CPA FAR Exam "Best Bets" for Simulations by Darius Clark. Part 1

[@jayebarnes]

That was so clear. thank you.

[@walidhogan5995]

Love your cpa course best lectures ever

[@aaroacademy]

Thank you, So, much for your content.

[@samanthapender2155]

for Jun 30th??? dr. interest expense 9,193 cr. cash 7,500 cr. discount on B/P 1,693

[@DariusClarki75]

Very good Samantha, what about the journal entry on December 31?

[@samanthapender2155]

@@DariusClarki75 dr. interest expense 9,261 cr. cash 7,500 cr. discount on B/P 1,761

[@richardtesta1607]

How do you get the 9,193? I can’t figure it out.

[@jrock6417]

@@richardtesta1607 It is the PV of the bond principal and interest calculated of $229,825, multiplied by the effective interest rate. Which is the annual market rate of 8% divided by 2 since payments are semi-annual (aka 4%). $229,825 multiplied by 4% is $9,193. Cash will always be $7,500 and the bond discount will be the remainder to make the entry balance.

[@jrock6417]

You can also calculate the future entries by taking the $229,825 and adding the amortization of the bond discount from the previous payment ($1,693 in this case) and then multiplying by the same 4% effective rate to get the interest expense for the next period (in this case 12/31). Hope this helps!

[@zkmv1111]

Brilliant

[@rushrider2332]

Pls make a video on likely sims might be asked in BEC

[@guruguruprasath7980]

Hi Darius, in which will get more Simulation questions

[@waxjohn5603]

Good work 👌👌👍

[@DariusClarki75]

Much appreciated John, Did you apply for an i-75 Scholarship?

[@abdulmalikalnoaman7427]

@@DariusClarki75 I am taking the FAR exam in Aug, do you have a list of topics that you expect to show up as SIMs? - I am so stressed about this exam

[@DariusClarki75]

Keep watching for the next You Tube Video in the series of "Best Bet" FAR Topics for a Simulation. Hint, Think Investments!

[@LuxxomannLU]

June 30th interest payment Interest expense (229,825*8%/2) $9,193 (Dr) Amortization of discount on bonds (plug). $1,693 (Cr) Cash. $7,500 (Cr) Next period the carrying value will be 231,518 Interest expense $9260,72 (Dr) Discount on bonds. (Plug) $1,760,72 (Cr) Cash $7,500 (cr)

[@edgarkim7487]

Why is the principal with 4% 10 period one? Isn't it .680 (for 8% 5 period)?

[@HGooner94]

semi annually = 8%/2 = 4% since it's semi annual payment for 5 years = 10 total payments (periods) there's a special place in hell for bonds, F bonds

[@cloudcircusgaming5153]

I tried amortizing the numbers in the example and it didn't balance out to 250,000

[@KSU0404]

it is because the the PV table rounded the factors. For the pv of 1 you could do 1/(1+.04)^10 and it would fix the rounding issue.

[@hetvipatel4451]

why would you not use the 8.58 instead of 8.11 for PV of payments?

[@kanoehooper5559]

Because you are working on the market rate not the stated rate semi-annually.

[@anthonylarocco573]

The stated interest rate is also the coupon rate which is the payment of the bond.

[@Tom-nn5wd]

You discount with the market rate

[@Lee-qu4ce]

I had bonds and it was nothing like this. Bonds are not that hard and they made it somehow impossible.