $432,000

The difference between these amounts is the amount behind that the lessee is in paying the rent due:

$432,000 – $360,450 = $71,550

[futurecpa1991]

most likely no

AUD - 96 (Jan 15)
REG - 90 (Feb 15)
FAR - 85 (Apr 15)
BEC - 82 (May 15)

[Zuly]

I remember this question and hated every minute of this one. If I were to do it again I wouldn't waste so much time on questions like these.

FAR - (11/01/14) 71 (02/07/15) 79
AUD - (04/30/15) 86
BEC - (07/21/15) 73 (10/01/15) 75
REG - (11/30/15) 55 (05/19/16) 74

[Determined CPA]

That was probably a pre-test. I wouldn't worry about it.

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Tscape16]

Sometimes you can find those becker questions on the released question PDFs where it has disclosed the difficulty. You most likely won't see something this difficult/time consuming on the exam (it got removed for a reason); however, you should always be prepared for anything. My testlets I had could be radically different from the ones you get.

AUD - 92
BEC - 86
FAR - 90
REG - 82

Licensed CPA since 2015.

FAR - 90 ✔
BEC - 86 ✔
REG - 82 ✔
AUD - 92 ✔
ETHICS - Passed

*Licensed CPA

[y_u_no_pass]

Well I didn't look at it, but I will say that when you get the harder questions you may find some that require many steps. I found this to be particularly true of BEC probably because of the nature of cost accounting. But they can't all be many steps or you wouldn't have time to finish.

Florida CPA!
Took final exam 2/25/15.
Sent in Application 3/12/15.
Issued License 3/20/15.
Used CPA Excel solely for all exams.

[Anonymous]

This question isn't really that terrible. Becker just gets super complicated in explaining how to arrive at the answer.

The real issue is that you need to know that GAAP requires you to amortize rent expense equally over the life of the lease. It's not about the lessee being “behind” on rent payments, and that's just a confusing and dumb way to explain the question. It's really just asking what is the difference between contractual rent and GAAP rent for the period after Dec. 31, 2013.

We know from the fact pattern that, contractually, you have 6 months of rent @ $23,000 and 12 months of rent @ $24,500. That's $432,000. For GAAP, you have 18 months @ $20,025. That's $360,450. What is the difference between the 2? $71,550.

[Tncincy]

We might need to go ahead and memorize that question….just in case….lol

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Anonymous]

Here's another one. 😉

Ichor Co. reported equipment with an original cost of $379,000 and $344,000, and accumulated depreciation of $153,000 and $128,000, respectively, in its comparative financial statements for the years ending December 31, 20X2 and 20X1. During 20X2, Ichor purchased equipment costing $50,000, and sold equipment with a carrying value of $9,000. What amount should Ichor report as depreciation expense for 20X2?

A. $19,000

B. $25,000

C. $31,000

D. $34,000

Answer C. In the context of this problem accumulated depreciation is affected by the asset disposal when the carrying value of the asset sold is written off and by depreciation expense for the current period. These two items account for the net increase of $25,000 ($153,000 – $128,000) in the credit balance of the accumulated depreciation account.

The debit change in accumulated depreciation caused by the asset disposal needs to be determined from the facts provided. The equipment account had a beginning balance of $344,000. The $50,000 purchase of new equipment would cause this balance to increase to $394,000. However, the ending balance was $379,000. The only other transaction affecting the equipment account was the disposal of a piece of equipment. Therefore, the original cost of the disposed equipment was $15,000 ($394,000 – $379,000). Since the disposed equipment had a cost of $15,000 and a carrying value of $9,000 (carrying value = cost – accumulated depreciation), the accumulated depreciation associated with the disposed equipment was $6,000 ($9,000 = $15,000 – accumulated depreciation).

The beginning credit balance in the accumulated depreciation control account was $128,000. It would have been decreased (debited) for the $6,000 of accumulated depreciation related to the disposed equipment. That would leave a credit balance of $122,000. However, the ending balance was a credit of $153,000. Depreciation expense for the period would also change (increase or credit) the balance of accumulated depreciation. Since the ending balance was $153,000, and the balance without the effect of depreciation expense was $122,000, the depreciation expense must have been $31,000 ($153,000 – $122,000).

[Anonymous]

Hahaha, I remember this question…. It's easy in theory and calculation but it takes A LOT of time to solve it….. I hope this question doesn't show up on exam day.. It's covered by Becker btw…

[Martin]

I found a similar question both times I took FAR.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Author]

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