Research SIMs

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  • #179915
    Anonymous
    Inactive

    Is it possible to have multiple correct answers on research SIMs? Going through Becker review SIMs on FAR I’ve noticed that there are questions that can definitely be answered with multiple references in the codification. The codification may have a summary paragraph that clearly answers the research question, but might also have another paragraph below that with an expanded explanation. In my opinion they would both be correct since they both clearly state the answer to the research question. Would the actual exam have questions like this or are these just bad Becker examples?

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  • #434295
    MCLKT
    Participant

    From previous discussions, I think the general understanding is that there is one correct answer, but there is partial credit given for something close.

    Usually, if you reread the question, you can find the exact answer. Even though both explanations could be right, one is “righter” 🙂

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    #434296
    Anonymous
    Inactive

    @mclkt Yeah I figured that is the case. The Becker SIM asked the following:

    “What is the treatment of purchased put options in the computation of diluted EPS? Find the proper citation that provides guidance to answer this question.”

    Becker's Answer: ASC 260-10-45-22 which states “The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include nonvested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Antidilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS.”

    My Answer: ASC 260-10-45-37 which states “Contracts such as purchased put options and purchased call options (options held by the entity on its own stock) shall not be included in the computation of diluted EPS because including them would be antidilutive. That is, the put option would be exercised only when the exercise price is higher than the market price and the call option would be exercised only when the exercise price is lower than the market price; in both instances, the effect would be antidilutive under both the treasury stock method and the reverse treasury stock method, respectively.”

    So by a better answer do we mean the one with the least amount of detail? I would argue that the citation I found is a better answer since it explains the treatment and the reasoning behind the treatment.

    I guess I'm overthinking this, but I don't want to get these easy ones wrong.

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