[akashhirani]

@sayhossz ……it is a generic email ?

[akashhirani]

I am finalist and Dec 20 was suppose to be my last exam ,got this email on 15th

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Is this a standard email …or glimpse of my result …does anyone is receiving such kind of emails?

[akashhirani]

Ohk .I get it now . The investment equivalent to depreciation assumption is also applicable on unbundling and even though unbundling, it add value to the business of target .

Thanks

[akashhirani]

Haha…..I didn’t want marking and all …I just wanted to know whether what I have analysed is correct or not . I mean my understanding of the situation is correct or not.
Thanks for your help .

[akashhirani]

Thankyou for your reply sir .

I have done an analysis of the above situation . Kindly tell me whether i am right or not .

In case of A Co that follows a constant dividend policy of $ 33 / year , shareholders know that they wont get anything extra unless their is a change in company policy so dividend paid may not be the driving force behind shareholders expectation and thats why there is a huge difference in market valuation given in question and market valuation as per dividend model.
May be in this case it expectation depends on the Earnings of the company .
Earnings were increasing at a higher rate in 2013 & 2014 but there is gradual increase in 2015 earnings , however still shareholders believe that there will be gradual growth in earnings next year too so 1 % increase is the result of the same.

Expectation also depends on the nature of the shareholder ,type shareholders that would prefer A type of company would be people who want constant fixed earning(dividend) + slight capital appreciation via rise in price

In case of B that follows a constant dividend payout of 40 % , shareholders know that the more the profit the more the dividend ( or more the dividend more the profit earned by company ) , so dividend paid is the driving force behind shareholders expectation and thats why market valuation given in question and market valuation as per dividend model is almost same . .
Earnings in 2013 went negative that why there is a difference in valuation on basis of 3 years growth however there is good increase in 2015 earnings as a result of which dividend paid was good , and shareholders believe that there will be good growth in earnings next year too so 5 % increase is the result of the same.
B type of company would be people who want believe balance between both dividend and capital appreciation .

In case of C that follows dividend payout from residual funds , shareholders know that the dividend paid is linked to the investment made . The driving force behind shareholders expectation should not be dividend paid but still market valuation given in question and market valuation as per dividend model is almost same, may be shareholders are also interested in dividend payments.

Valuation on basis of 3 years growth shows difference in value given in question and value calculated as dividend payout was less in 2013, however there is good increase in 2015 earnings and dividend , and shareholders believe that there will be good growth in earnings as well as dividend too so 10 % increase in share price is the result of the same.
C type of company would be people who are interested in dividend payments but it is not there priority. Long term capital appreciationis there priority. .

[akashhirani]

Thank you for the help sir .I will try to use this framework and yes, as you said question was not open ended ,I noticed it

Question is –
Describe the audit procedures to be performed in respect of carrying amount of the trade receivable and vehicles?

Sir, can you please show me taking this question as a base ,the application of above framework (5 points as mentioned by you above)?

[akashhirani]

If I m getting it right from your example does that means applying safeguard that increase the chances that if as an auditor I do something unethical ,it gets easily detected by someone else?

[akashhirani]

Thanks for being so helpful sir,it means a lot . Actually i use opentution notes as study text and then refer question from the Kaplan Kit as mentioned on the face of opentution notes.
Actually one of the problem i m facing in risk based question is the audit procedures to be applied .
In that particular question no calculations were provided , was just a theoretical case based question on inventory and debtor and the requirement was to write the audit procedure regarding the same.

I was able to identify the risk , what should be the appropriate accounting treatment , the impact it can have on the financial statement but was not able to write the audit procedure part .
Is there some technique ( a general one ) that can provide me some framework within which i can think as the audit procedures in general are open ended and a whole essay can be written on it.

[akashhirani]

Thankyou Sir .for your reply…sorry actually i saw a question related to the kaplan that’s why I asked .
Thanks for the help

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