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Mike, I’ve been working on the last f7 exam for last two days now )) and so far so good… but I’ve got some questions about it, if you don’t mind.
1. MCQ q1. correct answer’s D: allocating part of the sales proceeds of a motor vehicle to interest received even though it was sold with 0% (interest free) finance.
what standard or topic does this answer refer to? I can’t even remember I’ve studied something like that and I don’t know where to look for.2. part B q3. there are some dividends received that are disclosed in investment income (in the answers), and I can’t understand where they got them from.
3. how should we treat operating lease payments and a lease premium? what part of them should be capitalised and amortised and why? (still q3 note v)
4. what does it mean ‘investment through profit or loss’? particularly, ‘through profit or loss’ part.
well, not just some questions (of course you don’t mind, why would you). I mean, some questions for you 🙂
1) The mcq answer is because of substance over form in the Framework
2) There’s a working in the printed answer! (working iii)
3) It’s a finance lease and the answer is shown in (working v)!
4) Any movement in the value of the investment or any income derived from the investment goes “through profit or loss” as opposed to going through comprehensive income
Ok?
hmm, not completely.
1) why should we sell vehicle with ANY interest? when we sell something to someone how should any finance be involved in that? I mean, like borrowing or something, not in terms of receiving money.2) that’s why I’m asking. I can see working iii – Dividends received (500 – 200 profit on sale) – and I understand that they got 200 from the investment sale – an investment which had a carrying amount of $1·4 million was sold for $1·6 million. but where did 500 come from?
3) no, it’s another one, see working i – The lease premium must be amortised, on a straight-line basis, over the length of the lease (four years) – but why?
4) this one I understand now.
The answers for mcq 1 include a – c which are all patently incorrect. That’s one way to arrive at answer d.
However, the question implies that there IS finance interest included in the sale price. Companies that sell items with 0% interest have already uploaded the principal in order that they may sell on credit terms with 0% finance
3) Why do we have to write off the premium? Because IAS 17 says that we should. Simple as that!
Better?
yep. hope that I’ll arrive at complete understanding of f7 – not just these particular issues, but the big picture – before it’s the 8th of September :))
3 complete weeks before 8th – plenty of time (if you cut out sleeping and eating!)
You’ll be fine, don’t panic
I hope so… I think I just need to allocate all available time wisely, probably more time to practice than to theory.
Agreed – practice and familiarity with question style and content are key issues to success in all these ACCA exams
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