[jeff]

SO I know every test is different but does anyone have any insight on what has been heavily tested recently? I take the exam Monday and I need to narrow my focus….Thanks!

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

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

[prasadbapat88]

Hi All ,

I have scheduled FAR on 1/10/2015 and Reg on 02/18/2015. Currently study is in process ..

Using Gleim + Willey CPA Excel.

I want to practice MCQ / SIm sets which are wild crazy – difficult / hard..

Any one has link to that…

[Juliemiddle]

@mshewlett – If you work the problem out, you'll notice you never finish depreciating the asset, if you don't switch to straight-line. You mentioned you thought you should stop when you reach salvage value – but for this particular problem, you wouldn't dip under salvage until Yr. 11. And this asset only has a useful life of 10 yrs., so that wouldn't work. So, after Yr. 4, start SL depreciation.

I had this same question – I think if you work it out, it makes sense.

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[rbozung]

@mshewlett09 I had the same question too and asked Jeff and a professor at CPA excel. Just know, no matter what, The asset less accumulated depreciation should NEVER fall below salvage. The wording is confusing.

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[rbozung]

Question, is budgetary fund balance different from fund balance? I have it that Budgetary fund balance, estimated revenues and appropriations are set up and closed for the same amounts at the Beg and end of the year. If Budgetary FB and FB are indeed different, then I understand the below question and why the answer is B. If not, I am lost.

Question #5 (AICPA.921154FAR-TH-AR)

Which of the following accounts should Moon City close at the end of its fiscal year?

A. Vouchers payable

B. Expenditures

The expenditures account is a temporary account that is closed at the end of the fiscal year. Expenditures occur within a given fiscal period and are not carried over into a new fiscal period.

C. Fund balance

This answer is incorrect because the fund balance account shows the difference between the assets and liabilities. Its balance is carried forward to the next fiscal period.

The expenditures account is a temporary account that is closed at the end of the fiscal year. Expenditures occur within a given fiscal period and are not carried over into a new fiscal period.

D. Fund balance assigned.

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[rbozung]

Can someone please show me how the JE would look for the following? I am having a hard time understanding where the $80k of issuing costs goes and if it is “charged against the FV of the securities” like the explanation states, how can in not affect the capitalized cost of the acquired assets? Thanks!

Question #10 (AICPA.910513FAR-P2-FA)

On August 31, 2005, Wood Corp. issued 100,000 shares of its $20 par value common stock for the net assets of Pine, Inc. in a business combination accounted for by the acquisition method. The market value of Wood's common stock on August 31 was $36 per share. Wood paid a fee of $160,000 to the consultant who arranged this acquisition. Costs of registering and issuing the equity securities amounted to $80,000. No goodwill was involved in the purchase.

What should Wood capitalize as the cost of acquiring Pine's net assets?

A. $3,600,000

The cost of acquiring a company includes all cash and other assets distributed, liabilities incurred, and equity shares issued, all at fair value. Direct costs of carrying out a combination (such as accounting, legal, consulting, and finders' fees) are expensed in the period incurred; they are not included as part of the acquired entity. The cost of registering and issuing securities used to effect a business combination are charged against the fair value of the securities issued and, for equity securities, serve to reduce the amount of additional paid-in capital recognized. Thus, this correct answer ($3,600,000) was computed as 100,000 shares issued x $36 per share (fair market value) = $3,600,000. The $160,000 fees paid to a consultant would have been expensed, and the $80,000 cost of registering and issuing the common stock would have reduced the amount recognized from the sale of the stock.

B. $3,680,000

The cost of acquiring a company includes all cash and other assets distributed, liabilities incurred, and equity shares issued, all at fair value. Direct costs of carrying out a combination (such as accounting, legal, consulting, and finders' fees) are expensed in the period incurred; they are not included as part of the acquired entity. The cost of registering and issuing securities used to effect a business combination are charged against the fair value of the securities issued and, for equity securities, serve to reduce the amount of additional paid-in capital recognized. This incorrect answer ($3,680,000) incorrectly includes the $80,000 registration and issuance costs as part of the cost of the acquired entity. Thus, this incorrect amount was computed as 100,000 shares issued x $36 per share (fair market value) = $3,600,000, plus $80,000 registration and issuance cost, for an incorrect amount of $3,680,000. Only the fair value of the common stock issued ($3,600,000) should be included as the cost of the acquired entity. The $160,000 fees paid to a consultant would have been expensed, and the $80,000 cost of registering and issuing the common stock would have reduced the amount recognized from the sale of the stock.

C. $3,760,000

D. $3,840,000

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[go2134]

@rbo, for the Acquisition Method (and Equity Method) for GAAP, ALL Expenses (Direct or Indirect) are treated like a separate transaction. To make this easier to remember, I make 2 different JEs.

Example: Acquired 100% of Subco for $100,000 worth of CS (Par = $85,000) + $20,000 Legal Fees.

1) (Db) Investment in Subco for $100,000; (Cr) CS for $85,000; (Cr) APIC-CS for $15,000

2) (Db) Legal Expense for $20,000; (Cr) Cash for $20,000

.

Stock Registration/Issue costs are REDUCTIONS OF APIC.

Using the same information from above, if Stock Issuing Costs are $10,000, Reduce APIC and Credit Cash paid.

Adjustment = (Db) APIC-CS $10,000 (Cr) Cash $10,000.

This will result in an overall Debit to APIC for $5,000, and an overall Credit to Cash for $30,000.

Final JE:

(Db) Investment in Subco for $100,000; (Db) Legal Expense for $20,000

(Cr) CS for $85,000; (Cr) APIC-CS for $5,000 [15-10]; (Cr) Cash for $30,000 [20+10]

[go2134]

“Fund Balance” is a Permanent Balance, you can't close it out. You would close out “Budgetary Control”, so yes, you understand where you went wrong.

Note that “Vouchers Payable” is already an “Expenditure”, so you wouldn't close that out in order to avoid double accounting your expenditures.

[rbozung]

Go1234. Thanks on both counts and great recommendation to treat the JEs separately on the Acquisition method!

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[Gabe]

Does anyone have any helpful tips to remember what transactions go in investing vs financing in the cash flow statement? Always had problems differentiating between the two.

Thanks!

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

[rbozung]

@Gabe, this isn't full proof by any means, but it gives me a focal point when I am given a new item and I am not sure where to classify: think of “other companies” when you think of investing activities (lending to others, investments in HTM and AFS, collection of notes and non-trade receivables) and “my own company” when I think of financing (T stock, payment of dividends, proceeds from bond issuance)

BEC - Passed
AUD - Passed
FAR - 10/28/14 (waiting results)
REG - Passed

[iman_a]

Could someone please explain this to me?

“Compared to the accrual basis of accounting, the cash basis of accounting understates income by the net decrease during the accounting period of:

Accounts receivable (yes/no)

Accrued expenses payable (yes/no)”

Answer: Choice “b” is correct. No – Accounts receivable; Yes – Accrued expenses payable.

The Becker answer was extremely confusing.

AUD - 96
BEC - 85
REG - 81
FAR - 11/28

[Juliemiddle]

@iman…

-If A/R decreases, it means the company RECEIVED cash from customers.

->Cash received = Increase in Cash-Basis Revenue = Increased Net Income

->If A/P decreases, it means the company PAID cash to vendors.

->Cash paid = Increase in Cash-Basis Expenses = Decreased Net Income

AUD: 84 - Oct. 2013
BEC: 83 - Feb. 2014
REG: 91 - May, 2014
FAR: 68, 96 - Oct. 2014...DONE

CPAExcel, Ninja Audio (all sections)

[iman_a]

@julie – thank you, that makes much more sense now! The wording is what confused me.

AUD - 96
BEC - 85
REG - 81
FAR - 11/28

[RZHANG13]

hi, guys. Have a question on F6

Garf Corp current year income statement sowed pretax accounting income of 200,000. To compute the federal income tax liability, the following data are provided:

income from exempt municipal bonds 10,000

depreciation deducted for tax purposes in excess of depreciation

deduced for financial statement purposes 20,000

estimated federal income tax payments made 40,000

enacted corporate income tax rate 30%

What amount of current income tax liability should be included in Graf's December 31 balance sheet?

a) 11,000

b) 20,000

c) 39,000

d) 51,000

The solution is (200-10-20)* 30%-40=11. I can understand why it minus 10 and 20. but i can't understand the rest part of the solution. What does “estimated federal income tax payments made 40,000” mean? And how should i deal with it ? Anyone could help? THANKS!

[go2134]

Taking my exam tomorrow. Anyone have any last minute mnemonics/memory tools they use?

One of the ones I use is “I am CURRENTly MODIFYING my GPS to BALANCE our ‘TURE [tour] DC” for Governmental Fund Accounting.

Fund Accounting uses ‘Current Asset' approach, ‘Modified Accrual', and ‘Fund Balance'.

GPS in DC = General, Permanent, Special Revenue, Debt Service, Capital Projects.

It also works out that the level of Restriction (R/C/A) matches with the pattern:

General: None

Permanent: (R) Restricted

Special Revenue: (R/C) Restricted or Committed

Debt Services: (R/C/A) Restricted, Committed, or Assigned

Capital Projects: (R/C/A)

Also, “make sure you don't get DP'd by Cucumbers” = Debt Service & Permanent Funds do NOT use Encumbrances.

[Author]

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