[jeff]

Post by Another71.

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AUD - 79
BEC - 80
FAR - 76
REG - 92

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

[jasbeerch]

@ rossk

Financial statements are shown in comparative basis. when there is change in reporting entity or change in accounting principle, retrospective application is required. Comparison should be between apples and apples. Can't compare apples and grapes. Same way, if prior year financial statements are using different accounting principle… comparison is not apt.

Restated- when there is a accounting error, you just go back and correct the error.

I hope my explanation helps you to understand the difference

[Determined CPA]

rossk – this confuses me as well, as both require prior period financial statements to be retrospectively changed and to re-issue prior period financial statements.

However, there are situations where a change in principle that are separate from a change in estimate are treated as a change is estimate. I guess with the error of correction category, swtiching from non-gaap to gaap is always retrospective. Very confusing, as is everything with FAR!

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.

[Anonymous]

Anybody taking FAR this week or next? I have my test scheduled for 1/3 (retake) and yet again I still do not feel prepared. Trying to go through as many MCQs and Sims up until Fri night. This is my last section, I really want this to be my last test EVER haha. Then again, I have never felt “prepared” for any of the other sections so it's pretty normal but I guess I am getting a bit nervous since I really don't want to fail again.

Any suggestions/advice would be great, thanks!

[Anonymous]

Please help me understand the logic for the following problem:

On January 1, Year 3, Starlight Construction Co. began a construction project qualifying for capitalization of interest. The total amount spent on this project during Year 3 was $250,000, spent uniformly during the year. To help pay for construction, $200,000 was borrowed at 10% on January 1, Year 3, and funds not needed for construction were temporarily invested in short-term securities, yielding $3,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was a $150,000, 10-year, 7% note payable dated January 1, Year 1. How much interest should be capitalized by Starlight during Year 3?

a. $25,000

b. $9,500

c. $22,000

d. $12,500

Explanation

Choice “d” is correct. The calculations are:

Total expenditures of $250,000 ÷ 2 =$125,000

Average accumulated expenditures x .10

Interest rate on specific borrowing $12,500

Avoidable interest

Compare avoidable interest to actual total interest cost incurred and capitalize the lower amount.

Actual interest:

$200,000 x .10 = $20,000

150,000 x .07 = 10,500

Total actual interest cost = $30,500 > $12,500 avoidable interest

Capitalize the lower amount. Interest earned on money invested is interest revenue. It does not affect the amount of interest expensed or capitalized.

Choice “a” is incorrect. Total expenditures of $250,000 must be divided by two to arrive at “average accumulated expenditures,” since the expenditures were incurred evenly throughout the year. Failure to divide by two would result in an erroneous calculation ($25,000) for avoidable interest.

Choices “b” and “c” are incorrect. These answers assume avoidable interest is either $12,500 or $25,000 and then offsets this amount by the net the interest earned. Interest earned does not reduce interest expense or the amount capitalized.

My confusion is : Why do we have to divide the total expenditures by 2 to find the “average accumulated expenditures” ?

I might just be overthinking this but I got it wrong twice so I know it is not making sense to me 🙂

[sgustin]

@cmoncpa I am taking FAR on Friday 1/2. I do not feel prepared at all. I still need to learn govt, nfp, pensions, and stockholder's equity I am using becker but it's so hard to learn all this information.

A - (64) (73) (75)
R - (82)
F - (67)
B -

[Anonymous]

@sgustin

This is going to be a retake for me and I still don't feel great about it. However, I have felt this way for all 4 sections and have managed to pass 3 of them so to me this is quite the norm. My problem is I keep making the same mistakes mainly on the calculation problems or I forget a step which messes everything up. I am worried that I won't be able to get this down in 4 days. I keep telling myself, I only need a 75 not 100. Goodluck on Friday!

[sgustin]

@cmoncpa Good luck to you as well! I feel that way too. I need to learn to read the whole question as monthly calculations trick me. I just need a 75….

A - (64) (73) (75)
R - (82)
F - (67)
B -

[Anonymous]

@rossk, sorry for the later response. I think for ~$45 (depending on promos) the NINJA MCQ test bank is great. I really like the adaptive learning and review aspects. I do see some overlap in questions between Becker and NINJA but there are definitely a lot of NINJA questions I've never seen and they have already been updated for 2015 material. I would recommend NINJA to anyone that is struggling using other review materials. I passed BEC without them but considering the girth of information covered in FAR I think they were a good addition to my study material. We will see how it works out on 1/17.

[ewalk728]

@cpabefore40 it's because it was spent uniformly throughout the entire year so it isn't an even 25 but rather half of that

[ewalk728]

@cpabefore40 it's because it was spent uniformly throughout the entire year so it isn't an even 25 but rather half of that

[rossk]

@CTM thank you for your response. I think I will go for it , I wanted to know does Becker software update itself automatically for 2015 changes. Are there any major changes? Can someone tell me how can I view those changes in Becker?

[Anonymous]

@ewalk728 Thank you! It does make sense now. I believe I was overthinking it and the frustration of getting a few MCQs wrong in a row, did not help either 😉

I am progressing super slow on my studies, barely going through 1 Chapter with Becker. Also feels like I completely forget what I already read and did well on 🙁

Does anyone have have any advice on how often to go back and review the past Chapters? (every two chapters, every three chapters?) Can you advice on a method that has worked for you?

Good Luck everyone! LET'S DO THIS!

[rossk]

On December 31, Year 1, Classic Company revalued a patent under IFRS. On that date, the patent had a carrying value of $250,000, a fair value of $200,000, and a remaining useful life of 5 years. On December 31, Year 2, the patent's fair value was $175,000. In its December 31, Year 2 financial statements, Classic will report a current period revaluation:

15000 GAIN is the correct answer. I am confused why is amortization expense recorded when we are using the revaluation model? Don't we just adjust it to the fair value and record gain or loss.

[Anonymous]

Amortization over the useful life of the intangible is still done for the revaluation model. Revaluation carrying value = Fair Value on revaluation date – subsequent amortization – subsequent impairment. So, at year 1 the value would be 200,000. Year 2 carrying amount would be 200,000-(200,000/5)=160,000. You would revalue the asset up to the fair value of 175,000 resulting in a revaluation gain of 15,000 which in this case would be reported in OCI unless there was a previously reported revaluation loss in which case the gain up to the point of previously reported losses would be reported on the income statement. Hopefully that makes some sense. I think I may have confused myself in trying to explain what I think is the logic behind the correct answer. Damn FAR!

[nosleep135]

When do you use the spot rate/forward exchange rate?

[Author]

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