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December 2014 and June 2013

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › December 2014 and June 2013

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • January 30, 2019 at 10:10 am #503679
    foeldh123
    Participant
    • Topics: 168
    • Replies: 76
    • ☆☆☆

    1. IAS 36 and IAS 16, all assets will start to be amortized or depreciated when the asset is available for use ?

    2. in question Bradley (December 2014) (it’s the section B question but i can’t seem to know the exact question number), under part (b) and number 2 where it talks about provision, shouldn’t be an adjusting event ? since there was an approval of closure at a board meeting in August 2014 which is within the accounting period and shows the evidence that it has existed within the reporting period.

    Therefore, can i understand whether this can also be an adjusting event ?

    3. in the question of Poodle Group (Jun 2013), the Section B question, in the answer sheet, for the part (a), answer sheet have calculated two materiality percentage which are profit before tax and asset

    – My question is if we only calculate asset (material) percentage amount, we only get 0.5 mark ?
    – Then if the question provides us all the figures of total revenue, assets and profit before tax, is it safe to calculate all the percentage amount to ensure we get the full mark on the materiality calculation ?

    January 30, 2019 at 10:57 am #503683
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8328
    • ☆☆☆☆☆

    1. Yes (and I presume you mean IAS 38).
    2. Board approval is insufficient – per IAS 37 there is a constructive obligation (on which to base a provision) only if (i) there is a detailed formal plan AND (ii) the entity has “raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or ANNOUNCING its main features …”. So in the case of Bradley there was no constructive obligation at the reporting date – the board could have changed its mind in September.
    3. It’s more likely that there would be 1 mark for each but NO – do not calculate everything as this shows a lack of understanding that materiality must be assessed based on relevant parameter(s). For example, the % of an unrecorded liability on revenue is meaningless, since revenue is not affected.

    January 30, 2019 at 2:12 pm #503701
    foeldh123
    Participant
    • Topics: 168
    • Replies: 76
    • ☆☆☆

    for number 3. so if the answer sheet have calculated two materiality percentage (for example revenue and asset), and if i have mentioned just revenue percentage, i’ll only get 0.5 mark assuming that materiality calculation is 1 mark ?

    January 30, 2019 at 5:55 pm #503730
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8328
    • ☆☆☆☆☆

    If you write, for example [taken from D18 answer]:
    “The $2 million grant received recognised as other operating income represents 29% of projected profit before tax and is therefore material.”
    That’s it – you’ve evaluated materiality and you get the 1 mark.

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