[James]

MCQs

D for the 1st, about Same day share rules followed by 30 after.
£2200 for the 5/3 restricted gain
£3000 odd for the NIC
What about the self assessment one – Property, Trading etc?
12mths for the loss 100%
4 payments for the CT Tax –
£3000 for marriage £3000 x2 and £1000 for marriage exemption

[James]

Pretty fair paper I thought!
I think I got 13/15 on the MCQ’s so well happy with that!

Agree with most of the things here about section B, Q6 was a little weird, I messed up the 3 mark Corp Tax liability but thought the losses, capital allowances were good.

Q5, I had a fair go, made a silly mistake or two but they are only worth half a mark for every adjustment. I included the chaffeur too.

[James]

MCQ’s £2200 for the resricted gain, What requires a self assessment return?
£3000 odd for the NIC, 3000 for the marriage, 12 months for the loss.
Seemed to get C&D for Q8 onwards.
D for Q1, about the shares. Same day, then 30 after as individual.

Fair paper I thought!

Q1: Was the toughest for me, quarter up method need to be used for Gain 2. I didn’t know but did calculate the savings through for method marks

Q2: Got for the April year ends the profits in the question, overlap on (2) of the first tax year. Cash basis and accruals basis and stated the difference. Cash was a tax saving

Q3: IHT, was okay I thought. Did 90% of it, got a big tax payment for the shares, 200k+

Q4: VAT was okay, few easy marks in there.

Q5: Saving of £2880 for Part B. Didn’t extend the BRB for £250, but did the 3k one. Chaffuer I included. Thought was generally straight forward bar a few bits. Adjusted PA, included loan into reliefs, dropped salary of Partnership then apportion etc.

Q6: Took a while but okay I thought, did the 12 and then 4 months. Capital allowances were a credit for the 2nd year increased loss. Indexation cant create a further loss.

[James]

@drice99 said:
Yes the auditor observes and checks, enquires and does test counts,the client does the actual counting, organising and labelling

I said how:

Review Past years before the audit to see the common mistakes errors
Review stocktakes during the year to ensure the adjustments posted

Observe the stocktake
Recalculate a sample etc

Things like that

[James]

Pretty fair exam I thought:

MCQ’s can’t remember! Thought they were okay.

Q1: Threats to Independence.

Went for Familarity (7 years)
Self Interest (Profit Shares)
Self Review (Completing reviewing/WIP

Few points about other things Internal Audit can do.

Q2:

State reasons to change an Engagement letter.
Went for change of fees and a takeover.

Six parts of an engagement letter for 3 marks.

5 ways of understanding a new client.
Review Previous FS, Audit report, Controls of client, Website and something else:

Q3: Going Concern.
5 reasons they were not a GC, pretty straightforward lots to go at.
5 audit procedures again thought that was Okay. Check bank terms, check how possible the obsolete sales is with lawyers.

Q4: Audit risks

Said how they were mistating the insurance possibly, check to see how the scrap value is accounted correctly, how directors get a bonus on profits and others,

Q5:
Six deficinces with test of control and responses. Said about Cash not banked enough, Reports not sent to head office, Too many people can open safe, No receipts for petty cash purchaes, Inventory didn’t match and one more

Q6:
Reliability of evidence – How external is better, depends on various factors.
Inventory Audit procedures, research and development AP too.

Then effect on Audit report:
Would be a modified report, modified opinion.
Qualified opinion except for… Intangible mistatement. Material however not pervasive.
Use a paragraph in report to state this etc.

[James]

I had a quick look and from memory I’m think these are right, just double checked a few:

2) D
3) B
4) C
5) C
7) D
9) A
10) B
11) D
12) C
13) B
14) A
15) A
17) B
18) C
19) A
20) C

[James]

@chris1975z said:
Thanks Tinashe

I’m hoping for 2.5 out of 3 on the EPS (assuming profit figure is wrong and therefore hald mark dropped!). I did the CRAP/TERP calculation for the rights issue and time apportioned. Seemed one of the more simple EPS calcs with $1 shares rather than 50c share trying to trip students up etc.

Kind Regards

Chris

Chris,

The profit figure you have is irrelevant and own figure which wouldn’t cost you a mark, I just used 10,000 which was my profit figure.
I made a silly mistake after time apportioning so I’d assume I’d get 2/3.

[James]

@michelleberry28 said:
Hi Erin, i have sat it 3 times, and it doesn’t get any easier, its a joke!!! i think its one of the toughest papers on the course and at this stage I seem to have a mental block with it, so much is throw at you in the exam and as someone else said they just try and trick you instead of testing your knowledge, its so dishearting. I thought the paper in December was better and i got 47% so i’m not sure about this attempt and could gauge it better if i knew where i stood with the MCQ’s. This is my final paper having passed all my professional stage papers first attempt, you would think if i passed P2 that F7 would be easy but its not??? I would advice you to resit the paper in September but hopefully you will pass. I think its all about luck on the day of the exam and time is crutical. I really put in the effort this time having done the mock exam and QBR sessions and no amount of extra study would have made any bit of difference. I think this is a hard one to study at home yourself but if you have gone to evening lectures before i don’t think there is much point in paying for the course again, just do the revision and practise question after question. best of luck Erin and glad I’m not the only one struggling to pass this paper.

Erin, Michelle

F7 is one of those papers which is a question based paper, like you’ve said it’s just question practice. For me, having sat the exam last week, I feel it is all about proforma layout and taking the easy marks where possible. Such as on the published accounts we’re told not to waste time adding up, working out gross profit or profit and I feel we had various other little tips which meant the exam wasn’t time pressured at all. Once the proforma is laid out, do the profit (make a figure of 10,000) retained earnings and the tax. The proforma and those take approximately 5-10 minutes and you have perhaps 7-8 marks there and have 40 mins+ to work on the other adjustments.

I study through Kaplan and to be fair I think they are superb with the in classroom teaching, if I pass that’ll be the reason.

If you need any tips, I’ll be happy to help with any queries, I can email if need be and best of look to you both!

[James]

@sis00 said:
Regarding investment through P/L.
Opening – 6000
Sold – 1400
Closing – 4600 but closing at FV 6500, thus surplus 1900 goes to P/L as well as income (300 dividends, 200 profit on sale)

Isn’t it just 500 to investment income, 6500 to NCA?

The sale information was for the cashflow I thought as it was a 200 gain with 300 dividends received, therefore investments have gone up 500.

[James]

Just had a quick look at Q3, my predicted marks for each are:

Revenue 1/2 Mark
Cost of Sales 3
Admin 1/2
Distribution 1/2
Tax 1.5
Finance Costs 3

SOCIE:
S.Cap: 1m
S.Premium: 1m
R.Earnings: 1m

SFP:
Assets 2
Inventory 1/2
Payables 1/2
R’ables 1/2
Overdraft 1/2
Loan Notes 1.5
Enviromental provision 1.5
Leases 1.5
Deferred Tax 1/2
Operating Lease 1

There’s one mark in the balance sheet not allocated but I’d say that’s a rough guide you can use to calclulate marks for the question. I’ve got to around 18-20, even though I felt I made some really silly mistakes you can gain more marks than you think in my opinion.

[James]

@chris1975z said:
The question stated the provision had correctly been account for – in other words it was already incorporated in the 85m cost b/fwd. You’ve added another 4m on top – the only adjustment required was finance cost – you’ve doubled up on the 4m provision in my opinion. As you say, at max 1 mark dropped I’d suggest.

I think I overcomplicated the Finance Cost! Again, the unwinding is worth 1 mark (half for finance cost and half for provision)

For some reason I did 1/1.08 to the power of 5 to get the present value in today’s terms, dividing by 5. I got 200 something.

Still as there’s so many adjustments, it is not an issue making small mistakes as we’ll each still get 18/19-23 for everything else, these adjustments which we are querying are worth few marks as I’d anticipate most of the steps have been done correctly meaning a 3/4 marks tops lost.

[James]

@alexanderrobert1989 said:
James, Yeah I agree you are probably right but you just don’t have time to second guess in this exam.

On another note,

How did you deal with the £5000 in the suspense account?

Can you remember how you dealt with the investments through the P&L/B.S

And finally did you expense the full 2k through PandL for Op. Lease and create a prepayment in CA?

Thanks,

Rob

With the suspense account, I credited suspense and Dr Loan Notes, reducing the loan.
In the exam I did:

B/Fwd Loan notes 20000
8% Interest 1600
Less Repayment (5000)

Dr of 2 x 800 to Finance Costs.

In the exam, I rushed this so I think it is partially wrong, but I again would imagine 1 out of 1.5 perhaps.

[James]

@lauracam said:
how did you all account for the investments through p&l ? 🙂

Cr TNCA 6500
Dr P/L Investment Income 500.

B/FWD was 6,000 with an income of 500. Leaving a CV of 6,500 and a gain in P/L

[James]

@alexanderrobert1989 said:
So basically instead of me taking the full value of 85k and dividing by 5.

I worked out each individual PPE for my workings.

Plant and Provision = 18000/5= 3600
Finance Lease = 8000/5= 1600
Remaining PPE = 63000/5= 12600

So the total I got was 17800. Based on what you have been saying James it looks like maybe the provision was included.

So our difference is 800. 17800 vs 17000

Hopefully it wont be too much of a problem but alot of past exams have never included the provision in PPE so went with my gut in the exam.

Actuallly, this is how I went about doing this.

I got the 3,600 and 1,600 as I also assumed the 14m was the cash cost for the purchase and the 4m we had to add so I got $18,000/5.

My problem was I did:

85,000 – 18,000 – 8,000 and for some reason did reducing balance on the last bit so only had a depreciation charge of 8,000 for remaining plant!

But I agree with 17,000 as Chris had got. Again, my prediction is 2 marks for Assets so I’d imagine Robert and myself would get 1.5/2 so not really an issue.

[James]

@alexanderrobert1989 said:
Curious to know if anyone can balance the q3 on here. Seems the fair value adjustments and operating lease prepayment are tripping me up when I try to rebalance the question?

Just to confirm most people added the 4000 provision onto the plant getting 18000, then deviding that by 5 gave the depreciation.

14400 plant
4400 provision
400 finance cost
3600 dep

Why is the plant 14,400? Should it not be 4000 x1/1.08 to the power of 5? Double entry between Environmental Provision and Finance Costs. Whilst the plant is depreciated at 18,000/5 leaving 3,600 per year.

[James]

@chris1975z said:
PS – I think all this confusion over the depreciation charge has been blown out of proportion having reviewed the question. I think most of the information on the TNCA was for Cash Flow requirements part of the question.

I still maintain that dep’n for the year was simply 85/5 = 17. They were just telling us no equipment older than 4 years of age to ensure no confusion over residual values etc. In actual fact, this seemed one of the more simple TNCA sections of any ACCA paper for some time with them adding the curve ball of Cash Flows into the equation.

Just my thoughts though and I’m still happy i put 17k in for depn!

I think that’s pretty much it Chris. I think the confusion was it included a lot of information, all I did was break the assets down into 3, items 1 2 and Remaining, think I made a slight miscalculation but still hope to get most marks. Going through Q1, 2 and 3 depending how well my written is which is difficult to mark don’t think I dropped many more than 10-15 so I think I’m fairly certain I’ve passed, better than the debacle F9 exam.

Can’t see assets worth more than 2 marks as there was lots of other things do do, the beauty of a published accounts question. In hindsight, I actually thought this was a pretty fair paper, it’s really disappointing about the MCQ’s as I’m hopeful I’ve got 15/20 on these as I thought they nicer than previous paper. I may email my tutor and see what they say too.

Good luck for F6 and F9 (just done F9, the MCQ’s were ridiculously tough) are you doing the September sitting?

[James]

@jenny3549 said:
Exactly as I did. Equity costs more than debt so increasing equity and decreasing debt will not optimise structure according to any of the theories.

I started to go on about that, MM how debt is cheaper than equity as long as you don’t have too much.
Could you not argue they had too much debt either, so selling the debt off is not necessarily a bad thing from the other viewpoint?

[James]

@jenny3549 said:
Exactly!!!

I thought the point was to cover a good range of the syllabus but they didn’t. Loads were left out and it was all on markets etc. Nothing like practice ones – and I did plenty!!

You seem pretty spot on methods and marks Jenny, you’ll pass comfortably!
But I don’t think there was 5 questions on MCQ’s to do with WACC, Inventory, Working Capital, investment appraisal etc, 1 little FX.

I know next time if I need to resit September, I’m going big on theory and just try to learn the textbook. Which considering it’s meant to be a practical exam doesn’t really help you, disappointing from acca.

What’s even more frustrating is they don’t release the questions for section A.

[James]

I give up ha!
I’m feeling a 49/100 here.

Hope my MCQ guesses were good, frustrating I made silly mistakes.
Why were MCQ’s all on 1 area?

[James]

@emo777 said:
Now i see where Jenny and some others could face an issue. I think you calculated advance on trade receivables, instead of total credit sales

Even if I’ve done that part wrong still worth 5/7 I’d presume

[James]

This factor is interesting!

I did first

Old cost

1% of 27200
5% x balance of receivables

New cost

70% of bad debts saving
Factors fee at 0.75%
35/360 x27200 to get new receivables balance x80% x7%

I think the confusion is what you’re charging the 7% on?

[James]

@jamesuk19 said:

Gvtftf?

How did you find Q3 as above?

[James]

@emo777 said:
Jenny, i think the factor was viable, i studied this question carefully during preparation, it was viable by 87000 and smth</blockquot

Pretty sure I got 87000 too.
For part 1 did the factors receivable balance x5% and the bad debts 27200 x1%

Then the 70% reduction in bad debts gave a big saving with admin too on top of 50k. Factors fee of .75 was a cost with also the revised debt days of 35 gave a debtor figure of 2000 something, x80% x7% was the cost.

Agree?

[James]

MCQ’s were a plain joke in my opinion really harsh..

Doing F7 and working full time didn’t cover the full syallabus on theory.

Made a silly mistake on tad’s did reducing balance, will I get a mark at all?
Hopefully still 7/9 on NPV and 5/6 for sensitivity analysis.

Q1 hopefully 10/10, I messed up the calcs on 2 a little hopefully 5/10, 3 perhaps close to full thought I did it all okay. 9/10.

Q4 hopefully 7/15 what did you write for the theory on 4 with regards to capital structure. Then 12/15 on the last.
Would leave 44 with MCQ’s to go but thats ambitious marking so not sure.

Don’t think I got more than 4/5 on MCQ’s, all on one area.
I wish I could do the old exam.

[James]

Tax on TAD
1125x 30%

Times each year by .75

Balancing figure in T4.

[Author]

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