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@jarix said:
It was not compulsory to use blackshool in this question bcos attempting it would be like difficult to ascertain the volatility. But if u have used it fine and also if not fine. The examiner was testing expected values and decision tree for the cash flows.
Below is the comment of the examiner in one of his articles‘A commonly used way of evaluating decisions is via the use of expected values.
An expected value summarises all the different possible outcomes by weighting the possible outcomes by their probabilities and then summing the result.
Problems where one or more decisions have to be taken can become more complex and may require the use of a decision tree, with expected values being used to evaluate each of the decisions.
A decision tree is a diagrammatic representation of a problem, where the decision maker needs to consider the logical sequence of events.
Since one event may depend upon another, we may get situations where event one has a certain probability of occurring and event two, which depends on event one occurring, has another probability of occurring. In such circumstances, we have a situation of combined probabilities
Eg if event one has a 0.6 chance of occurring and subsequent event two a 0.75 chance of occurring, then overall the probability of both events occurring is:
0.6 x 0.75 = 0.45
ie a 45% chance of occurring.We shall look at such concepts in the following example, which demonstrates how techniques acquired in Papers F5 and F9 can be used in the Professional level papers.
@jarix i did not use the bsw model..i failed to recognise it..but i used the expected value instead..i feel kind of relieved after seeing u saying this heheand one more thing sir,since management is responsible for the preparation of the financial statements…if something goes wrong in the financial statements,is the management to be blamed or the auditor?since the auditor is the one that provides assurance as well..
ok i see..so no opinion will be given upon review engagement however assurance on the fs will be given and this will be a limited assurance.Under review engagement there are two types.attestation which gives a reasonable assurance on the fs compared to direct reporting engagement with gives a limited assurance on the fs.correct?
Ok,so is it correct to say review engagement provides limited assurance since it doesnt look at d financial statement as a whole?and there are two types of review engagement.the attestation engagement (positive opinion) and direct reporting engagement (negative opinion)?
and another clarification,an auditor that provides audit engagement needs to provide an audit report and an assurance report.Am i correct?
It’s okay sir!!!you don’t have to reply to my question anymore..i see the picture now!
its okay sir,you dont have to reply me anymore..i just figured out the answer!thanks!
ok!!thanks sir now i get a clearer picture between discrete and continous rate 😀
i read it from kaplan’s textbook.the textbook said that the risk free rate of market is also known as discrete rate.and to get countinous rate..we simply press In(1+risk free rate) on the calculator to get continous rate.
So im confused here why is risk free call discrete?and another example states that return on a co’s asset is discrete return aso and to get continous rate,we simply press In(1+risk free rate) on the calculator to get continous rate.why do we calculate continous for?what is continous rate?
then why is it on question june 2009 4(b),expected return is 15.5?why isnt it 14 (200 x 7%)?
so in the incurred loss model..the impairment loss of 522 is recognised when impairment happen. thats why it is recognised in year 3.whereas for the expected loss model,expected impairment is recognised earlier in year one…that is why in incurred loss model,there is no profit smoothing as there will be a sudden drop in return from 16% to 5.56 % correct?
and in the question june 2011 grainger …expected loss model..how to calculate impairment loss if we were asked??why does the answer calculate impairment loss for incurred loss and did not calculate so for expected loss model????
for financial assets measured at amortised cost.impairment loss is the difference between the asset’s carrying amount and its recoverable amount which is the present value of estimated future cashflow discounted at the financial instrument’s original effective interest rate right?then what is the incurred lost model and expected loss model for??there are so many ways of calculating impairment..can someone please clarify and make it clear for me???thanks!!
and is 522 an impairment loss??im confused here..im so weak in my financial instruments help please!!
oh i just saw it..i was doing the question in the wee hours guess i wasnt fully awake yet..thanks anna for replying!!
for question 1…i did not use cultural web for my answer..but i manage to write something based on what i know..i will still be correct right?as long as my answers are sensible and logical and fit to what the question ask.
<cite> @rhythm said:</cite>
in first question isn’t loan should be added to consideration ?? as it was to shareholders not the sub ???i don’t know..but i did not include it in my purchase consideration.:D
not enough time!!time constraint!!!and true to that q1 has the weirdest adjustment!!they say carrying amount has a devaluation of 3000 for consolidation.anyone minus the 3000 from subsi’s retained earnings b/f?and take out the additional depreciation charge 500 from the cost of sales?
i have a feeling that i’m going to fail this paper..if only im given one more hour extra i can slowly think about what to do with those adjustments i spent too much time figuring what to do with those adjustments!!never came across them in past year..i had only 45 mins left for q34and was really tired at that time..hands were shaking as i was hungry at that point of time too…acca should increase the time!!!damn!!!and in addition to that sir..theres a repainting subsequent cost,why didn’t they capitalise it?can i capitalise it by justiying that the repainting generate economic benefits.for example,if an exterior structure is damaged,it wont attract customers thus wont generate economic benefits,,