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ACCA December Exams

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  1. Dear Sir,

    In the notes (PG-27), it mentions that the investment is measured either at cost or according to IFRS 5 if held for sale – under IFRS 3

    But under IAS 27, the investment is valued either at cost, IFRS 9 or IFRS 5 if held for sale. Same is mentioned in IFRS 10.

    Which one would be right?

    • Please be specific – do I not refer to the examples as I’m lecturing?

      I think that it’s most unlikely that the video lecture is not aligned with the course notes

      May I ask you to check again? It could be that I’m making an example up off the top of my head in preparation to tackling an example from the course notes

      Just play the video for a few more minutes – you should find that the notes and lectures line up again

      • for example the start of this video you refer to working 3 and “per the question! lookin at the course notes i am not sure which question you refer to.

      • Ok, here’s an easy way to find out …

        … I always start working W3 Consolidated Retained Earnings with the line “per question” and put in the two columns in working W3 the two retained earnings figures from the question

        Watch the video again, make a note of the two earnings figures for the two entities and then briefly look again at the course notes.

        It may take you all of 1 minute to flip through the course notes questions to find the appropriate question

        If not, post again with the two earnings figures that I have written on the screen in the video and I shall look for them

  5. Hi Mike, the videos for this chapter keeps ending at about 4mins with the message
    “Sorry There was an issue with playback”

    And I can’t also find them on the youtube channel.

    Can this please be resolved?

    Thanks

  7. Hi MikeLIttle

    I am struggling with not consolidating pre-acquisition retained earnings. My thinking is: since you own 100% of the shares of the company, then everything it owns is now yours – including its pre-acquisition retained earnings.

    I also think of it this way: who does retained earnings belong to? – Current shareholders, right? If that is the case, then all of the retained earnings should be consolidated.

    Help me out, please…

    • Two directions to attack this question!

      1 The concept of consolidation is to reflect “Control” and the pre-acquisition earnings were not achieved whilst the new subsidiary was under the control of the parent. Therefore to consolidate those pre-acquisition retained earnings would give a totally misleading picture to our own shareholders and other stakeholders

      2 We don’t consolidate the acquisition cost of buying the subsidiary do we? The cost of acquisition is represented by our share of the fair value of the subsidiary assets acquired.

      But we don’t know the individual values of those subsidiary net assets.

      What we DO know is the shareholders’ funds = net assets and we also know that shareholders’ funds comprise share capital and reserves

      The balancing figure between the cost of the investment and fair value of the subsidiary net assets at the date of acquisition is called goodwill

      So, if we pay $100 and acquire $90 worth of net assets (capital plus reserves) then we have $10 goodwill

      But we’re not going to show $100 in the consolidation and we’re not going to show $90 capital and reserves in the consolidation

      That means that we’re missing off $100 debits and $90 credits.

      We need this to balance so we SHALL include the $10 goodwill debit

      Does that make it any clearer?

  10. Mike I took F7 along with F8 and sort of neglected it and concentrated mainly on F8….it didnt help that my lectures were delivered by a fella from LSBF deeply in love with mentioning his own name…and to put it mildly I found the whole experience off-putting. To say that you have been a god send, would be a massive understatement!

    P.s. Got as close as 47% last time round……not trying to put any pressure on you or anything, but anything under 56% this time around, will not only affect my average but will make me question as to what else could one need more than your lectures!!! 馃檪

    Essentially, this is a very long winded way of saying thank you! 馃檪

    Kindest regards

    Emilian

    • Hi Sir,
      I have a question
      What if a company has more than 50% of the share in the subsidiary company but it doesn’t have the control of the subsidiary as you mention there are some exception so in that situation will the holding company has to prepare the group account?
      I guess the holding company shouldn’t prepare as they don’t have the power to control but if they don’t prepare the group account will it not be misleading for the investors?

      • To qualify as a subsidiary, a company has to be under the control of the parent. On the face of it, a holding of the majority of the voting power in another company suggests that the investor has a subsidiary.

        But if, for whatever reason, the investor is not able to exercise that voting control, then the invested company (the supposed subsidiary) cannot be treated as a subsidiary and will therefore not be included within any consolidation

        In fact, if this is the only investment held by the “parent”, then no consolidation would be appropriate.

        You mention about misleading the parent’s own shareholders. That problem can be easily avoided simply by full and frank disclosure in the parent’s own financial statements.

        Ok?

  13. Dear Sir/Madam ,
    I cant watch those videos, are you updating these videos on YouTube this year ? Cause I can’t watch YouTube neither.
    Thank you.

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