[A332]

Yes, that legal cost part got into my mind too haha.

Thanks for sharing!
Good point on impairment, now I think that right thing to do was to add on annual impairment test before changing useful life

[A332]

1. Groups, part i was to calculate consideration and explain on it and also calculate and explain influence of PL of acquirer.
Consideration included cash, share based payment that was replaced with new share based payment scheme of the acquirer, deferred consideration and legal costs.

I made a guess and expensed legal costs through PL, although I had a thought to include them as a consideration.
Regards acquisition costs I found this on ACCA website:
All acquisition costs, such as professional fees (legal fees, accountant fees etc), must be expensed in the statement of profit or loss and not included in the calculation of goodwill.

With deferred consideration everything was straightforward – discount it to present value, unwound costs to PL.

Part b
Calculate net assets of acquirer
It was messy, so many adjustments of deferred taxes that will change the amount of net assets and after the acquisition the client has sold the revalued asset with the amount higher that has been revalued. Should we adjust goodwill in a reason of real FV is actually higher than it was at the date of acquisition (less 12 month after acquiring etc)? I really do not know, but i suspect that I should comment on this in the explanation part.

b ii
Calculate NCI in SOFP and goodwill
Goodwill was impaired, the task was for 3 marks, so I wrote a sentence that part of impairment of NCI will be accounted in SOFP as NCI measured at FV

Hope that was right.

iii
Was about how adjustments to deferred tax will influence cash flow statement (indirect method).
Tough question. Did not really know what to say there, although DT is an accounting concept and not really cash flow, it should be somehow adjusted as an examiner asked on indirect method.
I think that DT should adjust PBT before operation activities section of CF. Unfortunately this though came to me now and not at the exam. I was panicking already at that time, DT questions stressed me a lot.

Question 2
Ethics and accounting treatment
For ethics it was illegal transaction that CEO forced to do CFO.
Incorrect determination of useful life of intangible asset IAS 38, the same CEO was determined that an intangible had indefinite useful life, where in exam it was clear that operation cycle life of intangible has shortened, so, in my opinion its definitely finite useful life, so had to be reconsidered UL and applied prospectively as a change in estimate.

Also, what do you think, should the asset has to be impaired? It is an impairment indicator, but I am not sure whether we had to test on impairment or not, as if we had reconsidered new UL of the asset so we can expensed high portion of the asset through PL.

For ethics part was a big mark allocation, which is good I think.
CEO definitely breached all ethics standards, we just had to link them to scenario to score high marks and advice CFO what to do in situation where she was forced to to illegal transaction. Feel ok on that question overall.

Question 3

Sale and lease back questions

First part was to determine how transaction should have been accounted in the books of company that bough a retail unit being a company that specialise on development of the office buildings.

Basically it could be anything haha, I assume that to obtain the marks we have to discuss how to account the property that we bought in light of different standards.

It could be Inventories, since we specialise in office buildings, but on the last minute I changed my decision to investment property for the reason that in the question the client will redevelop this property and than sell it, so I assumed that it was bought for a reason of a capital appreciation, so investment property and not an inventory or PPE.

Hope that I had enough to say for a good mark.

Next part was to conclude sale and lease back transaction
Explain whether the transaction was a sale, I made a point that it was a sale because the transfer of risk and rewards has happened (legal title was passed + we leased back property for time much less than remaining UL even with the option to buy it as the option stated that to buy it back we had to pay extra 50% on FV, so I conclude that is not going to happen because in substance no one will pay that extra.

Part 4
Management commentary explain what it is, how it ally to ESG and investor issues on MC
Made points on MC practice statement
Issues that is not part of IFRS, potentially can be lacked of quality characteristic as it mostly narrative etc

Part 2 was on alternative perfomance measures (APMs).

EBITDAR used in management commentary and how it can be misleading
Wrote something that MC should be written is simple language etc
Note that EBITDAR was strangely calculated adding prior years amortisation
And couple more points

Key things that I took after the exam:
1. To practice more on narrative part as english is not my native so its takes additional time to clearly present what i want to say
2. If I cannot state something straight away in simple language – that will add stress my brain in exam situation and i will potentially lose marks, so in the practice almost always using short clear sentence is a way to pass
3. Paying more attention to the details during preparation, it may sounds ok during preparation until you try to write something 🙂
4. Better time planning management

[A332]

1. Groups, part i was to calculate consideration and explain on it and also calculate and explain influence of PL of acquirer.
Consideration included cash, share based payment that was replaced with new share based payment scheme of the acquirer, deferred consideration and legal costs.

I made a guess and expensed legal costs through PL, although I had a thought to include them as a consideration.
Regards acquisition costs I found this on ACCA website:
All acquisition costs, such as professional fees (legal fees, accountant fees etc), must be expensed in the statement of profit or loss and not included in the calculation of goodwill.

With deferred consideration everything was straightforward – discount it to present value, unwound costs to PL.

Part b
Calculate net assets of acquirer
It was messy, so many adjustments of deferred taxes that will change the amount of net assets and after the acquisition the client has sold the revalued asset with the amount higher that has been revalued. Should we adjust goodwill in a reason of real FV is actually higher than it was at the date of acquisition (less 12 month after acquiring etc)? I really do not know, but i suspect that I should comment on this in the explanation part.

b ii
Calculate NCI in SOFP and goodwill
Goodwill was impaired, the task was for 3 marks, so I wrote a sentence that part of impairment of NCI will be accounted in SOFP as NCI measured at FV

Hope that was right.

iii
Was about how adjustments to deferred tax will influence cash flow statement (indirect method).
Tough question. Did not really know what to say there, although DT is an accounting concept and not really cash flow, it should be somehow adjusted as an examiner asked on indirect method.
I think that DT should adjust PBT before operation activities section of CF. Unfortunately this though came to me now and not at the exam. I was panicking already at that time, DT questions stressed me a lot.

Question 2
Ethics and accounting treatment
For ethics it was illegal transaction that CEO forced to do CFO.
Incorrect determination of useful life of intangible asset IAS 38, the same CEO was determined that an intangible had indefinite useful life, where in exam it was clear that operation cycle life of intangible has shortened, so, in my opinion its definitely finite useful life, so had to be reconsidered UL and applied prospectively as a change in estimate.

Also, what do you think, should the asset has to be impaired? It is an impairment indicator, but I am not sure whether we had to test on impairment or not, as if we had reconsidered new UL of the asset so we can expensed high portion of the asset through PL.

For ethics part was a big mark allocation, which is good I think.
CEO definitely breached all ethics standards, we just had to link them to scenario to score high marks and advice CFO what to do in situation where she was forced to to illegal transaction. Feel ok on that question overall.

Question 3

Sale and lease back questions

First part was to determine how transaction should have been accounted in the books of company that bough a retail unit being a company that specialise on development of the office buildings.

Basically it could be anything haha, I assume that to obtain the marks we have to discuss how to account the property that we bought in light of different standards.

It could be Inventories, since we specialise in office buildings, but on the last minute I changed my decision to investment property for the reason that in the question the client will redevelop this property and than sell it, so I assumed that it was bought for a reason of a capital appreciation, so investment property and not an inventory or PPE.

Hope that I had enough to say for a good mark.

Next part was to conclude sale and lease back transaction
Explain whether the transaction was a sale, I made a point that it was a sale because the transfer of risk and rewards has happened (legal title was passed + we leased back property for time much less than remaining UL even with the option to buy it as the option stated that to buy it back we had to pay extra 50% on FV, so I conclude that is not going to happen because in substance no one will pay that extra.

Part 4
Management commentary explain what it is, how it ally to ESG and investor issues on MC
Made points on MC practice statement
Issues that is not part of IFRS, potentially can be lacked of quality characteristic as it mostly narrative etc

Part 2 was on alternative perfomance measures (APMs).

EBITDAR used in management commentary and how it can be misleading
Wrote something that MC should be written is simple language etc
Note that EBITDAR was strangely calculated adding prior years amortisation
And couple more points

Key things that I took after the exam:
1. To practice more on narrative part as english is not my native so its takes additional time to clearly present what i want to say
2. If I cannot state something straight away in simple language – that will add stress my brain in exam situation and i will potentially lose marks, so in the practice almost always using short clear sentence is a way to pass
3. Paying more attention to the details during preparation, it may sounds ok during preparation until you try to write something 🙂
4. Better time planning management

[A332]

I did not pass, second attempt, 48 fail mark, the first one was 45.
I should practice more writing in english probably as its my second language.

Congrats to all who passed and to those who did not – the pass score awaits us 🙂

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