[Hassan]

Thanks for such an elaborate response.

Stay blessed. 🙂

[Hassan]

Thanks for your response, snowbored.

I understand all the rest but shouldn’t the closing amount be 0 since even the remainder of 70,000 was repaid by Jones by the end of tax year? Or are you saying it is worked as the earlier of amount outstanding at end of tax year and the last repayment made during the period?

Perhaps I should remember it that way?

[Hassan]

It is very much possible to sit F5 and F9 exams together. Another OpenTuition member recently created a thread asking if he could study and sit the two papers together since he had attempted the rest of the Fundamental exams. I told him the same thing.

F5 does cover the kind of syllabus which is much more comprehensive compared to what you study in F9 but it is surely do-able. I would suggest watching video lectures delivered by John Moffat alongside the OpenTuition notes, studying ATLEAST the Kaplan study text (if not BPP) and attempting questions in the Kaplan exam kit after studying each section. Do follow the technical articles written by the examiner on ACCAGlobal website so that you are up-to-date with the examiner’s approach.

Also, don’t look for the institution only when you are looking for a place to study a given paper/s; instead, investigate which teacher in your locality is the best for a given paper and go to multiple institutions if say teacher for Paper F5 is best but teaches in place ‘A’ while another is reputed for teaching Paper F9 in place ‘B’.

Best of luck.

[Hassan]

That is definitely an encouraging post! Thanks so much for sharing such an educational experience.

[Hassan]

Commiserations on failing the F5 paper, Jay. Well, it is very much possible to sit the two papers together. I see that you did practice plenty of questions but I suppose it wasn’t TIMED practice in an exam-like environment.

I would suggest doing that for every paper you attempt. Even when you are doing individual questions, keep a stopwatch with you. Divide the time in the sense that you have 1.5 minutes per mark. Practice more and more questions in that way and make sure you choose a peaceful/silent environment when you sit to attempt these. Especially follow these tips when it is time to practice complete past papers and mock exam. Do make sure you attempt atleast one mock exam before you appear for the ACCA exam itself.

Also follow the examiner’s technical articles and approach towards the paper so that you are up-to-date with the examiner’s perspective on the paper.

Best of luck!

[Hassan]

I kinda agree with that notion (Richard’s), implying NO offense to anyone, and I feel we must purely focus on encouraging and motivating people as best as we can. While I agree with what gingergirl and what some of the others believe, I still feel it would be rather unfair if we discuss religion on an accounting forum.

With that said, I’d request everyone to simply discuss the idea introduced by the OP rather than discussing religion any further.

Thanks, and best of luck everyone.

[Hassan]

Such a heart-warming post, that. Kudos to Khalid for posting this. I second his thoughts and hope that the next time is YOUR time to pass, and pass with good marks against your name. Just try to stay optimistic, always (easier said, ofcourse) but one must keep finding ways to stay encourage even if people say things that indicate otherwise. As long as you are willing to spot your weaknesses and forgot the rest of what happened in the past, the future will surely bring the best in you.

Best of luck everyone.

[Hassan]

Absolutely, it is!

F8 follows on from some concepts you learned in your F7 exam and is based more along the lines of testing and reviewing those accounting records maintained by the entity.

F9 follows nicely from your F5 studies and while its not as comprehensive in terms of syllabus as the F5 paper, it introduces new topics at the same time.

F6 would be fairly new and easy; although, lengthy in terms of its syllabus.

I suggest you give the three a go, and hopefully you will come off with flying colours.

Best of luck.

[Hassan]

I am now considering what’s considered the ‘gold’ standard qualification in the field of tax, CTA. I have started to think that tax is probably where I belong (only a gut feeling, still. I was wondering how sensible an option it is to attempt CTA after clearing all of my ACCA papers and working on a BSC in Applied Accounting degree from Oxford Brookes University alongside by the end of this year (hopefully).

[Hassan]

Thanks for your response, Sir. So you are saying that even if I clear the CTA exams in, say, the UK and move to Australia later it wouldn’t be recognized as well (surely because tax rules may well differ in a different continent)? I was thinking if about clearing the ACCA exams here in Pakistan and also working on the OBU BSc honours degree and then moving to the UK on a work permit and studying CTA alongside (I suppose there’s a paper’s exemption for ACCA affiliates as well). I am not sure how well reputed, rewarded and popular this qualification actually is even in the UK (like CFA or ICAEW is, for instance).

Would you suggest getting the BSc Hons. degree to increase my job prospects after the ACCA? If so, could you possibly provide any links to or suggest useful sources for me to work through this OBU project?

Secondly, what course of action would you suggest to someone like me who isn’t sure of where to go next and what to do upon completion of the ACCA? I mean, I’ve been thinking of all sorts of things: CFA or MBA Finance (when I realize finance may not even be my strengths but the ultimate rewards on offer made CFA stand out but its a LONG journey) or ICAEW (after claiming exemptions; however, it’s attainable with full exemptions to an ACCA member anyway) and now CTA (which is starting to fade after what you just told me about it).

If, say, my ultimate destination is Canada or Australia (both don’t recognize ACCAs as well as some others to my knowledge) or the Middle East, what qualification/s (that wouldn’t take long to accomplish) do you thing would form a good combination with the ACCA and the BSc?

PS: I reviewed this post and realize how it terribly lacks any ounce of ambition. :/

[Hassan]

What’s the scope of CTA in the world (not JUST the UK)? Is anyone aware if any relevant courses for CTA are taught in Pakistan as well (especially Islamabad/Rawalpindi)? How fruitful is the industry for people engaged in tax practice?

I would appreciate answers to all the above and any further advice that the knowledgeable people here may have to give.

Thanks in advance.

[Hassan]

I thought of CFA (abandoned the idea thinking it would take way too long and finance might not be my strength considering its quite comprehensive), then MBA (the cost, element of finance was a bother again, followed by ICAEW after claiming exemption to 12 papers (then I thought it’s more or less another accounting qualification which I could get full exemptions to once I am ACCA qualified and have 5 years of experience anyway).

[Hassan]

Thanks for the compliments, Sir. The pleasure is mine. I shall especially thank my tutor for designing such a thought-provoking question and keenly participating in unraveling it.

Kind Regards.

[Hassan]

I am SO glad I was able to convey the messages, properly. Thank you so so much for keeping up with my lengthy responses and taking out the time to participate in the discussion, Sir.

Stay blessed.

[Hassan]

Ok, so my teacher was keen enough to look up the original adaptation of the question and just emailed me saying that her version was cut short of “remaining useful life of 18 years at 31 December 2011 when the original assessment had been 20 years initially.”

As I previously mentioned, the original question was cut short as the focus was on IFRIC-1 and also because of shortage of time.

[Hassan]

The reference to original assessment means 20 was the original assessment but the mention of 31 December 2011 implies that it changed at that particular date.

I think the confusion also spurs because the question is an extract, which wasn’t meant to be detailed since the teacher had just taught IFRIC-1 and was mainly testing students on that particular standard.

I hope that clears some confusion.

[Hassan]

Kindly do look up IFRIC-1 when you have time to spare so that you can be sure if what I quoted satisfies. The change to the useful life is made at the end of year 2011 when 4 years have already passed. Technically, it should have been 16 years left, but the change is applied prospectively and complete 18 years counted from that point of change as a prospective treatment to the change in estimate.

@gingergirl Nevermind the mistake; you were kind enough to try and assist me with the problem. I thank the both of you for that effort.

[Hassan]

Thanks for the help, Mike. I printed all the responses and showed them to my tutor for further clarification. She agrees that the way I have presented the question (with the kind of spacing) causes some confusion in the mind of the reader as to what exactly the problem at hand is. Her question basically asked for accounting treatment in regards to the change in provision (which I didn’t quite mention anywhere but the title has a hint). If you notice, the title of the question specifically mentions IFRIC 1. IAS-16 does not cover ‘change’ in liabilities such as decommissioning, restoration etc. and the treatment that follows; IFRIC-1 was meant for that purpose.

I’ll quote the relevant portion of the standard right here: “Where entities account for their property, plant and equipment using the fair value model, a change in the liability does not affect the valuation of the item for accounting purposes. instead, it alters the revaluation surplus or deficit on the item, which is the difference between its valuation and what would be its carrying amount under the cost model. The effect of the change is treated consistently with the other revaluation surpluses or deficits. Any cumulative deficit is taken to profit or loss, but any cumulative surplus is credited to equity.”

There was also confusion about the change in decommissioning cost as to whether it was a straight replacement or otherwise, but the question clearly stated it is a change due to change in useful life.
I’ll reiterate that IFRIC-1 is what was mainly followed in the solution of the problem in regards to the provision and its subsequent treatment.
Also, gingergirl rightly said that the change in useful life is a change in estimate as per IAS-8 but the remaining useful life is still assumed to be 18 years following prospective treatment; not 14 years as per the solution I provided.

Before I conclude, I would like to emphasize that this is purely a response from my tutor and what came about after I had a discussion with her today. I am still as thankful to the both of you for assisting me as best as you could with the given information. Accept my apologies if my response here was awry in any way,shape or form.

I hope to have your response on this, nonetheless.

Kind Regards.

[Hassan]

Hello again.

How exactly would you deal with the subsequent revision in the Income statement? I understand the bit about unwinding and recording finance cost but the subsequent measurement is what is confusing me here.

Thanks in advance,

[Hassan]

Glad to hear from you, Mike.

I apologize for what appears to be a vaguely worded question to both of you. I tried to keep it simple but my mistake that I ended up making it seem complicated.

Could you please be clearer in regards to what extent you agree with the solution I provided in my response above? The teacher simply gave me an outline to the answer so it is very much possible that I misunderstood what was said since I completed the solution, with the figures included, on my own.

I am assuming that the cost model was supposed to be followed throughout here in this question, which is why there should not have been any mention of a Revaluation Reserve maybe and the revised provision only capitalized as a result? (Revaluation Reserve only comes into play when fair value model is adopted?)

I wish you can spare time and clarify this, and possibly guide through the entire problem with the help of given numbers.
Pardon me if I am asking for too much,

I appreciate your time and effort anyway,

Thank you.

[Hassan]

So I consulted my teacher regarding the solution to the problem and the outline she provided was rather different. I thought I should share it here as I worked through the solution so that a) Mike could later confirm the appropriateness and b) Others could benefit. Here goes:

IAS-37 Provisions, Contingent Liabilities and Contingent Assets determines the accounting treatment for provisions such as decommissioning costs of $500,000. These costs will be capitalized in the cost of the asset in accordance with IAS-16 Property, Plant and Equipment using its discounted value:
[500,000 x (1+0.09)-20] DR Asset 89216
CR Provision 89216

An interest of $8029 (89216 x 9%) will be recorded as expense and the asset will be depreciated at $54461 [1000000+89216/20], giving a Net Book value of $1034755 (1089216-54461).

As for 31 December 2011, the Net Book Value produced will be $871372 [1089216-(54461 x 4)]. Since the change in provision is given as a decrease of $50000 (500000-450000), the resulting gain will be added to revaluation reserve and provision will be debited by the same amount using discounted value:

(50000 x 1.09)-18 DR Provision 10600
CR Revaluation Reserve 10600

[Hassan]

Sure, I shall let you know as soon as she checks it and produces the solution herself.

Without doubt, she knows her stuff pretty well. We are based in Rawalpindi, Pakistan. Thanks for asking. 🙂

[Hassan]

Thank you so very much for such an elaborate response, Ma’am.

I am only guessing this at this point since I don’t have an explanation of the question yet but the revised $450,000 is what 4 years after starting the decommissioning costs are estimated to be at TODAYS prices (based on the fact that “the change in useful life has changed the estimation”).

The question was designed by my own P2 trainer and she is really good at it. I just hope atleast some of her brilliance in regards to Accounting and Reporting can rub off on me sooner rather than later. :p I will be discussing the question in further detail tommorrow since I had days off till today.

Anyway, I so totally appreciate your time and patience here and the fact that you actually assisted through the entire question in good detail.

Thanks once more, and stay blessed.

[Hassan]

Thanks for your response despite Mike’s absence @ gingergirl.

Your mention of no retrospective treatment did thankfully remind me of what I studied about prospective treatment of changes in accounting estimates, so I am sure you are totally right about that bit.

That surplus I mentioned is the revaluation surplus (‘notional’ gain produced upon subsequent revaluation). I would suppose that’s right after the change in original assessment.

Are you entirely sure there will be no accounting adjustments, or any sort of workings to show, for the year ended 31st December 2008? Even if not, I think you missed the other year for which the question asks for accounting adjustments (ie. 31 December 2011). 😀

Your help is highly appreciated, by the way.

[Hassan]

Failed at 39 percent. Will make sure I follow opentuition with more dedication as I study F9 and P1 on my own this session.

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