[chippychipz]

I pretty much exclusively use my financial calculator to calculate everything, but I would assume that the next best option is to use the discount factor from the tables.

Year 1: 10 000 * 0.893 = 8 930
Year 2: 10 000 * 0.797 = 7 970
Year 3: 10 000 * 0.712 = 7 120
Year 4: 10 000 * 0.636 = 6 360
= 30380

I wrote yesterday, can confirm the PV tables are there but no formulas.

[chippychipz]

First calculate the NPV of the lease liability either through calculator or tables, or which ever method you prefer $30373

• During the first year:
Initial lease liability: 30 373
Interest: 3 645 [30373 * 12%]
payment: 10 000
closing balance: 24018 [30373 + 3645 – 10000]

• Second year:
Opening balance: 24018
Interest: 2882
Payment: 10 000
Closing balance: 16900

Recall: the current liability that will be registered in the financials for the first year is the principal amount that will be paid in the next financial year (the next 12 months), and the non-current liability will be what needs to be paid in the years there after.
•Current liability is 24018 – 16900 = 7118
• OR simply the payment less interest charged during the second year: 10000 – 2882 = 7118

And similarly the non-current is: 16 900 because this is what’s going to be paid after year 2

[chippychipz]

Hi Saiyini,

If I’m right I could try help you out, current liability is $7117? (maybe some rounding differences)

If I’m wrong I’ll have to recheck my workings.

[chippychipz]

Hi Saiyini, which parts not making sense for you?

As the question states the TAX DEPRECIATION is:
• 50% depreciated in year of purchase
• 25% in the following years (year 2,3,4…)

We are calculating the depreciation in 2002 so all assets acquired between 01 Oct 2001 – 30 September 2002 are depreciated @ 50%. They purchased an asset on the 01 Oct 2001 so this is depreciated @ 50%.
• 150 000 x 50% = 75 000

All other assets not bought between 01 Oct 2001 – 30 September 2002 are depreciated @ 25% of their CARRY VALUE.
• Asset purchased for 280 000 on the 01 Oct 2000 will be depreciated @ 25% of it’s carry value as this wasn’t a purchase in the current financial year but in a prior financial year:
• 280 000 x 50% = 140 000 (depreciation for 1st year, 01 Oct 2000 – 30 Sep 2001)
• 140 000 x 25% = 35 000 (Depreciation for 2nd year, 01 Oct 2001 – 30 Sep 2002)

Total Tax depreciation 01 Oct 2001 – 30 Sep 2002: 75 000 + 35 000 = 110 000

Hope this helps

[chippychipz]

Hi Cath,

Update from provider,

Amend from:
The production manager has decided to use more hair in order to make the dolls more appealing. The revised design uses 15 grams of horse hair.

Amended to:
Since the original budget was created, there has been a sudden unexpected increase in the price of horse hair, with national prices increasing to $0.28 per gram.

Which makes the question pretty straight forward.

Thanks again for your assistance,

[chippychipz]

Thanks Cath,

I agree with your assessment, I will notify them of the error and update you if they get back to me.

Regards,

[chippychipz]

Never mind, I get it now.

[chippychipz]

Hi hi,

Currently doing CIMA P1 myself (using Kaplan self study)

Those who are interested to join a group feel free:

https://chat.whatsapp.com/Hka703EGCZSKXU1ofDs7gx

[chippychipz]

Hi Shadyplay, (sorry im no professor, but have some extra info that might help)

There does seem to be mixed messages wrt the ‘grading process’, as CIMA blueprint mentioned there is no minimum threshold for each core activity…

But within that same excerpt you are referring to above there’s a link: “More information on performance descriptors is available HERE from September 2019.” clicking on the “here” link you will be lead to a page where you can view the “Understand your case study results”

And in this document they state: “When you get your case study exam results you will receive a scaled score of between 0 – 150. You must achieve 80 or above to pass the exam AND you must meet the minimum threshold for three competencies.” And they have some explanations and examples to follow.

I hope we can receive some clarity on this, but much like you I doubt they’ll be removing the minimum threshold on core activities.

Link to document:
https://www.cimaglobal.com/Documents/Student%20docs/2018/CS%20resources/Understanding_results_OCS.pdf

[chippychipz]

I feel like we might need a little more to go on in order to calculate the useful life, is it straight line/reducing balance method, do they give a depreciation %, a purchase date and a financial cycle period?

As they are only referring to a single asset costing 100k I assume that the asset was purchased part way through the year so the 23k Acc Dep is only for a few months rather than a full financial year cycle, and in the following year a full years depreciation is calculated (43k).

I passed BA3 about a month ago and I wouldn’t stress to much on this question, it seems like you need to assume a little more than required to complete the question. As long as you understand Acc Dep doesn’t HAVE to be more than depreciation (as above for eg.) you’ll be fine to calculate the rest. If there’s more info to the question I’d be happy to help.

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