ARO Question

In V3 of the 2010 CFA material, on page 467…#15. It says option C is acceptable (thus not the answer), but wouldn’t the assets value be decreased through a depreciation charge on the IS, not accretion??


as its phrased “least likely too”, there could be more than one incorrect answer, and I believe in this case both B and C are incorrect. However, B is “more wrong” because the CV of the liability increases by the accretion charge. C is also wrong, but the value of the asset actually does decrease, however by depreciation expense not by accretion charge. B is the “more wrong” answer I think. Stupid way to test somebody’s knowledge on material IMHO

Thanks Matt…you a level one candidate?

Yep! I’m writing in Toronto. Which oddly enough is the 416 area code :stuck_out_tongue: and I’ll probably take the 407 to get there LOL

Nice…the 406 is the great state of Montana and I’m writing in Helena the capital . Im trying to get FRA down so I have less worries haha how do you feel about it??

I feel ok, a few sections trouble me in FSA, mainly FCFF FCFE and CFO calc through Direct Method. I’m doing a heavy review 1 day each for each topic, then planning to just review all my material lightly the few days leading up to the exam.

What do you mean your trying to get FRA down? Is that a designation or the forward rate agreement :S pardon my ignorance, I’ve been consumed in CFA material for the last 6 months.

i was pondering the same thought last week, Financial Reporting and Analysis is FRA…volume three in the CFA curriculum. FSA FRA…its all the same and it’s giving me a headache lol

Oh shit, all this time I thought the book was Financial Statement Analysis (FSA). Just took a look and sure enough its Financial Reporting and Analysis. How do you feel about direct indirect CFO calc, FCFF, FCFE, Deferred Taxes and Leases? I believe those will all be tested, among other things.

I feel good on cash flow but Taxes and the little things worry me. I pounded the tax concepts today so hopefully I will be ok. Think of who the cash is available to…?