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Yes changing role of the accountant, there are literally 2 pages devoted to this in the study book, and no meaningful reference to burns and scapel, talked about how accountants were purely financial due to taking longer to do reporting. How it and integrated systems have improved information choice allowing then to become operationally focused and business partners. Also access to big data allowing boards access to more information to judge performance. Seemed like waffle!
Q4, I have read the McKinsey stuff after and still think I would not have answered the q differently as the study text only states the obvious I.e. strategy is how should the company operate. Hopefully answered this correctly it was guess work!
I totally thought components required were the sales volumes, but meant by ROCE made no sense! I thought it was supposed to show a higher one for the old product, but mine didn’t!
Now I’m thinking number of impressions needs to divide into this!? Is that right? It really didn’t seem to make sense to me.
@natmhl813 said:
did really bad.. and i don’t even understand what the examiner wants and the questions are really unclear…
seriously.. i read question 1ai for a few times.. and still unsure what does he mean by a revising the Q1 budget… does that mean flexing the budget?…. so confused.. definitely need a 2nd attempt for this paper.. omgYeah this was needlessly confusing. I think all that was required was to restate budget as the actual figures, which were provided In the answer paper as there were no other indicators in the appendices! I then talked about how they weren’t controlling costs due to drop in gross profit from 40 – 38 which shows costs were increasing. Also that admin was not planned correctly.
I hope this was right, the next part makes me think it might’ve been as you had to use Q1 actual to redo the budget there. I know this as one of the Qs on the june/Dec ’16 sample paper involved recalculate of budget in 4 quarters.
Operating segments is not an allowable ROMM, as it is purely DISCLOSURE related.
It doesn’t change the figures within the financial statements.
@xamii, why were operating segments a risk? Not following your thought there.
I had the $300m loan, is it in line with IFRS 9 financial instruments, as the loan and interest payable were both material.
Landing rights, I read this to mean a licence and talked about being valued as per IAS 36 with impairment due, which would be material.
Inherent management bias due to being a listed company, would be tendency to overstate profit and assets due to manipulating subjective elements of the financial statements. Also talked about new audit requirement.
Fuel derivatives – this was an easy one! As $40m, this was material! this could easily be misstated if team not experienced enough.
Business risks:
Did it say there was only one supplier? I did not take this from scenario, only that they had ordered and received the 5 planes, they could use others for future purchases.
Change regs – yes I had this one
Difficult to acquire landing rights:- this does not mean new runways or anything physical, just the licence to use certain times and routes.
Theft issue – said this was not material but reputational and could become a problem if developed.
Fuel issues – I mentioned this big risk as 30% of costs, so v material and relies on consistent oil supply and subject to price rises.
Providing you argued using good explanations you should be ok.
Does anyone know exactly what the additional info was for Q1 c)? I talked about importance of understanding the industry and doing tests of control in inventory but not sure that was the answer!?
@mikelittle said:
How do you measure the value / volume of milk in a cow? And if you leave the assessment for another couple of hours, it will no longer be in the cow!So a flock of sheep held for their milk (from which to make sheep milk cheese) has got three elements in its value? The animal, its coat and the milk within it? No way!
When a tree is standing, it’s a biological asset
Here’s a definition of “harvesting”
“Harvesting in general usage includes an immediate post-harvest handling, all of the actions taken immediately after removing the crop—cooling, sorting, cleaning, packing—up to the point of further on-farm processing, or shipping to the wholesale or consumer market.”
I rest my case! 🙂
Mike, I’ve reviewed the official answers from ACCA and they also treat the logs as excluded from IAS41! 😀
Marek, these Qs should be directed at the ‘ask the tutor’ F7 forum, I have been challenging the tutor and he has been responding promptly.
He is also the one who provided the ‘disputed’ answers.
I agree with the provision for return of goods that does seem more sensible.
Yes I see, you have raised some valid points and good pun on Shaun/shorn 🙂
However, I think it is as simple as IAS 41 applies when the produce is still ‘living’, whereas IAS 2 applies subsequently. Which I also think is simpler in terms of providing a true and fair view:
So milk held in storage is inventory, only produce when still in the cow.
Logs are only produce when the tree is still standing.
Fleece only produce when still connected to the sheep.
This is backed up by point 2 on the application criteria:-
“Agricultural produce at the point of harvest.”
Logs held in a yard have been harvested, I would argue, so IAS2 applies.
Marek. there are now suggested answers available on the main F7 forum:
https://opentuition.com/topic/answers-to-f7-june-2015-exam-section-a-mcqs/
Q2 is D.
You are correct on the others with exception of Q20 which is C
Thank you Mike
We’re keen to forecast our result!
I believe Q10 also needs amending to A.
ACCA global states the following re IAS 41:
“IAS 41 does not apply to:
Agricultural produce after the point of harvest, for example: wool, meat, fruit, rubber, logs that are processed subsequently (IAS 2, Inventories, applies)”Therefore only i) applies. What do you think?
Just shows how difficult these MCQs are with our debate.
Cost of payment £12,650
Future payment discount one year:- £12,650/1.1 = £11,500Total is £24,150
@evanslawlor15 said:
I have a question..how on earth do people actually remember what they selected for the MCQ’s?? If I was to look at that now I would have no idea….just curious…Look at the questions and work through your thought process for each…Should come back to you, especially on the calculation ones.
Hi Mike,
Many thanks for your work on this very helpful, in agreement with the majority of your answers. However Q18 I cannot see how there is another answer other than C):-
Cost of investment:- 1,200
Profit after tax Aug – Mar is 8 months so (750 x 8/12 x 30%) 150
PURP on inventory (300/1.2 x 0.2) ( 50)
Carrying amount of investment 1,300
Please can you review and feedback
Thank you
Agree with James 2) to 5) and number 7)
8) surely is A, ii) can’t be applicable as loans are irrelevant and iii) only has 49% equity, needs 50% to be sub.
Answer to 6) is B, irredeemable pref shares are equity, I put A in the exam but looking into it further the shares are actually equity.
Sold without recourse means factor cannot claim debt from seller.
Have to admit I’m feeling confident as answered the questions directly, got the main theories in there and applied then to the scenarios, fail to see what else I could have done to improve my chances.
Time management was a joke, v little time to digest scenario then having to write hurriedly to get the answer down.
If you answered the Qs with application of the models and with explained points, should be enough to pass…
Agree with Chris (baby) than Chris (suit), appreciate folks like to vent their frustrations on her re the exam, but the real value added is when the answers are released and you can assess whether you’ve passed or not.
Did exact same process with F9, which gave me some assurance that I’d passed.
Come on ACCA, we want some consistency and the release of the answers.
Having said that I’m sure we could figure out the answers by referring to textbooks/internet, can’t say I’m that keen to sort myself though…
There was quite a bit on substitute products, in that there is no real alternative to a mobile device.
Could also quote from the scenario that mobile devices are prized amongst the young as a status symbol.
I was very strict with my time management, literally only spending the time limit allocated for each question, i.e. 1hr30 for Q1, 45 mins each for 2&3, managed to have 30 mins at the end for Q1 b) and was still a struggle to put together a reasonable answer.
I would like someone to explain exactly how the probabilities should have been treated in the NPV calcs, only mentioned them in the narrative, didn’t do anything with them. In hindsight thought maybe should have divided the quote price by them to ‘gross’ up but this would mean the higher probability would have resulted in a higher price…
Multiplying by them also didn’t make sense as again you got a reduced licence fee for the higher probability.
Any ideas anyone? Hopefully was only worth a couple of marks and having NPVs for each scenario plus narrative then a conclusion will be enough to get 10 marks on it at least.
Yes that offset the cost for existing operators so should not have been included on the scenarios with no acquisition.
Also cost of preparing the bid was 10 for existing, 20 for new operators.
because that is the main theory linked to assessing competite environment, though as you say I’m sure diamond was relevant. Key thing is to get main points in, the models are only guides to that.
There was lots to say about both as the scenario was dense. I did not adjust for probabilities in iii) though did comment on them. Decided that acquire was best option as risk too great for other option as also depended on them developing market share which would have been difficult!
Can’t help but feel the straight line depreciation requirement was an error by the question setter, as many have said on here for the life of me I can’t see how it’s possible to calculate accurately without the historic cost detail.
Should hope ACCA see the error of their ways and award a mark just for calculating depreciation excluding the additions, as that’s all you could do! Really threw me in the exam too tying to figure a way of doing it, so frustrating.