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I don’t think there would of been a provision needed, there is no legal or constructive obligation as the reconditioning costs could of been avoided. Provisions are recognised if there’s uncertain timing which there’s not. I think the costs would of been capitalised and depreciated over the 2 years useful life until the next reconditioning. I’m not sure whether this would include the labour element though.
This exam was a shocker, there was hardly any calculations involved, I could of probably walked in there without a calculator. There was nothing really on consol or financial instruments, two core areas in the syllabus.
Q2 was the easiest, I think the investment property shouldn’t haven’t been revalued as the directors assumption was a level 3 FV, a level 2 FV was available so this should of been used. The lease treatment was irrelevant. I can’t remember if the investment property adopted the cost or fair value model so I may have messed up on that part.
Q3 was a shocker in my opinion, I didn’t like Q4 however I think there could of been a few common sense points made in the tax part.
There was too much analysis and writing involved in this paper which caused me to rush Q’s. I finished it but still think I’ve failed, worst exam I’ve sat.