2016 was a big year for the CPA exam! The FASB issued several ASUs, some of which will be tested beginning this January, the testing window for 2017 was extended, and the AICPA announced that the exam will change on April 1, 2017. We understand that keep track of these changes can be difficult. To help you prioritize, we have highlighted the most important ones below:
● Testing windows are extended for 10 days into the blackout months. This is applicable to each testing window in 2017 EXCEPT the April 1 – May 31 (Q2) window, when testing windows are extended for 10 days into the blackout months. This is applicable to each testing window in 2017 EXCEPT the April when the updated exam is launched.
● There will be a 10-week delay in the score release for Q2. This applies only to the Q2 testing window, and allows the AICPA to provide sufficient time to statistically validate candidate performance on the new exam.
● REG and BEC length is extended to 4 hours. These sections will increase from 3 hours per section to 4 hours per section
● There is now an optional 15-minute break that will not count against the clock. This is only available between testlets 3 and 4. Any additional break between testlets will still count against your time.
● Each section will have one additional testlet. The exam will continue to be composed of the 4 existing sections: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). However, each of the existing sections will have 5 testlets, instead of the previous 4.
● BEC will now include task-based simulations (TBS). This section now includes 5 TBS questions, and will still include three Written Communication (WC) questions.
● There’s a new TBS. In addition to the existing types of simulations, there will be a new type called the enhanced task based simulation.
● The Step Acquisition Method for business combinations is no more. Thanks to the FASB’s issuance of ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323), companies no longer have to retroactively apply the Equity Method to the beginning of an investment. Those that achieve Equity Method status can prospectively apply the equity method, which means that the date that they achieve this status, they begin using the equity method.
● Forget about current vs. non-current! For reporting on Deferred Tax Assets and Deferred Tax Liabilities, the FASB simplified the presentation of both on the balance sheet. Previously, current and noncurrent deferred tax assets/liabilities (depending on the net amount) were required to be presented separately. It was also difficult determining whether an asset or liability should carry a status of current or noncurrent. The FASB is now requiring companies to report all Deferred Tax Assets and Deferred Tax Liabilities as non-current. This means that the net amount can be presented as one asset or liability on the balance. Important note: only Deferred Tax Assets or Deferred Tax Liabilities within the same jurisdiction can be netted as one line item. These cannot be netted as one line item across multiple jurisdictions. For more information on this topic, watch our video: For more information on this topic, watch our video.
● Average cost is no longer being considered with respect to inventory valuation. In July, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory, in July as part of its Simplification Initiative. The amendments in this update apply to all inventory that is not measured using LIFO or the retail inventory method; in other words, inventory that is measured using FIFO or average cost. Inventory within this category should be measured at the lower of cost or net realizable value (NRV, which is the estimated, ordinary selling price, less reasonably predictable costs of completion, disposal, and transportation), rather than the lower of cost or market. Prior to this update, “market” could be one of three amounts: replacement cost, net realizable value, or net realizable value less normal profit margin.
Remember, Surgent CPA Review is not like other review courses. Whether you are a new candidate, or a candidate who has not found success using other review courses, you will find that our approach is both effective and efficient. We guarantee you will succeed!