FAR Study Group Q1 2017

CPA Exam Forum FAR FAR Review FAR Study Group Q1 2017

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Viewing 30 posts - 331 through 360 (of 1,469 total)
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  • #1434825

    A1lessio
    Participant

    F2 – I must have read and re-read F2 at least 3-4 times in the last 2.5 months. I think it’s the hardest chapter in all the books. I can finally calculate % of completion and installment method and grasp all the other concepts.


    People who subject themselves to the strictest discipline, who give up certain pleasurable things in order to obtain a goal are the happiest of men.
    AUD - 86
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 84
    #1435004

    Spartans92
    Participant

    Is it just me or is it normal to not fully recall everything even when doing comprehensive mcq? I just did a 30 mcq over all topics and several questions like full goodwill under GAAP vs IFRS partial goodwill I drew blank.. I had to look up my notes to figure out. Does this ever happen to anyone? I just feel like I’m not prepared at all :/


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435065

    mcohen1993
    Participant

    Hi all,

    It seems Ninja and Becker have questions quite different for FAR. Is studying mostly Ninja going to cost me? I usually do both but focus on Ninja because it’s faster for me.

    Are the actual questions close to how Becker presents?


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435140

    Spartans92
    Participant

    What am I missing on this question:
    When the allowance method of recognizing uncollectible accounts is used, the entries at the time of collection of a small account previously written off would:
    a.
    Increase the allowance for uncollectible accounts.
    b.
    Increase net income.
    c.
    Have no effect on the allowance for uncollectible accounts.
    d.
    Decrease the allowance for uncollectible accounts.

    Answer is A.. I thought C. Heres my thought on JE.

    Write off uncollectible : DR: AFDA CR: A/R

    Recover/Reverse: DR: A/R CR: AFDA

    Cash Collection: DR: Cash CR: A/R
    Thought theres no effect since it offsets.


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435166

    mcohen1993
    Participant

    The collection causes both of your JEs to be done simultaneously. AFDA increases (by a credit) and AR is restored.


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435167
    Namstut
    Namstut
    Participant

    @spartans92 I think you are looking at the cumulative effect on the balance of the allowance account but the question is asking how specific entries at the time of collection will effect the account.


    When the going gets tough, the tough get going.

    AUD - 85
    BEC - 80
    REG - 86
    FAR - 3/9/17

    #1435181

    A1lessio
    Participant

    @spartan92 – how are you scoring on Becker mcqs and progress tests? I’m at like 65-70% and exam is in 9 days. Still need to review 5-9, maybe some 10.


    People who subject themselves to the strictest discipline, who give up certain pleasurable things in order to obtain a goal are the happiest of men.
    AUD - 86
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 84
    #1435194

    NYaccountingstudent
    Participant

    Kent, Inc.’s reconciliation between financial statement and taxable income for Year 2 follows:

    Pretax financial income $ 150,000
    Permanent difference (12,000)
    138,000
    Temporary difference-depreciation (9,000)
    Taxable income $ 129,000
    Additional information:
    At
    12/31/Year 1
    12/31/Year 2
    Cumulative temporary differences (future taxable amounts)
    $11,000
    $20,000
    The enacted tax rate was 34% for Year 1 and 40% for Year 2 and years thereafter.
    In its December 31, Year 2, balance sheet, what amount should Kent report as deferred income tax liability?
    a. $3,600
    b. $7,340
    c. $8,000
    d. $6,800


    One shot to pass FAR or i lose credit for REG
    AUD - 75
    BEC - 78
    FAR - NINJA in Training
    REG - 75
    #1435197

    NYaccountingstudent
    Participant

    Kent, Inc.’s reconciliation between financial statement and taxable income for Year 2 follows:

    Pretax financial income $ 150,000
    Permanent difference (12,000)
    138,000
    Temporary difference-depreciation (9,000)
    Taxable income $ 129,000
    Additional information:

    Cumulative temporary differences (future taxable amounts)
    12/31/Year 1 $11,000
    12/31/Year 2 $20,000

    The enacted tax rate was 34% for Year 1 and 40% for Year 2 and years thereafter.
    In its December 31, Year 2, balance sheet, what amount should Kent report as deferred income tax liability?
    a. $3,600
    b. $7,340
    c. $8,000
    d. $6,800

    Why do they multiply 40% by $20,000 rather then multiplying the 40% by the temporary difference of $9,000??

    Beckers explanation says we take the $20,000 because it says “future taxable amounts”

    So we just ignore the normal rule of multiplying the tax rate by the temporary differences for this question?


    One shot to pass FAR or i lose credit for REG
    AUD - 75
    BEC - 78
    FAR - NINJA in Training
    REG - 75
    #1435199

    Spartans92
    Participant

    @A1, I haven’t been doing much progress test actually. I just finished going through the individual chapts. earlier today I did around 20 MCQ per each optional section. Im gonna start Ninja. I range anywhere from 60-70’s too LOL. Hopefully I can do as many MCQ/ Sims in these next 4 days.

    I find my biggest weakness to be F2-F6. Mine is in a few days too and I honestly think my chance of passing is .00001% LMAO.


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435215

    A1lessio
    Participant

    I think because They are Asking for deferred income (income taxed in future) for yr 2. So multiply 40% by the future taxable amount. I forgot the rules for depreciation. Reviewing this chapter tomorrow morning before work.


    People who subject themselves to the strictest discipline, who give up certain pleasurable things in order to obtain a goal are the happiest of men.
    AUD - 86
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 84
    #1435218

    mcohen1993
    Participant

    @NY,

    DTA & DTL is done by looking at the future amounts owed. How questions will present themselves is to ask based on the current year only, that’s where you may get confused. Use CY to find current income tax expense.

    Back to my original question, how does the Ninja questions compare to actual exam and Becker compare to actual exam? I have used both for my other exams and found a mix of both sadly. But actual does seem to have less long winded questions and more direct. Less info thrown at you kind of thing.


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435224

    azfrench
    Participant

    Hey everyone,

    So I’ve been studying for FAR the last three weeks and have made it through all the sections. I started my review yesterday. I have yet to do any progress tests but have started my own notes and redoing the MCQs and Sims (I have Becker). My exam is scheduled January 21st due to my traveling for work and having to move at the end of January. I’ve noticed I’m seriously forgetting stuff I thought I had down and am struggling with a lot of the long calculation problems. Does anybody else feel the same way with this section? It’s my first go at it and I’m really getting nervous…also looking for any tips during my review stage? Thanks!


    Almost there...
    AUD - 79
    BEC - 88
    FAR - NINJA in Training
    REG - 88
    #1435226

    azfrench
    Participant

    @nyaccountingstudent,

    From what i remember, it is presenting the cumulative temporary differences which would include the depreciation amount. I’m pretty sure the depreciation amount above is extra information trying to trick you. Hopefully that helps!


    Almost there...
    AUD - 79
    BEC - 88
    FAR - NINJA in Training
    REG - 88
    #1435227
    Amor D
    Amor D
    Participant

    Can anyone tell me how much is the loss from discontinued operations in Year 2? Thanks guys!

    On December 31, Year 1, the Board of Directors of Maxy Manufacturing, Inc. committed to a plan to discontinue the operations of its Alpha division. The decision represents a major strategic shift and will have a significant effect on its operations and financial results. Maxy estimated that Alpha’s Year 2 operating loss would be $500,000 and that the fair value of Alpha’s facilities was $300,000 less than their carrying amounts. Alpha’s Year 1 operating loss was $1,400,000, and the division was actually sold for $400,000 less than its carrying amount in Year 2. Maxy’s effective tax rate is 30%.

    In its Year 1 income statement, what amount should Maxy report as loss from discontinued operations?

    a.
    $1,400,000

    b.
    $1,700,000

    c.
    $980,000

    d.
    $1,190,000

    Explanation

    Choice “d” is correct. Since the fair value of Alpha’s facilities was $300,000 less than its carrying value, there has been an impairment loss, and that loss should be recognized in Year 1. That $300,000 impairment loss plus the $1,400,000 Year 1 operating loss would be recognized in Year 1 net of tax. The total loss would be $1,700,000 x 70% (100% – 30%) or $1,190,000.

    Choice “c” is incorrect. It includes the Year 1 operating loss of $1,400,000 but not the $300,000 impairment loss but does report the Year 1 operating loss net of tax.

    Choice “a” is incorrect. It includes the Year 1 operating loss of $1,400,000, but not the $300,000 impairment loss, and reports the Year 1 operating loss gross of tax and not net of tax.

    Choice “b” is incorrect. It reports the Year 1 loss from discontinued operations gross of tax and not net of tax.


    "But as for you, be strong and do not give up, for your work will be rewarded."
    (2 Chronicles 15:7)
    #1435230
    Amor D
    Amor D
    Participant

    Okay never mind, I saw the answer to my question above:

    On December 31, Year 1, the Board of Directors of Maxy Manufacturing, Inc. committed to a plan to discontinue the operations of its Alpha division. The decision represents a major strategic shift and will have a significant effect on its operations and financial results. Maxy estimated that Alpha’s Year 2 operating loss would be $500,000 and that the fair value of Alpha’s facilities was $300,000 less than their carrying amounts. The estimate for Year 2 turned out to be correct. Alpha’s Year 1 operating loss was $1,400,000, and the division was actually sold for $400,000 less than its carrying amount. Maxy’s effective tax rate is 30%.

    In its Year 2 income statement, what amount should Maxy report as loss from discontinued operations?

    a.
    $350,000

    b.
    $500,000

    c.
    $420,000

    d.
    $600,000

    Explanation

    Choice “c” is correct. The Year 2 loss from discontinued operations would include both the Year 2 operating loss of $500,000 (which turned out to be a correct estimate) and the “additional” loss (on disposal) of $100,000, net of tax, for a total of $600,000 x 0.70 or $420,000.

    Choice “a” is incorrect. It includes the Year 2 operating loss of $500,000 but not the $300,000 impairment loss but does report the Year 2 operating loss net of tax.

    Choice “b” is incorrect. It includes the Year 2 operating loss of $500,000, but not the $100,000 loss on disposal, and reports the Year 2 operating loss gross of tax and not net of tax.

    Choice “d” is incorrect. It reports the Year 2 loss from discontinued operations gross of tax and not net of tax. The Year 2 loss from discontinued operations should include both the Year 2 operating loss of $500,000 and the loss on disposal of $100,000, net of tax, for a total of $600,000 x 0.70 or $420,000.


    "But as for you, be strong and do not give up, for your work will be rewarded."
    (2 Chronicles 15:7)
    #1435257
    HRSexton
    HRSexton
    Participant

    Today is day two of studying Financial. I took Auditing Monday and take this test 3/6. Anyone out there with the same test date?


    Becker & Ninja MCQ

    Trying to finish by 5/31/2017 and continued motivation is my problem; I have never been a good studier.

    FAR

     

    AUD - 76
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - NINJA in Training
    #1435260

    mckan514w
    Participant

    Could someone help me out with the explanation and journal entries for this question? I am not sure I understand the accounting of this one and why you record deferred charges?? and would the deferred charges and discount on note receivable be at their PV?

    Jole Co. lent $10,000 to a major supplier in exchange for a non interest-bearing note due in three years and a contract to purchase a fixed amount of merchandise from the supplier at a 10% discount from prevailing market prices over the next three years. The market rate for a note of this type is 10%. On issuing the note, Jole should
    record:
    1) Discount on note receivable 2) Deferred charge
    a. Yes Yes
    b. Yes No
    c. No Yes
    d. No No

    Explanation
    Choice “a” is correct. Absent established exchange prices or evidence of the noteโ€™s market value, the present value of a note with no stated rate or an unreasonable rate should be determined by discounting future payments using an imputed rate. The prevailing rate for similar instruments of issuers with similar credit ratings normally helps determine the appropriate rate. The purpose is to approximate the rate in a similar transaction between independent parties. The stated interest rate may be less than the imputed rate because the lender has received other stated (or unstated) rights and privileges as part of the bargain. The difference between the respective present values of the note computed at the stated rate and at the imputed rate should be accounted for as the cost of the rights or privileges obtained. Jole Co. will record a discount on the note. In addition, because it has received the right to purchase merchandise at a discount from prevailing market prices, a deferred charge (prepaid purchases) also should be recorded at an amount equal to the discount.

    So would it be????

    DR Note Receivable PV of 10,000
    DR Deferred Charges 10% of market price
    CR Cash 10,000
    CR Discount on Note Receivable (plug)


    And they ask me why I drink

    BEC 71, 82
    AUD 75
    REG 75
    FAR 61, 69

    #1435299

    mcohen1993
    Participant

    I believe the reasoning is not all expense is recognized, so you will make it as a LT prepaid expense.


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435308
    Mscfisher
    Mscfisher
    Participant

    @mkcan514 where did you find this question I don’t understand it at all.


    Luck is when when preparation meets opportunity
    AUD - 77
    BEC - 83
    FAR - NINJA in Training
    REG - 83
    #1435349

    mckan514w
    Participant

    @mscfisher- its a gleim question. and thank you for saying that you don’t understand it either… this / their test bank is making me feel like a raving idiot who not only will never pass FAR but quite honestly doesn’t deserve to!!! ๐Ÿ™‚


    And they ask me why I drink

    BEC 71, 82
    AUD 75
    REG 75
    FAR 61, 69

    #1435358

    mckan514w
    Participant

    @mcohen1993 so what you are saying is that in exchange for me giving you 1,000 today you agree to pay me back with interest and I agree to buy merchandise from you at a set rate. Thus a portion of the note receivable is really a pre-paid expense of future merchandise to be purchased?

    I don’t know if that makes sense- it sort of makes sense in my head.

    DR Note Receivable
    DR Pre-paid Expenses
    CR Cash
    CR Discount note receivable

    Then when the note comes due and I purchase the merchandise
    DR Cash
    CR Note Receivable
    DR Inventory
    CR Pre-paid Expense

    Im sorry like I said above this is really making me feel super dumb!


    And they ask me why I drink

    BEC 71, 82
    AUD 75
    REG 75
    FAR 61, 69

    #1435359

    A1lessio
    Participant

    @mcohen1993 – I used Becker for Regulation and Audit and I felt like the actual exam questions were shorter and more to the point. There were some questions that were almost identical. I think becker does a good job of making sure you understand the big picture.

    I also use these free cpa questions a co-worker suggested from https://www.cpareviewforfree.com/, but the FAR questions are ridiculously hard. For instance bond questions on troubled debt restructuring which was never even mentioned in the Becker book. I hope doing these questions pays off.


    People who subject themselves to the strictest discipline, who give up certain pleasurable things in order to obtain a goal are the happiest of men.
    AUD - 86
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 84
    #1435418
    Mscfisher
    Mscfisher
    Participant

    #mkcan514 Michael Jordan’s failure commercial is what i live by. Rest assure, this year we will both be able to say: I’ve failed and failed so many times that’s why i succeed.

    So b i like to put numbers to everything.

    As i understand it even for non interest note u need the use the prevailing rate. So say pv of 1 @10% for 3 yrs is .75

    DR N/R 7500
    DR discount 2000
    DR prepaid expenses 500
    CR cash 10000

    I’m just throwing in numbers but in that way the longwind explainatiom now makes sense. The actual discount is less bc of the right to purchase the merchandise.


    Luck is when when preparation meets opportunity
    AUD - 77
    BEC - 83
    FAR - NINJA in Training
    REG - 83
    #1435433

    mcohen1993
    Participant

    @mckan514w

    Gleim is known to have a ridiculously hard test bank, one of my coworkers showed me an Inventory question that threw me for a loop.

    @a1lessio

    Thanks for the encouragement, just my usually worried self here. As you can see I scored high on REG and AUD, but I thought AUD was much harder and my score does NOT prove that. I work in Tax so it is a running joke at the office.


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435452

    mckan514w
    Participant

    Thanks guys for the kind words- clearly I am having a “bad study day”. I just might have to print out that Michael Jordon quote!

    @mscfisher LIGHTBULB! ๐Ÿ™‚ that makes perfect sense- thank you.


    And they ask me why I drink

    BEC 71, 82
    AUD 75
    REG 75
    FAR 61, 69

    #1435511

    boe
    Participant

    @mcohen1993 Yeah the ninja questions are extremely close to the real exam. The reason is that ninja utilizes the AICPA test bank. Whereas, becker uses their questions as an additional teaching tool, hence they’re more involved and cover multiple topics in a single question.


    So close, yet so FAR away.
    AUD - 85
    BEC - 85
    FAR - NINJA in Training
    REG - 83
    #1435580

    Spartans92
    Participant

    Conn Corp. owns an office building and normally charges tenants $30 per square foot per year for office space. Because the occupancy rate is low, Conn agreed to lease 10,000 square feet to Hanson Co. at $12 per square foot for the first year of a three-year operating lease. Rent for remaining years will be at the $30 rate. Hanson moved into the building on January 1, Year 1, and paid the first year’s rent in advance. What amount of rental revenue should Conn report from Hanson in its income statement for the year ended September 30, Year 1?

    a.
    $120,000
    b.
    $90,000
    c.
    $240,000
    d.
    $180,000

    Question: How come I have to use the total revenue 720k? At first I only accounted for the prepaid 120k * 9/12 = 90k which is incorrect. Answer is 180k. 720/3 * 9/12= 180. I get the math but not understanding why I take 720. Thanks


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435590

    BondVillain
    Participant

    When you are ‘straight-lining’ operating leases (from both lessor and lessee sides) you need to calculate the rent for the entire lease and then divide it over the lease term. Here is the calculation:

    Year 1 12 x 10,000 = 120,000
    Year 2 30 x 10,000 = 300,000
    Year 3 30 x 10,000 = 300,000
    total rent 720,000
    Divide over lease term 36 months = 20,000 per month x 9 months = 180,000


    Q3 2015: AUD 87
    Q2 2016: REG 85
    Q3 2016: BEC 73, Retake 80
    Q1 2017: FAR
    AUD - 87
    BEC - 80
    FAR - NINJA in Training
    REG - 85
    #1435613

    Spartans92
    Participant

    So that’s similar to like renting out and receiving several months free of rent. You have to account for the total revenue over the lease term.. Thanks!


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
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