FAR Study Group Q1 2017

CPA Exam Forum FAR FAR Review FAR Study Group Q1 2017

This topic contains 1,668 replies, has 91 voices, and was last updated by mtaylo24 mtaylo24 1 hour, 25 minutes ago.

Viewing 30 posts - 361 through 390 (of 1,669 total)
  • Author
    Posts
  • #1435646

    BondVillain
    Participant

    Yes, the lessor and lessee calculate the rent expense or income the same exact way.


    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
    #1435668
    mtaylo24
    mtaylo24
    Participant

    @mcohen1993 Gleim's inventory chapter is currently ruining my life 😉


    A: 60, 61, 61, 78 (Expires May 17)
    R: 55, 69, 74, 75
    B: 71, 72, 73 (3/4/17)
    F: 52, 54 (3/10/17)
    AUD - 78
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 75
    #1435671

    A1lessio
    Participant

    make sure you know Dollar Value LIFO!

    I am incredibly burnt out, just a few more days


    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 - 78
    REG - 84
    #1435691

    Spartans92
    Participant

    Thanks, @bond. Another question:
    On April 1, Year 2, Hill Corp. issued 200 of its $1,000 face value bonds at 101 plus accrued interest. The bonds were dated November 1, Year 1, and bear interest at an annual rate of 9% payable semiannually on November 1 and May 1. What amount did Hill receive from the bond issuance?

    a.
    $200,000
    b.
    $202,000
    c.
    $209,500
    d.
    $194,500

    So I know its C because it has to be bigger than 202,000 (200 *1000 *1.01) .But Im not sure where the 5/12 is coming from in Becker. I did 9% * 1/2 = .045 *200 *1000 = 9000 for my interest but not sure what to do next to accrued it.

    What Becker did was: $200,000 × 9% × 5/12 = 7500 + 202,000 = 209,500


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435694

    mcohen1993
    Participant

    If you count the months (finger method for me) from November to April “1”, you get 5 months. Becker and the Ninja questions throw these tricks out it seem and you will inevitably count an extra month or one less.


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435724

    waffle_house
    Participant

    I have a question about “real loss” and “artificial loss”. This is a question on the Becker SIM in R5, second set of Sims question 1.

    Sale of furniture with a remaining useful life of 9 years. The lease is a capital lease for 7 years, with a present value of $68,000. The furniture has a fair value of $70,000, carrying value of $65,000, and is sold for $58,000.

    a. Determine the amount and type of loss.

    Answer: Loss $7,000 & Artificial

    Okay I thought it would be 12k since selling price is lower than the FV.

    Also, what about the real loss? Why wasn't that the answer instead of artificial????

    Can someone enlighten me. Becker doesn't explain


    I put in work, it was evident
    AUD - 80
    BEC - 75
    FAR - 84
    REG - 76
    #1435730

    A1lessio
    Participant

    Spartan & mcohen – I keep getting these wrong. So he issued the bonds in between periods, the buyer of the bonds has to payback the interest not earned (5 months). My question is do we always multiply the % by the face of the bond?


    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 - 78
    REG - 84
    #1435745

    waffle_house
    Participant

    @ Alessio

    Yes if issuing bonds between periods you would get the accrued interest by (face amount x stated rate x periods incurred) and you will add that to the bond proceeds (premium or discount). Easy right?


    I put in work, it was evident
    AUD - 80
    BEC - 75
    FAR - 84
    REG - 76
    #1435757

    Spartans92
    Participant

    wait, so if its semi-annual why dont we use 4.5%? Half of 9.. I thought Becker did something like that in the lectures. Ugh. But I guess I'll go with Waffle's formula ^^. Thanks guys!


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435764

    mcohen1993
    Participant

    It's not a half year. It's broken down into the months. When in doubt break down, always do rate times months/12


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1435773

    waffle_house
    Participant

    When calculating interest on anything use the months incurred. Semi annual is the same as 6/12. If bonds are issued in (April 1 Year 2) but are dated (Dec 1 Year 1) then you would calculate accrued interest using (face amount x stated rate x 4/12) that would give you the interest. Its a lot easier than you think.


    I put in work, it was evident
    AUD - 80
    BEC - 75
    FAR - 84
    REG - 76
    #1435791

    Cjsr
    Participant

    @spartans92 That 1/2 thing you're remembering, maybe from doing the amortization of discount/premium with semiannual payments?


    BEC Jan 2016 83
    REG Jan 2016 83
    AUD May 2016 92
    FAR Jul 2016 74 aaarrrggghhh
    Becker FastPass for BEC, REG, AUD, FAR1
    Switching to NINJA for FAR2
    #1435827
    GiniC
    GiniC
    Participant

    @hrsexton – I'm taking FAR 3/9 (3/10 if a seat opens up). Not the same day, but we'll likely be on about the same study schedule!


    Prep using Becker live classes
    FAR scheduled for March 2017
    AUD - 95
    BEC - 82
    FAR - NINJA in Training
    REG - 82
    #1435833
    GiniC
    GiniC
    Participant

    Sheesh – offline for one day, and there were 65 posts!!!


    Prep using Becker live classes
    FAR scheduled for March 2017
    AUD - 95
    BEC - 82
    FAR - NINJA in Training
    REG - 82
    #1435838

    waffle_house
    Participant

    Man I feel like I have a good grasp on F1-F5 in Becker (this is my second attempt at Far, 72 first try). But damn some of these SIMS are time consuming… Also, F4 & F5 optional questions are tough as hell, lol anyone with the same experience?


    I put in work, it was evident
    AUD - 80
    BEC - 75
    FAR - 84
    REG - 76
    #1435871

    Spartans92
    Participant

    @cjsr, haha thats it.. Thats what I was thinking which is completely different (effective interest method). LOL. Oh god, I'm not in a good shape. Yep, Waffle think that formula helps a lot. Now I know why I got this other question right.. I got it right for the wrong reason. Yikes!

    @Waffle, I got killed by F4 Optional. Got a 50% 🙁 F5 I'm doing much better.. got 72% LOL. Not great but improving. off to F6 now.

    These Becker questions are much more time consuming than I hope. I only work 30 MCQ on ninja so Far. Really wanna do more but gotta push through F6 and F7.The Sims are very helpful!! I didnt work through all F4 Sims but I really think they are better than MCQ.


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1435881

    Cjsr
    Participant

    @spartans92, I'd say you got it right for the right reason – you knew it had to be more than 202,000. That's how we play divide and conquer with mcqs.


    BEC Jan 2016 83
    REG Jan 2016 83
    AUD May 2016 92
    FAR Jul 2016 74 aaarrrggghhh
    Becker FastPass for BEC, REG, AUD, FAR1
    Switching to NINJA for FAR2
    #1435949

    A1lessio
    Participant

    anyone here have a simple approach to bank reconciliations. I feel like that could easily be a sim or a few easy mcqs we shouldn't get wrong.

    so bank balance + deposits – outstanding checks

    or check book balance + interest earned – service charge – nsf +/- errors.

    My problem is the questions are never that straight forward and I get everything mixed up. Aren't these two suppose to tie somehow?


    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 - 78
    REG - 84
    #1435997

    Spartans92
    Participant

    hmm, A1lessio, do you have any specific questions? I think those questions r somewhat logical but I agree it would suck if we lose minor points on those. I should prob review them too.. and cash to accrual as well! So little time yet so much material to look over still.

    I remember theres always one with checks written but not yet mailed. That is deducted off book balance but should be added back as well.


    BEC - 76
    REG- 67, 85
    AUD-63, 74, Retake Feb. 27
    FAR-65, 62
    #1436022
    Amor D
    Amor D
    Participant

    ONLY COSTS TO TERMINATE AN OPERATING LEASE ARE INCLUDED IN THE G/L FROM DISCONTINUED OPERATIONS, BUT NOT THE COSTS TO TERMINATE CAPITAL LEASE?

    On March 1 of the current year, the board of directors of Lockwood Inc. voted to discontinue the operations of its fresh produce division, a reportable segment of the entity's operations. The sale of the division, which was finalized on December 15, resulted in a gain of $150,000. The division had operating losses of $500,000 during the current year and also paid employee termination benefits of $200,000 and $20,000 to terminate an operating lease. Ignoring income taxes, what is the loss from discontinued operations that Lockwood should recognize on its current year income statement?

    a.
    $550,000.

    b.
    $720,000.

    c.
    $570,000.

    d.
    $350,000.

    Explanation

    Choice “c” is correct. The net loss from discontinued operations will include the gain from the sale of the division, the operating loss, the employee termination benefits and the cost to terminate the operating lease. Exit and disposal costs related to discontinued operations are reported in discontinued operations on the income statement:

    Gain on sale $ 150,000

    Operating loss (500,000)

    Termination benefits (200,000)

    Cost to terminate the lease (20,000)

    Loss on discontinued operations $ (570,000)

    Choice “d” is incorrect. The employee termination benefits and the cost to terminate the operating lease are exit and disposal costs related to discontinued operations that must be reported in discontinued operations on the income statement.

    Choice “a” is incorrect. Both the employee termination benefits and the cost to terminate the operating lease are exit and disposal costs related to discontinued operations that must be reported in discontinued operations on the income statement.

    Choice “b” is incorrect. The gain on the sale of the division must be reported in discontinued operations. The gain will offset the losses of the discontinued operation.


    "But as for you, be strong and do not give up, for your work will be rewarded."
    (2 Chronicles 15:7)
    #1436121
    mtaylo24
    mtaylo24
    Participant

    ^^^^??? Do you have a comparable capital lease question or did you see that rule somewhere? The question above seems straight forward since everything is related to a discontinued operation.


    A: 60, 61, 61, 78 (Expires May 17)
    R: 55, 69, 74, 75
    B: 71, 72, 73 (3/4/17)
    F: 52, 54 (3/10/17)
    AUD - 78
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 75
    #1436123
    mtaylo24
    mtaylo24
    Participant

    @a1lessio, I had the worst DRS on that back in q2. All I can say is follow the flow per books and per bank and compare your outages (I do these all of the time at work)…

    I still need to find help for inventory reconciliation. I still have yet to see it mentioned in any of my reviews, but got blindsided by it last quarter.


    A: 60, 61, 61, 78 (Expires May 17)
    R: 55, 69, 74, 75
    B: 71, 72, 73 (3/4/17)
    F: 52, 54 (3/10/17)
    AUD - 78
    BEC - NINJA in Training
    FAR - NINJA in Training
    REG - 75
    #1436148

    mckan514w
    Participant

    OMG the DRS's are just so so horrible and take so long… 🙁

    @Amor D- agree with Mtaylo ???? I don't ever recall reading that capital lease would have a different treatment than an operating lease when you discontinue operations. You would (I assume, recognize any impairment on the lease immediately and any loss / gain on getting out of the lease when that occurred).

    @waffle_house- hmmmm I am searching way back in my brain here but I **think** an artificial loss occurs on a capital lease when the sales price is lower than the carry amount- but the FV is higher… because essentially the carry amount on the lease is the PV of future cash flows- so it is “artificially created”- if that makes sense…. maybe someone else can chime in- i don't remember it from last quarter but do remember studying it the first go round.


    And they ask me why I drink

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

    #1436165
    GiniC
    GiniC
    Participant

    @a1lessio – For bank reconciliations, I try to look at it logically, rather than with a formula. Then when they hit you with something a little off-standard, you have a way to think about it. Each item presented goes on one side of the tally or is excluded (they do that sometimes!) – nothing ever goes on both sides!

    For the side that starts with Balance per Books – what does the bank know that my books don't?
    . Service charges, for example – until they “invoice” me on the statement, I haven't entered it into my books
    . Interest earned on my balance – not entered on my books until I see it on the statement

    For the side that starts with Balance per Bank – what do I know about that the bank doesn't?
    . Checks I've written (and entered in my books) that have not yet been presented to the bank for payment
    . Deposits I tallied up, recorded, and put in the night deposit box (or the mail) near the statement date that didn't get processed for the statement

    In the end, both should come out equal (for a sim) or match an answer (for an mcq). if they don't match, find the difference and divide by two – that's the item (or sum of items) that you put on the wrong side.


    Prep using Becker live classes
    FAR scheduled for March 2017
    AUD - 95
    BEC - 82
    FAR - NINJA in Training
    REG - 82
    #1436178

    A1lessio
    Participant

    @Ginic- very helpful thank you


    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 - 78
    REG - 84
    #1436237
    GiniC
    GiniC
    Participant

    @a1lessio – with all that, they just wasted ten minutes of my precious study time with a reconciliation that didn't balance, because they only gave me part of the information! They gave me the information to adjust the Balance per Books, but nothing for the Balance per Bank. I got hung up on the difference, which didn't matter – matching the two balances is a confirmation, but you can do one without the other. I finally clicked in the number I had calculated and it ws fine. Grrr. I often think too much!!!


    Prep using Becker live classes
    FAR scheduled for March 2017
    AUD - 95
    BEC - 82
    FAR - NINJA in Training
    REG - 82
    #1436243

    rafiv900
    Participant

    Please anyone give me the numbers to go to the $5,000

    Question CPA-00213
    During Year 6, Fuqua Steel Co. had the following unusual financial events occur:
    Bonds payable were retired five years before their scheduled maturity, resulting in a $260,000 gain. Fuqua has
    frequently retired bonds early when interest rates declined significantly.
    A steel forming segment suffered $255,000 in losses due to hurricane damage. This was the fourth similar loss
    sustained in a 5-year period at that location.
    A component of Fuqua's operations, steel transportation, was sold at a net loss of $350,000. This was Fuqua's
    first divestiture of one of its operating segments.
    Before income taxes, what amount of gain (loss) should be reported separately as a component of income from
    continuing operations in Year 6?
    a. $(255,000)
    b. $5,000
    c. $(350,000)
    d. $260,000
    Explanation
    Choice “b” is correct. $5,000.
    The steel forming segment's hurricane damage (4th in 5 years) of $255,000 is “unusual in nature” and should be
    reported separately as a component of “income from continuing operations.” Items that are unusual in nature and/or
    infrequently occurring are reported separately as a component of income from continuing operations.
    The retirement of debt is unusual but not infrequent. It should be reported separately in income from continuing
    operations.
    The loss on the steel transportation operation is reported under discontinued operations, net of tax.

    #1436249

    mcohen1993
    Participant

    +260-255 should give you the amount. The -350 is mot likely a discontinued operation which is still apart from continued operations (as opposed to the old unusual and infrequent category which has disappeared).

    One thing I have notices is a lot of the NINJA questions DO NOT use the updated Q1 2017 rules for Inventory (LCM only for LIFO and Retail), Deferred Taxes (all noncurrent), or prospective treatment for switching to equity method from cost. Be aware of these changes. Becker has updated their questions.


    I'm Done
    AUD - 94
    BEC - 80
    FAR - 85
    REG - 91
    #1436280
    scared_cpa
    scared_cpa
    Participant

    A company exchanged land with an appraised value of $50,000 and an original cost of $20,000 for machinery with a fair value of $55,000. Assuming that the transaction has commercial substance, what is the gain on the exchange?
    A. $0
    B. $5,000
    C. $30,000
    D. $35,000

    Ans is C (50-20).

    Does anyone have tips so I can keep these types of questions straight? I can never remember how to figure these out. They seem so simple with minimal calculations so I want to make sure I nail them on the actual exam.

    I understand that since the exchange has commercial substance, it is measured at FV. I assumed the JE would be Dr. Machine 55,000 Cr. Land 20,000 Cr. Gain 35,000. But the gain is 30,000, the difference between original cost and appraised value. So where does the extra 5,000 go between appraised value of land and machinery? Do we value the machinery at 50,000 instead of 55,000 even though the FV of the machinery seems more clearly evident to me than the actual value of the land? Does it mean the actual JE is Dr. Machinery 50,000 Cr. Land 50,000 and a separate entry for the gain on adjustment of land of Dr. Land 30,000 Cr. Realized gain 30,000? Ugh I hate these!


    FAR - 67, 82 (Expires 07/31/18)
    AUD - 03/08/17
    REG - TBD
    BEC - TBD

    Don't go ninjin' nobody that don't need ninjin'. Cause I could be a-judy choppin' and kung fu kickin' and there goes your leg. There ain't much call for a one-legged ninji.

    #1436318

    BondVillain
    Participant

    @scared_cpa – per ASC 845-10-30-1:

    In general, the accounting for nonmonetary transactions should be based on the fair values of the assets (or services) involved, which is the same basis as that used in monetary transactions. Thus, the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered to obtain it, and a gain or loss shall be recognized on the exchange. The fair value of the asset received shall be used to measure the cost if it is more clearly evident than the fair value of the asset surrendered. Similarly, a nonmonetary asset received in a nonreciprocal transfer shall be recorded at the fair value of the asset received. A transfer of a nonmonetary asset to a stockholder or to another entity in a nonreciprocal transfer shall be recorded at the fair value of the asset transferred and a gain or loss shall be recognized on the disposition of the asset.
    845

    So there's two criteria: the first is use the fair value of the asset surrendered; second, use the fair value of the asset received if the fair value is more clearly evident. In your problem the land was appraised so the approximated it's fair value.

    The entry:

    New asset 50,000 debit
    land 20,000 credit
    gain 30,000 credit


    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
Viewing 30 posts - 361 through 390 (of 1,669 total)
Return to Front Page

You must be logged in to reply to this topic.