[geologist81]

This is for the one with Balridge

[geologist81]

Q1 was for 32 points, Q2 for 20pts, Q3 for 28 points and Q4 for 20 points, that is for the question with Achille

[geologist81]

All by all, a fair exam I think. I got the case with Achille’s cruise

Q1a) ops and financial evaluation
ops- 1) they are operating in a niche market
2) they are structured in a divisional system with each vessel being one division
3) well automated and procurement centralized
Finan Still profitable but 1) liquidity decrease 2) gearing stable but high 3) Margins 4) interest cover at 1,21. No increase in loans but due to increased costs and stagnation of sales the margins are decreasing and most of the PBIT is abosrbed by finance costs. It is a strategic drift

Q1b) Governance question with five or six points 1) more NED’s 2) more nimination of directors (8 years is too long) 3) appoint a chairman, two other points I don’t remember

Q2) evaluation the different strategies proposed 1) build more vessel 2) buy 20% of bigger vessel 5000 people 3) to let run existing fleet in new destinations so they can work longer than six months 4) river cruises with an alliance
I think 1 and 2 are definitely out, need big investments, no debt as high gearing and also no issuance of shares as the institutionaal investors are already pissed off. 3 could eventually be possible if it does not infrange maintenance (limited option). Most suitable option 4 as it does not need high investment and it allows to diversify.

Q3a) roles and responsabilities of a risk officer for food safety. 1) review of risk register and controls in place ang get approval of Board 2) Quality control of food chain 3) induction of new crew members when they start in company 4) Quality inspection onboard of vessel 5) in charge of safety equipment onboard for example the kitchen staff to wear sanitary clothes when working in kitchen

Q3b) how to help the company for risk awareness. I explaines the awareness is from top to bottom and gave examples. I think this was the 4 lines of defense (managers, employees, internal audit, external audit) but I did not mention it.

Q4a Why is excellence perf important for the company 1)reputation 2)profitability 3) best services to customers + notes

Q4b) HOw to implement for company? Here I took each of the Balridge points (leadreship, strategy, customers, etc…) and gave an example for each. Not sure if that is correct.

[geologist81]

Q3a) roles and responsabilities of a risk officer for food safety. 1) review of risk register and controls in place ang get approval of Board 2) Quality control of food chain 3) induction of new crew members when they start in company 4) Quality inspection onboard of vessel 5) in charge of safety equipment onboard for example the kitchen staff to wear sanitary clothes when working in kitchen

Q3b) how to help the company for risk awareness. I explaines the awareness is from top to bottom and gave examples. I think this was the 4 lines of defense (managers, employees, internal audit, external audit) but I did not mention it.

[geologist81]

Q4a Why is excellence perf important for the company 1)reputation 2)profitability 3) best services to customers + notes

Q4b) HOw to implement for company? Here I took each of the Balridge points (leadreship, strategy, customers, etc…) and gave an example for each. Not sure if that is correct.

[geologist81]

All by all, a fair exam I think. I got the case with Achille’s cruise

Q1a) ops and financial evaluation
ops- 1) they are operating in a niche market
2) they are structured in a divisional system with each vessel being one division
3) well automated and procurement centralized
Finan Still profitable but 1) liquidity decrease 2) gearing stable but high 3) Margins 4) interest cover at 1,21. No increase in loans but due to increased costs and stagnation of sales the margins are decreasing and most of the PBIT is abosrbed by finance costs. It is a strategic drift

Q1b) Governance question with five or six points 1) more NED’s 2) more nimination of directors (8 years is too long) 3) appoint a chairman, two other points I don’t remember

Q2) evaluation the different strategies proposed 1) build more vessel 2) buy 20% of bigger vessel 5000 people 3) to let run existing fleet in new destinations so they can work longer than six months 4) river cruises with an alliance
I think 1 and 2 are definitely out, need big investments, no debt as high gearing and also no issuance of shares as the institutionaal investors are already pissed off. 3 could eventually be possible if it does not infrange maintenance (limited option). Most suitable option 4 as it does not need high investment and it allows to diversify.

[geologist81]

Was not easy but I think a fair exam;
Q1) Consortium group with 70% + choice of 20 or 30%- here I think it was 20% to avoid the CFC charge.
Q2) Incorporation relief(explanation) of a sole trader business in a company wholly for shares +
IHT calculation + E.R

Q3) Ways of loss relief against current total income or previous total income, tax saved was PA 12500 at 20% – 8000 CGT at 20%
Roll-over relief replacement of building gain = 32 000, only 75% used as business and also 3000 (86000 – 83000 not reinvested) so 11000 taxed now and 21000 deferred
Vat – deregistration

Q4) close company – this was about a penalty charge of 32.5% as the shareholder got a loan from the company, loan can be reimbursed due to certain conditions.

[geologist81]

Q1- Step-acquisition

It is first an associate recognised at cost in 2002 at 100 mil
We add back the share of post-acq profit, this was possible as the question gave the NA at acq and asked to calculate the NA in 2006 at second aqui.We also add the secon aqui at 66.

NA 2006: 100 + 27 (adj for step-aquisition) + FV of the contingent consideration + NCI at proportionate share – NA

For the NA, the question gives the CV at 348, if I remember correctly, including also the deferred tax. The only adjustment needed was for land of 10 and also current assets of 47 both not depreciable. On this 57, there is a deferred tax of 57*20% = 11.4
So I came to a NA of 348+57-11.4 = 393.6

The last part about the digital list, I did not include, there was an article about the digitale accounting in the ACCA website.
The weird part in this question was the control at 48%, but as substance has priority over form, the actual value is 60% and 40%, I also used the 40% to calculate NCI. I also got a bargain purchase.

I think the exam was average, let’s see in a few weeks

[geologist81]

@monikasiurnicka said:
Hi

Do YOu know when exam results will be avaiable?

14 October

[geologist81]

Question 1:
7pts, why is the replacement cost of 17 mil not a good fv for the building ?

This is IFRS3 FV measurements, non-financial assets FV are based on highest and best use if the conditions, that it must be financially and legally feasable, are met, which it is.
The market value of the building, for residential use, was 24 mil and also demolition plus permit costs of 1 mil. I did include this to come to a FV of 25 mil, but I was not fully sure if I had to include the 1 mil in the FV ??

I see several people have an impairment of 30 mil but I thought the RA and CV was for the whole company included the building, I might have misread the question.
CV = 106
RA=100 so impairment of 6 from which 4 for an asset so goodwill impaired by 2. Does anyone also has these numbers ? FV- 1.6 goes to RE and 0.4 to NCI. Proport shares, 2 goes to RE.

The SBP covered by IFRS 2, if there is an acquisition without obligation to pay the SBP, than is considered as SBP, if obligation to pay, than it is considered as a FV consideration for the acquisition. Problem here is that the old SBP, that the parent company is obliged to pay, is replaced by another one for the employees of the subsidiary. So here some part could be IFRS 2 and the other IFRS 3. FV of old SBP =15 mil. When making the calculation of the new SBP, I come to a total cost 19.2 mil without discounting. As the new one is bigger, the old SBP of 15 mil is dealt under IFRS2 and not FV consideration. Here it is also not clear cut, maybe the new SBP is considered obliged to pay and than 19.2 has to go in FV consideration, not sure.

Question 2:
– Advances to receivables: This is an advance for some future sales of goods. Under IFRS15 Revenues, the sale cannot be recognised and so the advance goes into liabilities
-Pref shares to exchange for ordinary shares or cash. Pref shares are considered as debts so this is equivalent to a convertible loan. The loan fails the test of “fixed for fixed”payment as part is equity and the other part liability.
-deferred tax- only to recognise if there is probable future profits.
-ethical part ok

Question 3:
-3 years license + 5% royalties:
to spread the revenue over 3 years. so by recognising the 7% shareholding we get this at Y/E: 1/3 FV 4-5 mil goes to P/L, 2/3 FV 4-5 mil goes in a liability account.

-Cryptocurrencies cost 3mil and FV of 4 mil and Building cost of 6 and FV of 10
The cryptocurrency is an intangibles asset, see technical articles. The cryptos has been sold at cost so it means a loss of 1 mil for Guidance. There was no information about the selling price of the building so I assumed it was sold at FV and so Guidance had a gain of 4 mil. Total gain 3 mil for Guidance.

Question 4: I missed the biggest part I have also 38% and 17%; the first part of the question about an evaluation of the ROE. There is a technical article Perf Measures dealing with it. The ROE is a good tool but has limitations, Perf measures are not covered by IFRS and so there is no standards on it so the calculation of it could be subject to interpretations, this lack of transparency is also a lack of comparability. I didn’t answer to the rest of the question.

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