[Mark]

The domestic currency depreciated, and the firm sells overseas. Therefore the revenue is INFLATED as the foreign currency earned has appreciated. Therefore 600 additional revenue (and profit as cost in domestic currency) meaning she does deserve the bonus.

This is very topical, and probably based around brexit. Anyone with any business knowledge will know the £ has recently tanked against all world currencies by c. 15%. The effect of that has been a boom in revenues and profits for exporters, such as dometically based manufacturers) which was the case here.

This is also partly the reason why the FTSE 100 rallied so strongly after brexit. The £ tanked, and many firms like shell pay dividends in $. A weakening domestic currency led to an appreciation of the dividend yield making it more attractive for uk investors when it was converted to £- exactly the same concept as for the firm in the question who was selling abroad and their domestic currency tanked 15%.

@vitalbutnaru said:
For Q4a, I said she does not deserve any bonuses, as:
1. The total revenue should have been adjusted by 600 (4000 + 4000x(1-0.15) = 7400), so a (600) c.u. less to profit;
2. Depreciation – I’ve adjusted 350 c.u. as (385 – 350), assuming that purchase and put in service of new equipment has impacted significantly the npm, whilst took 35 c.u. charge from domestic unit as a reference point. Anyway, it’s an assumption;
3. As for HQ costs’ allocation – i did nothing, however I was very clear in supposing that both domestic and export divisions are in the same conditions (same split structure, based on revenue approach), so even if not controlled by the manager, it’s more or less fair to charge the Export division, also considering that Domestic division has been charged too, however it has reached the 8% threshold. I can’t recall the exact figures, but I got around 5% npm. Anybody followed any of my steps?

[Mark]

Guys/Girls..

I think I have figured out what they actually wanted in question 4 part b where it said calculate whether she should get the bonus.

I reckon they wanted us to calculate ROI (and suggest this was a better measure as it captures controllable profits) and/or residual income as otherwise why would they have included the debt/equity betas etc and capital employed?

I don’t think I did very well in this question as I just inflated the revenue to take account of the depreciation on the domestic currency..

It makes sense that they would have wanted ROI calculated as the last part was EVA so i think it wanted us to cover this whole part of the syllabus but the revenue adjustment through me..

Hope we all done enough in the other parts to pass..

[Mark]

Im getting confused over what the otherbpart to question 4 was.. One of part a or b was the bonus and part c was the eva.. Can anyone remember what thebother part was whether it was a or b? Thin a was 7 marks, b 8 and c 10?

[Mark]

Can anyone remember what part B was for question 4?

I am trying to think but I can’t even remember!

For part C on the EVA, I wrote as many of you have said already EVA was excellent in aligning the business with shareholder wealth maximisation objective but that it wasn’t really a good measure to compare divisions because it gives an absolute value and these values are meaningless when compared as the markets and asset bases are so different.

Trying to think what part B was..

[Mark]

I don’t recall it saying the FX rate was set at all, I can only remember it saying the selling price was set and thus revenues would vary with the exchange rate.

@lucamucciaccia said:
the price (and the FX rate) was set at the beginning of the year for one year therefore the Export division is taking advantage of this for the second half of the year. The turnover should have been 7400

[Mark]

Yep- spot on, that is exactly what I did which boosted profits by the additional 600 too as costs were in domestic currency. That took the margin to well over the 8% level and meant the manager should have got the bonus (as the exchange rate was out of her control).

@chullbulla said:
If primary currency weak you receive more money means revenue increased by 15% for six months 4000 X1.15 = 4600 for six months and 4000 for first six months

[Mark]

Just tried part 2 and I am pleased I atleast got the balance sheet for that right after re-financing- still surprised though at this question it feels like I’m doing F7 or P2 so far not P4!

[Mark]

Ahhh thank you so much John, that explains it!

Thanks

[Mark]

Passed with 57.. was a fair bit lower than I expected to be honest but happy to pass 😀

[Mark]

Pass- 50% on the dot!

Actually cannot believe it, thought i’d failed for sure!

[Mark]

Yes- it is MUCH harder. I’d say 2-3 times as difficult.

The average mark is higher because the P level papers have weeded out the weaker students who can’t get past the F-level ones. People on p level papers are clearly reasonably competent- you get a mixed bag at F-level!

@abbas7796 said:
apologies for the error above

the above question should be why p2 has maintained a much better avg pass rate as compare to f7 in the last 8 years?

@abbas7796 said:
apologies for the error above

the above question should be why p2 has maintained a much better avg pass rate as compare to f7 in the last 8 years?

@abbas7796 said:
apologies for the error above

the above question should be why p2 has maintained a much better avg pass rate as compare to f7 in the last 8 years?

[Mark]

Anyone else just going to continue practicing P2 until the exam results come out?

I’d be very surprised if I had passed to be honest, and I expect a mark in the 40’s 🙁

My plan is if I continue practicing questions from now until the results I will not forget any of the knowledge I already have acquired and may even improve up to a pass standard..

Then if the worst happens and I do fail I will be in a very strong position to study even harder for another 2 months and make sure of a pass in June..

I’m also going to start one more exam in the meantime.

[Mark]

Didn’t think it was a particularly nice paper, as Marin says some nasty/strange adjustments in the consolidation.

I went for question 2 and 3, as I didn’t revise current standards. Current standards looked easier though if you knew your stuff on that.

Quite tough I thought! I’d estimate I got 40%-52%. Praying I will scrape a low pass!

Good luck everyone.I’m going to keep practicing in case I need to do it in June..

[Mark]

Thanks ds3ce, excellent advice!

You have hit the nail on the head I think; I have been rushing though ACCA and have got up to this point in just 1.5 years having started off at F1!

I think the main problem is, during the F phase I passed exam easily with not too much effort, but I never fully understood the concepts (for example in F7) and I felt I just passed because I was good at exams not because I was great at accounting!

P2 has caught me out as you actually have to fully understand everything inside out, so it has been such alot of work and like you say it has left my physically and mentally drained and with no time to enjoy the things I love. I feel almost depressed infact at the thought of starting another 2 exam courses straight after this one!

I think I will take both of your advice’s, and just enrol for one course. I’ll do my best in P2 tomorrow and just keep practicing it until the results come out, with a view to retaking straight away should the worst happen.

Taking one exam a sitting will mean I won’t finish all of the exams by Dec, but hopefully I will by the June sitting 2017. Qualifying six months later doesn’t seem like a high price to pay when you think about it actually, as I will be able to enjoy life more and just take them one at a time, not be felling as burnt out as I do now.

[Mark]

Thanks seagoat..

The thing Is I won’t know if I pass until early April and I get study leave to attend BPP classes from my employer, and those classes start before the results come out.

That’s why I’m not sure if I should start the classes for P3 and P5 next week and then If I fail P2 (I’ll know before the revision classes) quickly move onto the revision course for P2 by deferring P5, or should I just assume I will fail it if it goes badly tomorrow and carry on practicing P2 until the exam results are out whilst only doing P3 classes?

[Mark]

Yer i did the same guys.. though the paper was quite easy overall.

@chantie123 said:
i thought the paper was ok. wondering for question 5, what did you guys do with the savings interest? did you eqully divide the gross amount of approx. 9k between husband and wife? samson and delilah (lol)

@samirrules said:
Yeah I gave them 4800 each as savings income as they would have it 50:50. Really struggled to spell Delilah right through the paper though as I was rushing lol

[Mark]

Yep- exactly what I did too. £4800 each or something, and didn’t gross up either as already gross..

@chantie123 said:
i thought the paper was ok. wondering for question 5, what did you guys do with the savings interest? did you eqully divide the gross amount of approx. 9k between husband and wife? samson and delilah (lol)

[Mark]

Passed with 67%, learnt it from scratch in two weeks. Happy 😀

[Mark]

Passed with 69%! Score surprised me, thought I’d done badly and estimated 48-52%! Delighted 😀

[Mark]

Out now.. good luck all 🙂

[Mark]

Exam was quite easy I thought. Made a welcomed changed from the rock hard F7 exam the day before.

[Mark]

Exactly what I’m doing too.. just going to take it at a leisurely pace until August results. I reckon I’m on the border or fail/pass. Like you say its a win win situation.. I’m going to do a 30 mark question every evening to keep it all in my head and improve. Then if I need to resit in Sept I can with ease, if not bring on P2!

@jpf1101 said:
Glad I am not alone in finding that very hard!

I fully admit to not revising as much as I should have done, but that was one tough exam!

September resit for me I think. In fact I am going to be working from now onwards on the basis of a fail. If it’s not a fail, then I will be more prepared for P2.

[Mark]

Yer I noticed that, on my restated figures and comparatives everything went down. ROCE dropped due to the huge hike in Admin Expenses (I put down possibly restructuring costs) driving down PBIT. Gross margin dropped even though Revenue increased from restated comparative, possibly due to intensifying price competition. Asset Turnover also fell marginally, Operating margin dropped aswell due to the reduction in Pbit caused by the increased admin expense in addition to the increased revenue in the denominator of the calc.

@chris1975z said:
Did anyone else find it odd in q2 they sold for 1m profit when the division was making 5.8m pre tax profit from memory!? I was useless on revised ratios and commentary left a lot to be desired. Admin expenses shot up 182% like for like? Possibly one off costs for legal expenses for sale? Working capital cycle increase and decrease in debtor days, inventory days and increase in payables days!? Increase in asset turnover in 2015 but decrease in gp margin?

[Mark]

Sh*t.. i forgot to use the weighted average number of shares in calculating EPS! just used the full 30mn 🙁 damn.. time pressure got to me completely forgot that bit. hopefully pick up a few marks still.

@dannyw1984 said:
That was fu.cking horrible. Absolutely brutal.

I am glad I left question 3 until the end as I just literally had no idea. Half of the adjustments I had never seen before – completely threw me. If I had attempted Q3 first it would have made me feel bad for the rest of it.

Did half the MCQ’s
Question 1
Question 2
Read Q3 and almost ended my life
Finished (guessed) MCQ’s.
Wrote out some proforma’s for q3 and tried to put in some “easy” marks.

I actually managed to get all the way through the basic EPS part, but as I couldn’t work out a profit figure I couldn’t divide that by the weighted avg number of shares.

All in all, load of crap.

5 marks to work out 8 ratios which took time? Meh!

As for the analysis – I just compared 2015 to the restated 2014 position (with the division having been sold). Probably wrong though.

Anyway, no chance I have scored more than 30% in that, so will be re sitting.

[Mark]

Statement of Financial position did require adjustment- the company sold 8mn assets and thus its NAV would have been lower, thereby increasing ROCE and Asset Turnover due to the lower NAV. Obviously Pbit dropped massively to counteract this due to surging Admin costs.

@gdjay said:
Did everyone discount the value of the second payment on car MCQ?

Q2 was time consuming, only had to deduct the disc ops p&l figures though, no SFP adjustment was required. You could use comparatives to work then out. What was hard was commenting with only the figures there, left this yuk very last as Q3 I knew what take ages. which it did.

Couldn’t figure out how to work out straight line depreciation without historic cost details, just applied a fifth to bfwd nbv (excluding cost of additions of course). What did everyone else do?

[Author]

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