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Wacc : equity 12 x 75% = 9 % pre-tax debt 8% x 25% x (1 – 0.30) 1.4%
Tax rate 30%WACC 10.45 %
Green EVA positive around 24m, Blue negative around $35m
mostly due to revenue and cap empl figure diff as most adjutments similar for each co.
no r&d adjustment, Econ. Depn adj (12-10) x (1-25%)
Operating Lease add back (said depn incl adj for leases I think ?) couldn’t decide if that needed adj as couldn’t find a period of lease. so did not further adj.
Non cash add back
pretty much only opex not adjustedNo cap empl. opeing figure adjmts
An enlightening revelation – I too would certainly welcome comment from ACCA to rationalise this.
That said, I feel the letters ‘ACCA’ are hard won, certainly highly respected in the industry and obviously part of that stems from maintaining high standards of knowledge. – whether other accounting bodies do this or not.
A lovely paper, if you have revised then hey very straightforward, however it was in fact extremely time pressured, no time to really get depth to any answer, this is a shame, as as the paper demands this to achive real knowledge and not the usual copying textbook stuff
It’s certainly a tipping point for many similar professions: online education replacing professors, online automated tax solutions, inexpensive legal software replacing lawyers,moreover non-creative, numerical, rules based jobs WILL BE SUBSTANTIALLY ELIMINATED very soon, to the degree that accountants have to discover totally new ways to add value to backfill these significant reductions in revenue, or risk being marginalised.
threshold competencies have shifted, the profession and inviduals within it must think ahead and expect change.
Question 2 I think.. 4 products A,B,C,D, the subsequent appropriation of the16k direct production cost altered the decision in a progressive way.. – A & C were a “buy-in” decision,
the consequence was that direct production cost was to be aborbded over B&Dequally 8K each, however Dthen became uneconomic to Make, which then left B to bare all o the 16k cost and thus made B then also uneconomic to Make,Upshot.. all were buy-in decision saving 16k, leaving outsourced variable cost and operating costs
these were the financial considerations,
my Rationale; harmon’s model slightly ignores the influence of key drivers of change;’real world’growing globalisation; global convergence of standards & legislation redress etc,, could there be merit in offshoring strategically important tasks? Safe, or a step too far? May happen anyway from emergence, or through the combination of the lenses of ‘experience/design, but just seems un-addressed by the model somehow, .
NAV1980.. Not sure if the “chicken and blood sacrifice” would be allowed in the exam hall ? , I think it counts as taking unauthorised material to your exam desk !
42% – so good luck to all for June ..
Question paper was not nice in Dec, – despite this, actually thought I’d done ok ?
I bet cashflow comes again June..“it’s the application stupid, not the given knowledge”, .. that’s what I take away from the Acca exam feedback
Much too much mechanics at this level, supposed to be a professional level paper! I think this paper should be fully based on theoretical areas, and discursive questions entirely,; why are we being tested on cashflows anyway, this is not the making of an accountant of the modern age, number crunching bits are now undertaken by accounting systems so why do exams keep trying to flog us to do mathematical contorsions when any old pc with a consol program will do that 35 minute question in less than one minute.
I thought of the transfer across reserves but, the question is explicit in detailing the elemental movements for the year on retained earnings in paragraph 5 being TCI + Divs paid., so I ruled that out,
Question is within BPP 2013 Study Text; Q.21 on page 554, Model Answer per page 603
i.e. was expecting;
Dr PPE $105m
Cr OCI Reval Gain $ 58m
Cr Surplus Reserve $ 47m+ Possibly Dep’n adjmts for past reval reversal..
I also suspect the answer may not be entirely correct, for not the reasons above.
The treatment of the revalution surplus moves from $54m to $101m, thus $47m movement
We’re told that the property revaluation in OCI is $58m, so $58m OCl (taken to OCI possibly for reversing earlier reval losses? + $47m gain to reserves = $105m to PPE
but instead, if the $58m appears to be booked between ppe & OCI – no movement to surplus reval reserve – so I am puzzled I can’t reconcile the movement in the reval surplus reserve.
So, per the model answer, reval surplus = $54m + $58m = $112m … But the closing balance is $101m ??? what might I be missunderstanding ?