FAR Simulations with Becker

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    Topic
  • #1596657
    lauren.wilson14
    Participant

    Does anyone know if there is any place to get a better explanation on some of these simulations? I am so annoyed with Becker and how they don’t explain the journal entries for the majority of there sims.

    Here is an example of one

    The pension plan for General GAP, a U.S. company, ended Year 6 with a fair value of plan assets and projected benefit obligation of $930,000 and $850,000, respectively. The following information pertains to Year 7 for the plan:

    • Plan contributions: $110,000
    • Plan benefits paid: $95,000
    • Service cost: $275,000
    • Other Comprehensive Income Balances:
    – Unrecognized prior service cost goes from $225,000 at the end of Year 6 to $210,000 at the end of Year 7
    – Current prior service cost: $10,000
    – Unrecognized pension gain goes from $85,000 at the end of Year 6 to $90,000 at the end of Year 7
    – Current pension gain: $12,000
    • Discount Rate: 8%
    • Expected (and Actual) Return on Plan Assets: 9%
    • Tax Rate: 30%

    I got the calculations right but all the journal entries wrong.I tried going back to the book but it wasn’t any help. Like I need to know why you are crediting this instead of that.

     
    “becker-cpa-review”/
     

Viewing 4 replies - 1 through 4 (of 4 total)
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  • #1596666
    lauren.wilson14
    Participant

    Also for anyone thinking about getting Becker, just don't. They used to be good but ever since they updated their review course, it has just gone downhill completely.

    #1597098
    Anonymous
    Inactive

    @Lauren – There was a time when I thought the same thing. I don't know how far along you are in your studies, but in my opinion the material (assuming it's a reputable company) is all a preference. In some cases it's helpful, in others it's not. Fact of the matter is, PLENTY of people have and will pass using Becker. To say it's no good isn't consistent with passing scores. Same can be said about Ninja, Gleim, Roger etc. I feel like there are people on this site who say “___________ did NOT prepare me for the sims” while showing a passing score in their sig.

    Keep going, people have used Becker to pass…so can you.

    #2342625
    smurf
    Participant

    Not responding to the question just filling in the parts you left out, cause I also need help with better learning the journal entries for Pensions. Here are the Calculations. If not a better website, maybe just an example of the T-Accounts used to figure these out (journal entries). The calculation I get because I also use Roger's CPA, but neither site is great at walking one through the journal entries required.

    1. Calculate Net Periodic Pension Cost:

    $277,300

    Net Periodic Pension Cost = Service Cost of $275,000 + Interest Cost of $68,000 – Expected Return on Plan Assets of $83,700 + Amortization of Prior Service Cost of $25,000 – Amortization of Pension Gain of $7,000 = $277,300.

    Interest Cost: Beginning PBO $850,000 × Discount Rate of 8% = $68,000

    Expected Return on Plan Assets: Beginning FVPA $930,000 × Discount Rate of 9% = $83,700

    Amortization of Prior Service Cost: Beginning Balance $225,000 + Current Prior Service Cost $10,000 – Ending Balance $210,000 = $25,000

    Amortization of Pension Gain: Beginning Balance $85,000 +Current Pension Gain $12,000 – Ending Balance $90,000 = $7,000

    2. Calculate the Fair Value of Plan Assets as of the end of Year 7:

    $1,028,700

    Fair Value of Plan Assets = Beginning FVPA $930,000 + Return on Plan Assets $83,700 + Contributions $110,000 – Benefits paid $95,000 = $1,028,700

    3. Calculate the Projected Benefit Obligation as of the end of Year 7:

    $1,096,000

    Projected Benefit Obligation = Beginning PBO $850,000 + Service Cost $275,000 + Interest Cost $68,000 + Current period Prior Service Cost $10,000 – Current pension gain $12,000 – Benefits paid $95,000 = $1,096,000

    4. Calculate the Funded Status as of the end of Year 7:

    ($67,300)

    Funded Status: FVPA $1,028,700 – PBO $1,096,000 = ($67,300)

    5. Provide the journal entries for each of the following events:

    a. Contribution to the pension plan

    Account Name Debit Credit
    Pension Benefit Asset $110,000
    Cash $110,000

    b. Current Year Net Gain

    Account Name Debit Credit
    Pension Benefit Asset $12,000
    Other Comprehensive Income $12,000

    c. Current Year Prior Service Cost

    Account Name Debit Credit
    Other Comprehensive Income $10,000
    Pension Benefit Asset $10,000

    d. Service Cost

    Account Name Debit Credit
    Compensation Expense $275,000
    Pension Benefit Asset $275,000

    e. Interest Cost

    Account Name Debit Credit
    Net Periodic Pension Cost $68,000
    Pension Benefit Asset $68,000

    f. Return on Plan Assets

    Account Name Debit Credit
    Pension Benefit Asset $83,700
    Net Periodic Pension Cost $83,700

    g. Amortization of Prior Service Cost

    Account Name Debit Credit
    Net Periodic Pension Cost $25,000
    Other Comprehensive Income $25,000

    h. Amortization of Net Gain

    Account Name Debit Credit
    Other Comprehensive Income $7,000
    Net Periodic Pension Cost $7,000

    #2345757
    Jimmy Dugan
    Participant

    Look at the Becker Skillmaster video for that sim. They have an instructor walk you through every single sim in their test bank. There is more insight and detail in those videos than the written explanations.

    AUD - 95
    BEC - 87
    FAR - 84
    REG - 90
    You're killing me Smalls

     

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