FAR Study Group Q1 2017
December 22, 2016 at 7:50 pm #1399002
@ginic 70s on your first run? One can only dream, but it does seem like you put in mad work up front.
Here is the official answer explanation:
Answer (B) is correct.
On January 1, Year 1, the bonds were issued at $88,022 [($5,000 annuity payment × 3.99271 present value of an 8% annuity) + ($100,000 bond repayment × .68058 present value of $1 at 8%)], which is at an $11,978 discount ($100,000 – $88,022). The interest expense in the first year is $7,042 ($88,022 × 8%), and the coupon payment is $5,000. This means $2,042 ($7,042 – $5,000) of the value of the discount is amortized in Year 1. Therefore, the value of the net bonds payable at the end of Year 1 is $90,064 ($88,022 + $2,042).December 22, 2016 at 8:22 pm #1399028
Seems like it…December 22, 2016 at 8:38 pm #1399032
Ugh.. I hate FAR!! and I hate studying while working. Lot of people do it and I have to applaud for their effort. Work is getting much busier with tax season coming up too. Luckily I have the extended holiday break.. Still on F6 and Exam is in 3 weeks.. WTF!! I just can't seem to have the energy to study after work… how do you guys do it?
I am so behind.. Still struggling with bonds 🙁 This section is so overwhelming. I just wanna shoot myself and call it done.December 22, 2016 at 8:58 pm #1399047
@Spartans – I negotiated a shifted work-day. I get up at 6 AM, study several hours, and get to work at 10 instead of 8:30. Somehow I don't mind working at 8 PM as much as I mind studying then!December 22, 2016 at 9:03 pm #1399067
@Spartans, Have you tried mornings? It actually isn't half bad. I'm not sure where I have been finding my energy lately. It must have been that FAIL with a capital F. I have been determined ever since…December 22, 2016 at 9:06 pm #1399073
OK, Kieso Weygandt Warfield 14th Ed p. 714. “Companies report bond discounts and bond premiums as a direct deduction from or addition to the face amount of the bond.” “Report” I.e. on balance sheet, vs. “record” in ledger? Words have technical meanings. Same section in KWW also notes that “Discount” is a contra account, not an asset, and “Premium” is an “adjunct” = liability valuation account. This is starting to gel a little.December 22, 2016 at 9:18 pm #1399079
Whipped out the ol school Intermediate Accounting book on em! Tell em why you're mad! Seriously, these Gleim questions are ridic, but I would rather be over-prepared this go-round…December 22, 2016 at 9:21 pm #1399086
Took me a while to find it in my 15th edition, but I did. This makes MUCH more sense now than it did when I was taking the course! The discount is also a valuation account – both premium and discount sort-of adjust the value of the bond from face (par) to what would have been fair value on the date of issue. We've got this!December 22, 2016 at 9:24 pm #1399088
Have you guys been using that thing? I actually think that I have a pdf of it somewhere in the cloud. I might have to start using it! Haven't touched that in years…December 22, 2016 at 9:30 pm #1399095
I haven't really tried studying in the morning because Im not an early bird lol. I go to bed around midnight every night so I tend to study after dinner around 8-11 per night. Weekdays I break it down into sessions. I'd do 9-11:30 then 1-3 then 7-9 again. However, I read the book and that takes up majority of the time..
It just bothers me when I take much longer than expected. I can't focus for this section, not sure if its because the material or I'm just burned out. I just hope to pass with 75 this round.. As long as I knock FAR down Audit shouldn't be too bad.December 22, 2016 at 10:46 pm #1399116
Wow.. so I just googled a question and it brought me back to a thread I posted few months ago in April. At that time I got the question right and was explaining it to a fellow Ninja but Im struggling now on a retake. DANG that is some cray cray BS…Kind of funny how much worse a retake actually is..
I wonder what happened to my brain juice now!! May the force be with you.December 22, 2016 at 11:24 pm #1399133
Aha! And we can't just debit “bonds payable” because at the end we still have to really write a check for $100K.December 22, 2016 at 11:42 pm #1399140
Done for the night. Leases tomorrow…I shall be posting some interesting questions.December 22, 2016 at 11:59 pm #1399148
ok guys, I should know this because its literally perm and temp. differences from REG. But somehow I forgot everything already. If I have tax depreciation in excess of book.. Why am I deducting it out of book income to get tax income??
Here is the question:
Dunn Co.'s income statement reported $90,000 income before provision for income taxes. To compute the provision for federal income taxes, the following data are provided:
Rent received in advance $ 16,000
Income from exempt municipal bonds 20,000
Depreciation deducted for income tax purposes in excess of depreciation reported for financial statement purposes 10,000
Enacted corporate income tax rate 30%
What amount of current income tax liability should be reported in Dunn's December 31 balance sheet?
I get everything up till the depreciation.. I understood it when I was studying REG just a month ago. LOL.December 23, 2016 at 10:13 am #1399251
If tax depreciation is in excess of deprecation reported for f/s purposes it's a deduction on the tax return. Depreciation reduces taxable income, so if there is excess depreciation to be taken then keep reducing taxable income. Any chance the answer is $22,800? Ugh, I totally forgot this chapter, I haven't looked at in like a month.December 23, 2016 at 10:39 am #1399268
Just beginning governmental accounting – OMG this a monster. Using Ninja plus videos and Wiley CPAexcel book. Any tips or strategies to approach this topic?December 23, 2016 at 10:45 am #1399272
For me, the linchpin of governmental accounting is the concept of encumbrance. You encumber funds in order to keep people from overspending their budgets, I.e. to make sure everyone knows that money is committed. Everything else makes sense around that.December 23, 2016 at 12:01 pm #1399326
Bingo!! 22800 is the answer. I think I got this part down 🙂 Thanks!
I hate DTL and DTADecember 23, 2016 at 12:55 pm #1399358
Hey ninjas! I am going to plan to participate in the Q1 forums this time around. I just got through taking FAR for the first time in Q4 and came up short with a 73, so I am going to retake it on Jan 7th. Then I am off to studying for REG for the first time, with an exam date on Feb 4, and then a retake on BEC scheduled for March 6 (which i failed with a 74 on my first attempt back around July/August).
So to say the least I am trying to get as many of these exams done in Q1 as possible. All the best to everyone studying for their exams in this window.
Also, @mtaylo24 I see that you have drafted a pdf of all the JE's that you plan to study for FAR. Would it be possible to get a copy of that document? I had planned to draft up a list of JE's myself this time around and put a little bit more focus on JE's.December 23, 2016 at 2:10 pm #1399383
stilgoinParticipantDecember 23, 2016 at 4:30 pm #1399506
jeff @ another71.comKeymaster
2017 Update Video:December 23, 2016 at 5:29 pm #1399527
@stilgoin thanks, very helpful. Also, does anyone know if the exam asks research questions for GASB?December 23, 2016 at 6:51 pm #1399553
I wondered about GASB research as well, but I only had access to FASB on the times I have tested for FAR, so I am assuming no. I did tell them in the survey at the end of one of my FAR exams that I thought it was unfair to be asked about GASB issues in the sims since we had no access to GASB. I’m sure they threw out all governmental sims after my complaint. (<<<insert snarky sarcasm and eyes rolling here)December 23, 2016 at 7:56 pm #1399569
Here's a link to the annual report (that includes the govt financial statements) for the City of Boston:December 24, 2016 at 9:36 am #1399715December 24, 2016 at 1:03 pm #1399770
This one had me stumped, but I finally got it…
Question: 5 Main, a pharmaceutical company, leased office space from Ash. Main took possession and began to use the building on July 1, Year 1. Rent was due the first day of each month. Monthly lease payments escalated over the 5-year period of the lease as follows:
Period – Lease payment
7/1/Year 1 – 9/30/Year 1 – $0 – rent abatement during move-in, construction
10/1/Year 1 – 6/30/Year 2 – 17,500
7/1/Year 2 – 6/30/Year 3 – 19,000
7/1/Year 3 – 6/30/Year 4 – 20,500
7/1/Year 4 – 6/30/Year 5 – 23,000
7/1/Year 5 – 6/30/Year 6 – 24,500
What amount would Main show as deferred rent expense at December 31, Year 4?
D. $71,550December 24, 2016 at 8:40 pm #1399898
Need help with this question…
White Industries started their operations on January 1, Year 1 and recorded $400,000 in warranty expense during the year. Warranty expense was the only difference between the company's pretax financial income and its tax return income of $900,000. White will be required to pay these warranties at a rate of $100,000 per year beginning in Year 2. Although White fully expects to earn in excess of $100,000 in Year 2 and Year 3, the company believes it is more likely than not that it will incur a loss after Year 3. The enacted tax rate is 25% in current and future periods. What will White record as its income tax expense in Year 1?
Not really understanding where to start.. Thanks!December 25, 2016 at 5:29 am #1400007
@mtaylo24 Thanks for the link. I am definitely going to look over these JE's.
Also, on the deferred rent expense problem for lease payments, the answer is D, $71,550. Thanks for sharing.December 25, 2016 at 1:31 pm #1400045
Grove Township issued $50,000 of bond anticipation notes at face amount in the current year and placed the proceeds into its capital projects fund. All legal steps were taken to refinance the notes, but Grove was unable to consummate refinancing. In the capital projects fund, what account should be credited to record the $50,000 proceeds?
A. Other Financing Sources Control
B. Revenues Control
C. Deferred Revenues
D. Bond Anticipation Notes PayableDecember 25, 2016 at 1:51 pm #1400048
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