*** ACCA Paper SBR December 2019 Exam was.. Instant Poll and comments ***

Paper was good and average. I couldn’t do well due to time constraints. Q1 was slightly confusing and took majority of the time. Ready to sit in Mar again

Disaster .. only did 80% of the paper .. retry in March…

Yes it was confusing. Who remembers the questions? I just don’t remember.

I’ve tried to remember what I can here, along with some answers/thoughts I had during the exam:

Q1 on a step acquisition from associate to subsidiary. Talked about the differences between significant influence and control and how equity accounting to be used up to the point of control assumed. Relatively simple goodwill calculation if you remembered to bring in the FV of the existing investment held. Talked about how associate was to be accounted for and then moved onto NCI being at proportionate value in GW calc. There were also some FV adjustments to make in respect of revaluation (including the arising of deferred tax as a result). I think from what I remember, good will was around $1.4m in my answer (though may be way out!)

Q2 was really quite straight forward in my opinion. There was a whole host of ethical issues and dilemmas being faced of which I addressed using PIPCO. I then talked about the chain of command when it comes to resolving these issues (i.e. not just resigning in the first instance without speaking to person themselves, another key member of management personnel, the audit committee and finally, the ACCA).

I also talked about what the principles and threats were not in relation to the scenario to try and obtain close to the full 11 marks (however, this caused me issue with timing in hindsight).

The treatment of the accounting for ships and containers was wrong on several levels (aggregating separate material items on the balance sheet), depreciating all as one and changing the depreciation policy without the end result being more relevant/reliable measurement. Finally, IAS 16 specifies that if you are to hold the assets under the revaluation model, you must hold the entire class of these assets in the same way (and not cherrypick), which is not what the accountant was doing.

Q3 & 4 is where I really struggled. 4 in particular seemed particularly tricky and I found it difficult to pinpoint exactly what the examiners were after. I made some scarce remarks about the business combination hitting the P&L through goodwill impairment and in turn, hitting the EPS figure. I also mentioned that in an asset acquisition, dep’n and amortisation would hurt the profit in the first year.

I also talked briefly about the contingent consideration, which would need to be allocated across the assets obtained and so if the significantly higher figure was used, we would give rise to an inflated balance sheet and skewing any ROCE calculations, putting us in a position whereby impairment may be significant in a future period. I also recall stating the revenue recognition criteria somewhere in Q4 for the non refundable fee paid. I just said that it should be held as a contract asset and the transaction price written down accordingly upon full recognition.

Finally, question 3 again seemed quite a tough question to deal with (related to the Joint Venture). It asked us whether the JV should have been classified as a sub by one of the JV participants, which really messed with my head. For another of the sub-requirements, I just threw a load of standards based on impairment somewhere here via bullet points as time was of the essence. I stated the definitions of an asset under the conceptual framework and then went onto IAS 38’s PIRATE criteria for recognising internally generated intangible assets for the production costs being capitalised or not. Not sure if this was the right approach but was really clutching at straws!!

All in all, think i’ll come out with between 40-50% and will be resitting in March due to Q3 & Q4 and the missing out of 8 marks in Q1 (related to assets) due to bad timing planning!

When answering Q2 ethics. Part b) ship depreciaton did we have address ethics part within part a)?

Q4 – did we have to calculate treatment under BOTH a) asset acquisition and b) business acquistion? Or simply state which one is relevant den apply this to calculate EPS. I got negative earnings under business combination so couldnt work out EPS?

Q4 was the revenue as an agent or principle ..although i discussed couldnt decide so went with my gut as principle

Q3 UK version there was discuss of correct to consolidate…what did others decide..i said yes….

Thanks BG.. I just remembered I put a contract liability istead of asset. Lol. Its obviously I contrant asset as the fee was paid..

I forgot to bring in nci in calculating goodwill….i m ruined

Did you not use full goodwill method in Q1??

I got negative goodwill..

@micksymooresy16 said:
Did you not use full goodwill method in Q1??

I got negative goodwill..

The question said proportionate method so that means partial method yes? I got negative goodwill too

I think there was a hint in the question of q1 it said about goodwill/bargain purchase. And this only happens in negative qoodwill. Looks like we on the right path

pm

Q2 ethics part A. Situation 3. I talked about ethics as in professional behaviour – computing with relevant laws and regulations and avoid action that discredits the profession . Because clearly he was not following the standards.
And then in part B I talked specifically which standards were done incorrectly. I mentioned segment reporting since their ships were material items (not sure if correct though haha ), then said about it you use revaluation model then it should be applied to all class of assets in scope of that standard (PPE IAS 16). I also said gain and losses are charged through OCI. And disclosures should be made review of depreciation methods, etc.
Then also said that provision that was created before for overhaul was incorrect and it is an acc error. Should be corrected retrospectively. Said what provision is , that it is obligation from past events not future. Although now I am thinking did he have to have a provision for overhaul costs or not?

Q4 – I am not sure too! But I said it is business combination , and then started caccluatlions so I didn’t calculate if it was asset acquisition . sugar there was KPI and I forgot to that part, but just talked about contingent asset, then calculated goodwill, then said that direct costs are expensed.. Showed transactions

Q4 haha not principle ! principal

Q3 it was a joint venture , yes in consolidation It is accounting in Equity accounting . there should be asset investment in joint venture and corresponding share will be included in group retained earnings.

Q1 – step acquistion so first its recorded as an associate & then afterward its consolidate
-did you get a bargain purchase as the answer?

-for the q about fair value of land increase – is the deferred tax calc on the increase from 1 year to the next?

-for the last q, asset acq is taken as 30 right (29 consideration + 1m direct cost?)
-is the depr only adjusted for cal KPI for this for asset acq?

-i wrote q4a as principal since the actual producer gets a small fee

-couldnt finish the 4b q so 4c 5 marks are gone :/

-was it a joint control situation for ibex co?