ACCA F7 December 2009 Question 2 Sandown

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  1. Avatar of nkmile64 nkmile64 says:
    April 15, 2013 at 6:01 pm

    Thank you for an excellent lecture that yet again adds value to OpenTuition!
    I was wondering about the so-called “Available For Sale” Investments. A search I performed in the text of the relevant IFRSs (IAS 32, IAS 39, IFRS 7 and IFRS 9) did not produce any results which is quite embarrassing. The closest thing I could get to is a Financial Asset that is an equity instrument and classified as FVTOCI; the gains and losses are recognised in a reserve in OCI and not in Profit or Loss. Still, I don’t understand how previous reserves from gains on the investments are treated in case of disposal of these FVTOCI investments. Are they recycled through Profit or Loss or just moved from the reserve to Retained Earnings?

    Your assistance would be more than gratefully appreciated.

  2. Avatar of diepnguyen97 diepnguyen97 says:
    May 25, 2012 at 5:07 pm

    40325 not 40825

    • Avatar of MikeLittle MikeLittle says:
      May 25, 2012 at 6:21 pm

      @diepnguyen97, I’ve not checked the ACCA website answer but it could well be the treatment of the deferred tax – that was a 1,500 adjustment wasn’t it?

      • Avatar of diepnguyen97 diepnguyen97 says:
        May 25, 2012 at 6:35 pm

        @MikeLittle, Hiya, thanks for the reply. No its not the deferred tax, deferred tax is right. It is something to do with available -for – sale investment. As in the website :
        Profit/gain on sale of available-for-sale investments (w (iv)) 4,000
        ( 4000 = 2200+1800)
        Gain on available-for-sale investment 2500
        ( under other comprehensive income)
        Realised profit reclassified (recycled) (1800)
        to income on available-for-sale investment

        • Avatar of diepnguyen97 diepnguyen97 says:
          May 25, 2012 at 6:36 pm

          and the answer above : investment income ( 1300 +2500) 3800

          • Avatar of MikeLittle MikeLittle says:
            May 25, 2012 at 6:50 pm

            @diepnguyen97, None of those adjustments, nor any combination of them, explains a 1,500 difference between my answer / BPP’s answer / Kaplan’s answer and the ACCA’s version!

            But you appear to have identified where the difference is!

          • Avatar of diepnguyen97 diepnguyen97 says:
            May 25, 2012 at 9:14 pm

            i think that where the problem is, but i dont have a clue why the examiner treats the investment like that. So if this question come in the exam, or similarly, I ll be stuck as i dont understand the reason behind it :(

      • Avatar of angelcorpse angelcorpse says:
        April 10, 2013 at 8:48 pm

        think I got what the problem is here. Mike, see, you overlooked the sale of AFS investment which had a carrying value of $8.8m and was sold for $11m which gave a gain of $2.2m for current year and since the investment originally did cost $7m and revalued to $8.8m giving us past revaluation gain of $1.8m. Therefore, total AFS invest. in. is $4m(2.2+1.8). And the gain of $2500 that you included into Inv. Inc. they put this figure under ‘other comprehensive income” section as a gain on AvFS. :)

  3. Avatar of diepnguyen97 diepnguyen97 says:
    May 25, 2012 at 4:57 pm

    The result of this question as according to acca website, the profit for the year is 41825 not 40825. Can anyone know the reason why?

  4. Avatar of jokochokoleornard jokochokoleornard says:
    May 17, 2012 at 2:28 am

    The question is nö 2 in december 2009 F7. Thanks 4 help

  5. Avatar of jokochokoleornard jokochokoleornard says:
    May 17, 2012 at 2:25 am

    The solution for sandton answers shows a deferement of income of $4000.

    Thats O.k. Do it mean deferred liability( $2400) is included in the deferred income? Thanks 4 advice guys. All d luck in exams

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