[AJS90]

@COOLYAR186 said:
Any remb part d of q2 50m and 5 creditworthiness ?

Yep the entity had bond liabilities, and during the year had a 50m gain on these liabilities. Of the 50m, 45 was a fair value gain and 5 was due to a weakening of the entities own credit rating.

I wrote that an entity cannot recognise a gain through profit or loss if it’s as a result of a decrease in it’s own credit rating.

So the 45 is through P&L and the 5 is through OCI

[AJS90]

For the hedge accounting the figures were:
Bond liability 2,000 and then £1,910
Swap payable 0 and then £203

I found that the hedge was not effective, only just!

The movement in the total liability was (-90 + 203) = 113

The movement on the bond liability was 2,000 – 1,910 = 90

Hedge effectiveness = 113/90 = 125.6%

Therefore the full 113 (Dr 203, Cr 90) goes through the P&L

Thoughts?

[AJS90]

For the 2nd entity I got -10 as the goodwill figure, but I then adjusted to remove the 20 for the royalty rights. It didn’t seem right to me to recognise the 20 royalty rights because they were from the parent but I may well be wrong here so I reduced the net assets by 20 giving a positive goodwill of 10. The other bit that indicated positive goodwill to me is that the question stated that the goodwill is not impaired (this would of course be irrelevant if the goodwill was negative), I know this isn’t absolute proof of positive goodwill but it nudged me in that direction.

For the first company I got a goodwill on acquisition of 50, but then adjusted for true-ups within the 12 months (the 40 land, and the 1 provision). I’ve just realised I did these the wrong way round and got goodwill of 11 (50 – 40 +1) where it should have been 89 (50 + 40 – 1). Oops! Hopefully some method marks though.

What did others get for the gain on deemed disposal? I was happy with mine at the time but I’m not so sure now!

AJ

[AJS90]

I decided to do section B questions first and managed to get 3&4 done to what I hope is a satisfactory standard. I didn’t have time for, I think, 3c relating to legal risks so i skipped it and moved on to question 1 with 90mins left.

Question 1 – wowza what a nightmare. The question was closely related to one of acca’s technical articles –> https://www.accaglobal.com/uk/en/student/acca-qual-student-journey/qual-resource/acca-qualification/p4/technical-articles/conditional-probability.html

I didn’t manage to finish the assessment of the project with the offer to sell the project after year 1 however I’m pretty sure that this was not a real option question. A lot of people will disagree with me on this but if you read the article linked to above it shows how to assess an offer to sell using probability adjusted cash flows (you look at the probability adjusted present value of cash flows after year 1 and then compare this value to selling the project – the article explains this much better than me). There was no standard deviation in the question so there was no way to calculate the value of a real option.

As I said though I didn’t do any better as I didn’t finish the last 2 parts of Q1 (which will also have cost me at least 3/4 professional marks and caused me to fail I’m fairly certain). My issue is not the difficulty of the question, it’s the time constraint. I really struggle to see why ACCA papers, particularly at the professional level, are so time pressured?! Surely examining someone’s ability to sit and think through a problem is more valuable than assessing how quickly than can get a semi-sensible scatter of relevant numbers down. Giving more time would improve the quality of answers, ensuring that candidates are assessed on what they know rather than how quick they can work. Surely it’s better for an individidual to work a little slower but work in a neat methodical manner providing sensible logical and useful advice for the given scenario. No doubt a reduction in time pressure would also make the markers job easier as well because answers could be presented better.

Even before this I was considering writing to acca to get an understanding of why we are given a tight time constraint, I don’t see much value in it. If candidates have the knowledge but it takes them longer to get it down then I think they deserve to pass, there should not be a punishment for being a slow writer or for being having a bit more thinking time. In the real world it is a much bigger error to steam in to your work and make mistakes than to stop and take a few minutes to really consider what you need to do and how best to present it. This reality should be reflected in the ACCA exams.

Super frustrating to know more than you have time to write.

I’d like to know what others think on this.

AJ

[AJS90]

I was pleased to get 71% in this, I probably spent the least time studying this out of the 4 I sat in June and got the following
F6: 81%
F8: 71%
P1: 55%
P3: 58%

Was a big relief to pass all 4, only 3 to go in December then hopefully I’m all done 🙂

[AJS90]

Super happy with my tax result, I sat 4 papers in June and was relieved to get the following:
F6: 81%
F8: 71%
P1: 55%
P3: 58%

Not exactly consistent but all above 50 so I’m happy 🙂

[AJS90]

Exam could have been much worse in my opinion. I had many points for SWOT so hopefully picked up good marks here, the part on the change kaleidoscope was ok, VERY generous of the examiner to give us the features (I had these memorised so was a little disappointed about that. The examiner giving us these features just goes to show that P3 is all about application to the scenario rather than textbook knowledge.
I’m a little surprised that so many people struggled with TOWS – the model is very easy to understand and also easy to apply. It’s in fact very common sense. “Using strengths to seize opportunities” for example is very obvious.
I spent too long on Q1 so the rest of the paper was a bit rushed. I’m hoping to have smashed Q1, then picked up enough marks on Q2 and Q4 to see me over the line. Good luck to all, a very long two months ahead!

[AJS90]

From the poll results it looks like most people had the same feelings about the exam as me.
Q1 was a nice question in my opinion, I like the way they tested the income tax liability. I would hope I’ve picked up a lot of marks on this question though undoubtedly not perfect.
Q2 was the trickiest of them all, often when doing calcs I can realise what the examiner was going for, not the case for me here with the loss reliefs but I think I will have picked up a few of the easier marks for the capital allowances etc and other straightforward workings.
Q3 Nice question. I may have been a little brief on part b) but I was a little behind on time following the long tax calculations so I had to make it up somewhere.
Q4 Very straightforward, easiest in the whole paper in my opinion.
Q5 I messed up a little here, realised that the CLT was more than 7 years before death when I was picking up my bag to leave the exam hall and so this was testing the 7yr cumulation period. Hopefully again picked up a few marks with the other IHT workings. Part b and c were fine.

[AJS90]

I’m not a tutor but I’ve seen your question so thought I’d jump in.
A 1 for 2 rights issue means that a shareholder has a right to buy, at a discounted price, 1 additional share for every 2 that they currently own.
In your example the shareholder owns 3000 shares (May + August purchases) so they are able to buy 1500 shares at £2.20. So the total cost of the purchase is 1500 x £2.20 = £3300.
Hope this helps and good luck in the exam!

[AJS90]

I used the same approach to working capital as @lauraxxx

The working capital had to be invested at the start of the year, which is the same as investing at the end of the prior year. NPV questions assume that the cash flow arises at the end of the year s it wouldn’t be correct to have 10% of yr1 sales in yr1… At least that’s the way I read it.

I also recovered the working capital at the end as there was no suggestion that a repeat investment was going to be made and so the working capital would be recovered at the end of the current project.

[AJS90]

Does anyone know how long it will be before ACCA put the paper and suggested solutions on their website?

Overall I thought the paper was so so. Could have been better but could have been worse. Q1 a&b I didn’t get the same answer, I think the reason for this was that I used the tax benefit on the capital allowance at it’s monetary value instead of deflating it to it’s present day value.

Q2 & Q3 were fine. But I got 12% on 3a (cost of equity using DGM) where others seem to have got 13% so maybe I used an incorrect dividend value or something :-/

Q4 was my worst by far. I was unsure of what discount rate to use in my calculation. I felt that using 7% would have been ok for the buying option but the same rate could not be used for the lease because the cost have capital may have been different to the 7% bank loan?!

Advantages of leasing was an ok question. The short maturity vs long maturity rate on debt was a bit of general knowledge as opposed to textbook knowledge learnt for F9, I just spoke about uncertainty, speculation, government policy and security backed debt.

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