FAR Study Group Q1 2017
December 25, 2016 at 10:19 pm #1400168
I can't score an 80% on leases to save my life and have been stuck on this chapter for 3 days smh! Too damn tricky!December 26, 2016 at 6:48 am #1400211
@mtaylo24 When's your exam? Mine's the 9th. I'm almost there; half-way through bonds. It's been a tough month here. I'm still debating whether to start my final review now or after governmental.December 26, 2016 at 7:17 am #1400213
@jalls, Haven't scheduled anything yet. Leaning towards early Feb….Im still debating whether I should start throwing BEC in the mix and sit for them both towards the end of the window. I don't think that I'll ever be ready for this section…
Sidenote: I finally got a 90 on leases, gave me the greenlight to move to Derivatives/Hedges (yay). I can't believe how many sessions that took.December 26, 2016 at 9:34 am #1400225
GiniCParticipantDecember 26, 2016 at 10:12 am #1400232December 26, 2016 at 12:47 pm #1400297
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 Payable
The answer is D. The explanation:
Bond anticipation notes are included as general long-term liabilities. The amount would never be revenue or a deferred revenue as the amount is due to be repaid at some point.
Comment: I've been studying governmental accounting for the last couple of days and thought that the 5 governmental funds – general, special revenue, capital projects, permanent and debt service fund; could not carry longterm debt.December 26, 2016 at 1:06 pm #1400315
Anyone have tips for JE on pensions. Im struggling to understand what account to debit and to credit. I understand the numbers just the accounts are driving me nuts. For instance, to record return on plan asset we have to first DR: Pension Benefit Asset CR: Net periodic Cost and then DR: Def. Tax Expense – I/S CR: DTL
Im not quite understanding the logic. Any help is appreciated.December 26, 2016 at 1:41 pm #1400342
Scenario: You are an employer and can only deposit 75,000 in a plan
1. Deposited 75,000 in a plan
Debit pension expense 75,000
Credit cash 75,000
2. Deposited 100,000 in a plan
Debit pension expense 75,000
Debit ppd expense 25,000
Credit cash 100,000
3. Deposited 65,000 in a plan
Debit pension expense 75,000
Credit cash 65,000
Credit pension payable 10,000
Scenario: Amended plan to improved benefits which is effective July 1 of this year. APBO increased 100,000 due to increase in service cost. Tax rate is 30%
Debit OCI 70,000
Debit Deferred Tax Asset 30,000
Credit OPEB liability 70,000
Credit Deferred tax benefit – OCI 30,000
Service cost 10,000
Interest cost 2,500
Debit Pension expense 12,500
Credit Pension Liability 12,5000December 26, 2016 at 3:09 pm #1400384
@mtaylo, can you possibly explain the reason for the APBO one? why DR: OCI and CR: Def tax benefit? Im sorry if that sounds stupid.. but thats mainly my struggle to understand the account to use.December 26, 2016 at 3:43 pm #1400405
@Spartans I'll give this a shot since I haven't revisited the tax chapter yet. You adjust Oci for pensions when:
1.) net gains (losses) are amortized as part of service cost or
2.) a new determination of a funded status is made.
The APBO one was a new determination of funded status since the plan was amended…
We do the tax JE since that tax rate was mentioned.
You Debit OCI and offset OPEB liability, then you debit deferred tax asset and offset the tax benefit, due to the temporary differnce…December 26, 2016 at 4:23 pm #1400426
Can someone ‘splain when to use continuing ops vs oci when it comes to the foreign stuff? I keep getting this mixed up…December 26, 2016 at 4:48 pm #1400433
Bond question anyone?
I'm not sure how to get an answer on this. I'll keep looking at my text. It's probably a journal entry related to exercising warrants?
Roaster Company issued bonds with detachable stock warrants. Each warrant granted an option to buy one share of $40 par value common stock for $75 per share. Five hundred warrants were originally issued, and $4,000 was appropriately credited to warrants. If 90% of these warrants are exercised when the market price of the common stock is $85 per share, how much should be credited to capital in excess of par on this transaction?
D. $24,250December 26, 2016 at 4:55 pm #1400438
@mtaylor24 perhaps this is a little simplistic. I got it out of my “other” notes. I'm sure I've seen something very similar in Ninja Blitz and Notes on more than one occassion.
“First, a remeasurement adjustment which goes through the income statement
Second, a translation adjustment which goes through the statement of other comprehensive income”
So, is it basically as easy as knowing the difference between a re-measurement and a translation? Even Gleim says that plus a bunch of other stuff in the summary of core concepts.
“Foreign currency translation adjustments are reported in
other comprehensive income” – Thanks for your summaries, Dr. Gleim, et. al.
I'm sure I'll be experiencing the joys of that soon. I once took advanced accounting that covered that. If nothing else, I got the book for reference..December 26, 2016 at 5:09 pm #1400448
Anyone else find this exam to be hell to study for? Especially if you don't work with public companies?December 26, 2016 at 5:11 pm #1400450
I've figured out my question by looking up the definition of “bond anticipation note.” Per Investopedia:
DEFINITION of ‘Bond Anticipation Note – BAN'
A short-term interest-bearing security issued in advance of a larger, future bond issue. Bond anticipation notes are smaller short-term bonds that are issued by corporations and governments, such as local municipalities wishing to generate funds for upcoming projects. The issuing bodies use the bond anticipation notes as short-term financing, with the expectation that the proceeds of the larger, future bond issue will cover the anticipation notes. Bond anticipation notes may be used when the issuer wants to delay a bond issue, or if the issuer wishes to combine several projects into one larger issue. Bond anticipation notes are typically payable from the proceeds of the sale of the bonds.
So the moral of the story: the bond anticipation note is a short term debt instrument and thus can be carried by government fund.December 26, 2016 at 5:35 pm #1400457
@jalls, Thanks, that makes perfect sense. I need to stop ignoring the summaries at the bottom, you would think that would be the only thing worth ignoring, but when they say study everything, you must study everything lol! It actually started to click as the questions began to repeat, but your explanation confirms where I was heading.
I'm done w/ that hedging chapter (ALREADY!?!?!) Moving on to Stockholder's Equity. This should be fun 👎December 26, 2016 at 9:13 pm #1400523
Got a bond question as well for y'all.
On April 1, Year 1, Ward Corp. issued $750,000 of 10% nonconvertible bonds at 102 that are due on March 31, Year 11. Each $1,000 bond was issued with 40 detachable stock warrants, each of which entitled the bondholder to purchase one share of Ward $10 par common stock for $25. On April 1, Year 1, the market value of Ward's common stock was $20 per share, and the market value of each warrant was $4. What amount of the proceeds from the bond issue should Ward record as an increase in stockholders' equity?
@jalls, is it B by any chance?December 26, 2016 at 9:19 pm #1400526
I can't make Bonds sink in even after the Roger videos.. While watching its very easy to follow and understand roger but then when I turn to becker. 90% of the time its like a foreign language. Very discouraging because I should be on Govt now but instead I'm like 3 chapters behind for this dang topic.December 27, 2016 at 8:45 am #1400622
Thanks @mtaylo24 – it was one little word again – Monthly. I was doing all the calculations correctly but using each amount as the lease for the YEAR, not the month. With no idea of scale, it didn't occur to me that the monthly rental I derived was too small. Rent for a single office in a large building, just to have a local presence (my company does that in some locations) would be that low.December 27, 2016 at 11:38 am #1400688
Hope everyone had a happy FAR holiday… family just left so I am back at it after about a week off…. ugh. ready to be done 🙁December 27, 2016 at 12:38 pm #1400721
My focus is 💩. I can’t seem to get through 3 questions without stopping. I took off 3 days and the guilt is insane! Must.Get.Through.FAR.To.Finish. 🙁December 27, 2016 at 2:37 pm #1400811
For bond questions with warrants I always look for a few things: Are you going to have to use the warrants only method or the market value method. In this particular problem we are only given the FV of the warrants, therefore, we use the warrants only method.
JE's that I use to help me solve the problem:
DR: Cash 765,000 <—- 750,000 @ 102 (step 1)
DR: Discount 105,000 (step 4 – plug)**
…………….CR:B/P 750,000 (face of the bond) (step 2)
…………….CR:APIC – warrants 120,000 (Step 3)*
*there are 750 bonds and each bond has 40 detachable warrants (750 * 40) = 30,000. Each warrant has a market value of $4.00. So 30,000 warrants x 4 = 120,000
** the discount or premium I always do last, its a plug figure.
The answer should be B. Honestly bonds are intimidating but once you understand the bond amortization table and the JE's, answers will fall into your lap. Keep pushing guys.December 27, 2016 at 3:04 pm #1400831
I'm about to take a break myself and I'm already feeling guilty. Well not really a full break, I should have time to study on the side but the exam won't be my priority again until Saturday.December 27, 2016 at 3:11 pm #1400837
@spartans92 (For some reason my post just disappeared…so I will try again)
For bond questions with warrants I always look out for a few things: Are you going to have to use the warrants only method or the market value method? In this particular problem, we are only given the FV of the warrants. Therefore, we use the warrants only method.
JE's that I use to help me solve this problem:
DR: Cash …..765,000 <— 750,000 @ 102 (STEP 1)
DR: Discount..105,000 (STEP 4 <– this is a plug, I always do this last)
……………….CR: B/P ………….750,000 (STEP 2)
……………….CR: APIC – warrants..120,000 (STEP 3)*
*There are 750 bonds and each bond has 40 detachable warrants (750 x 40) = 30,000 warrants. Now, each warrant has a market value of $4.00. So 30,000 warrants x $4.00 = $120,000.
The answer should be B. Honestly bonds are intimidating, but once you understand the bond amortization table and the JE's, answers will fall in to your lap. Keep pushing guys.December 27, 2016 at 3:49 pm #1400882
@jalls..not sure if anyone answered as yet but I am going with B.19,350
Cash 33,750 (because $75 plus 1 warrant gives you 1 share and 90% of 500 warrants exercised)
A.P.I.C- warrants 3,600
common stock 18,000
A.P.I.C 19,350December 27, 2016 at 11:30 pm #1401086
For you Becker users how do you feel about skipping F10? I can't watch any more lectures or retain anything else. I have this whole week off and would like to kick off the review process now. The exam date is Jan 20th.December 27, 2016 at 11:52 pm #1401105
After having taken FAR twice, I highly recommend not skipping anything. Every exam is entirely unique and not studying any random chapter could be the difference between passing and failing.December 28, 2016 at 12:17 pm #1401314
jeff @ another71.comKeymaster
Test Your Might (AUD) – MCQ Giveaway on FacebookDecember 28, 2016 at 2:20 pm #1401528
finally got my NTS for my re-take and now just feel stalled out on when to schedule it… there aren't a lot of open dates so I am either looking at Mid-January or Late February… I feel like Mid Jan is too soon but Late Feb too long… any helpful words of scheduling wisdom????December 28, 2016 at 2:28 pm #1401530
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