[jmmyjimmy]

@sanjanapaul1234 said:
I don’t understand why have people used porter’s 5 forces for Question 1a. The question had asked analyse the environment and comment on the way it’ll affect the organisation’s mission and strategy. I strongly felt to use SWOT analysis for this question. Porter’s 5 forces revolves around how competitive and attractive the industry is to make above average profits. PESTLE could have been used in 1a. That still makes some sense to me.

Don’t worry. In order to assess the external environment, it is possible to apply any model convenient for you: PESTEL, 5 forces, SWOT. Or not to apply any models at all, i.e. use common sense. In case you question will cover the relevant points, you will not not lose any scores for the “wrong” model.

[jmmyjimmy]

@vatalya said:
For question 1c What did you have to do with the 400 m debt for Tai and what did you calculate as current value of a Tai share. I got a very small figure so my gains were extremely high. Couldn’t recall what I did in my past exam practice questions..

i calculated free cashflow of tai (to my mind, included interest expense accruing from 400m debt in the calculation) then used the growth model for the calculation of value.

received around 930m.

[jmmyjimmy]

Guys, one question. Did you inflate the post-tax cashflows in the base npv exercise or just used the inflation rate for the purposes of investment maintenance?

[jmmyjimmy]

@lesbella said:
We should sell future right?

i understand the futures were in chf, so that we need to sell futures in order to get rid of chf (i.e. buy usd).

according to this logic, we were to buy put options (june ones).

[jmmyjimmy]

@adarshjanan said:
What you guys wrote for this one. 3 b) explain factors to discuss over them using longer term finance and factors that would make them change the policy down the line (10 marks)

not sure whether it is correct but i wrote external (bank covenants, riskiness of projects, shareholders risk model) and internal (gearing, secured assets, dividend policy).

[jmmyjimmy]

@gevher said:
Although I did not mention that I used as PESTEL or SAF, i explained the question as inline with the content of PESTEL and SAF.

Can i still get mark from my answers or would I have to explain as Political, Economical, Social, etc..

definitely. there is no requirement to use the model (provided your explanations suffice).

[jmmyjimmy]

@lydia1208 said:
I agree that for question 1, in order to capture the key success factors, a free-style analysis is more suitable as PESTEL, 5 FORCES are purely to evaluate the environment, and this not enough to demonstrate why HiLite is doing so well , for example the industry article said about the luxury hotel chains that went out of business ( same country same conditions)
I did use the Porter Diamond for inspiration as I believe the country itself has a competitive advantage in tourism that contributed to success of Hi-Lite ( favorable factors very good infrastructure, tax rebates, educational programs in hospitality which results in high percentage of leisure travelers )
I think with the models sometimes you are limiting your options to discuss a topic,and lose the focus from the actual requirement.

what did you use for 1b then?

[jmmyjimmy]

by the way, what did anyone write in section 3b?

the first responce was to set-up an it committee / non-executive director with the relevant experience / chief it officer.

the second one should be introduction of specific controls and general controls (such as authorisation by password, encryprion, safe place, etc).

third – don’t remember. 🙁

[jmmyjimmy]

@irishrazor said:
4 Hours…still wasnt enough time to give the case study a proper reading.

For 1 (b) i did a balogun hope haley EVALUATION for the change in the proposed acquisition…

Time pressure..negative..90million needed immediately..

Scope..negative…big transformation required etc

Diversity…negative…need more women in management etc

Power…positive..management willing to sell etc

Preservation….negative…gym and leisure facilities?

Capacity…..positive…they have the finance(debt and equity in place)

Capability….negative…never done before (also need to send staff 5000 miles away)

Readiness..positive….staff want better wages and better opportunities etc….

Am I the only one that approached it this way? i understand most people did SAF.

I think there was so much subjectivity and alot of your own interpretation required in the exam as a whole…

i did not use saf on the basis that the report would be addressed to the financial director.

i described the considerations, which may affect the cashflow (e.g. unpaid penalties for pollution, loss of revenue due to adverse reputation of the country, grandfathering penalties for the child labour, cost of relocation, unknown debt/equity ratio, gearing, covenants, basis for calculation the discount factor). used pestel model for structuring.

in conclusion i wrote that a more thorough analysis is needed before the final decision.

[jmmyjimmy]

@robertoh said:
Yep

thanks! does anyone remember how many marks were for section 3 (including professional ones)?

[jmmyjimmy]

@robertoh said:
2a ah yes, press release. Thought was ok just not sure if enough for 10 marks but nice and easy question

was it a 10-mark question?

[jmmyjimmy]

@ajjajj said:
the exam was fairly easy. Missed up with a couple of questions, but hoping to make it.
question one used PESTLE, with one of five forces related and supported industry. NPV, question forgot to use the IRR and payback period as a comparison but managed to through some sensitivity analysis for both financial and non-financial aspects like 5 forces.
the press release was a relatively easy one.

both reports were easy.

the only one through me out was slid did not understand the requirements correctly so I did my best guess but the note was correct.

i don’t think we were supposed to dive deep into financial analysis. the forecast itself had many disadvantages. i think we needed to analyse the consequences of entering the new market.

[jmmyjimmy]

guys, do you remember how many marks were awarded for each section?

1a: key success factors. which model have you chosen for the key success factors? i decided to use porter’s diamond.

1b: merger strategy. do you think it is acceptable to use pestel here (i mean in terms of cashflow defficiences)?

2a: press release – how many marks were given for that? did they expect a “press release” style (i.e. no bullet points but paragraphs)?

2b: integrated report – can you remind what it was about? 🙂

3a: disruptive technologies – any ideas regarding this?

3b: slides – put some responses like setting up it committee / chief it director. how did you cope with that?

[jmmyjimmy]

@sokty said:
Q2

1. Lease: Qualified Opinion as it is material misstatement but not pervasive

2. Provision: also Qualified Opinion as it is highly material to SOPL but not pervasive. We can nor offet provision and contingent assets confirmed by insurance company, IAS37.

3. Impairment: not material, so opinion is not modified.

Regarding case 2, I have put pervasive as the misstatement represents 50% of pbt. Do you think it is a mistake?

[jmmyjimmy]

Same issue with the length. Nevertheless, I suggest to reconcile some audit risks, that have been identified in Q1 (a).

group audit
finance costs vs borrowings
revenue / expenses (management bias)
impairment
provision
control risk (new technology)
issue of shares
intangible assets

what else? do we need to state the going concern issue (massive redundancy, which will lead to bad reputation / strikes and new competitor)? or the going concern should be neglected as it relates to disclosure? please advice!

[jmmyjimmy]

Part 2 questions have been uploaded on the acca oficial website:

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p2/exampapers/int/p2int-2018-marjun-q.pdf

I am confused that so many scores are given for the deferred tax asset question. What did you manage to write there except the DTA recognition criteria and the relevant applicability?

[jmmyjimmy]

@cr333 said:
There is no need to show journal entries in the exam, as long as your workings are clear and you allocate them to the right balance sheet accounts. It’s useful to think of adjustments in terms of journals though as this helps you ensure you make all the necessary entries, and it’s also useful when explaining to others, as we are doing.

The NCI increases by the share of net assets acquired, which I calculated as 390 x 10% = 39m. The consideration received was 48m, so there was a 9m credit to OCE.

The NCI still received a 70% share of the change in retained earnings and OCE as the disposal was only on the last day of the year

Change in NCI regarding the full goodwill method should be calculated as 10% x (net assets + goodwill).

Chris, can I still receive credits in case I calculate the wrong amount in the working but correctly include this wrong amount in anither relevant working (e.g. retained earnings)?

[jmmyjimmy]

@nathan488 said:
Exactly, it’s nothijg to be worried about my friend 🙂

For example, I took my NCI adj to RE accidentally instead of OCE, I probably did the wrong DR/CR to RE on the financial asset amount

But as long as you’ve done all your workings showing what the figure should be etc, you’ll only ever be penalised a very few marks for things like that

All these things were on about will probably only cost a few marks tops

I’m pretty confident you get at least 20/35 if you just do the consolidation (no adjustments) and for example folllkw through your workings etc

Then even more marks for specific adjustments and what not, I think we’ve done just fine 🙂 it’s reassuring to see on this forum though, think Q1 has definitely (hopefully) saved me

Just out of curiosity, did you take the parents Share of RE/OCE at 70 or 60%? (Since they disposed the 10% at year end and I couldn’t remember the rule on this) I went with 60% since were doing a SOFP and so show the year end result

Hah, will hope for the best!

Regarding the financial asset, I did three adjustments (two in RE and 1 in OCE). But I don’t remember the figures.

As for the percentage, I used 70%, as the disposal took place in the last day.

[jmmyjimmy]

@nathan488 said:
You should always put the movements of fair value through your RE

There was one FV excess due to PPE with a useful life of 10 years I think and the difference was 80m

So I took the 80 to goodwill (already included within FVNA so not really any change), the depreciation of (80/10 *1 year =(8) to my RE and lastly the net figure of 72 to my SOFP

Then for that adjustment where they had a fair value of land of 30 but sold half

I agree since it’s land there’s no depreciating movement but I did 30 to start, took off 15 since they’ve sold it and by year end actually have only 15m worth of land and so took 15 movement to RE and the net amount 15 to my SOFP

Can’t remember the inclusion of FV adjustments to the retained earnings. 🙁 But nevertheless, we are on the same page regarding most of the workings.

[jmmyjimmy]

@nathan488 said:
I ageee with all the above (although I stupidly put my NCI adj equity in RE (cri)

Off the top of my head I also had these adjustments in my retained earnings:
– FV movements
– 14m impairment loss of PPE
– I reversed the 2m financial asset coupon expense since you only ever charge the “EIR” rate to P/L
– as above, I charged the EIR rate
– negative goodwill

Can’t remember anything else currently 🙂

For FV adjustments – disagree (they should be included in working 2 and relevant SOFP components)
Impairment – agree (did the same)
Reversal – agree (Dr Cash; Dr RE)
Interest – agree (Dr FA; Cr RE)

[jmmyjimmy]

@nathan488 said:
I also showed the NCI share of other components of equity in the NCI working so I had:

FV NCI
Share of profit/loss
Share of OCE
Increase in NCI (for the sub that had the adj)
NCI at year end

So pretty much the same, and no impairment since only impairment was of the parent for PPE directly

Agree, I also included OCE!

What about group reserves?

– RE of parent
– S1: share of loss only
– S2: share of profit only
– Gain on bargain purchase
– Adjustment on the financial asset (profit to cash)
– [what else?]

OCE:

– OCE of parent
– movement in equity (investment in Bude)
– increase of FVTOCI
– S1 share of OCE
– S2 share of OCE
– ???

[jmmyjimmy]

Does anyone remember workings in respect to the calculation of NCI? To my mind it was as follows:

– S1: FV of NCI
– S1: NCI share of loss
– S2: FV of NCI
– S2: NCI share of profit
– Increase in NCI (investment in Bude)

Is that all?

[jmmyjimmy]

@nathan488 said:
The question said right at the end that it’s not accounted or recognised under IAS 20 grants :/

But your actual accounting seems okay.

I wrote for the £4m non refundable fee TO the other entity that they need to defer the expense (deferred expense) until it’s at that date, since they’ve paid for it but haven’t yet consumed the “benefit” of these trials

Then for the other free of £2m being received, I think I said to defer it as deferred income again for the similar reasons

I also waffled a bit about IFRS 15 and performance obligations.

At that point I had gone through an answer booklet and was just glad to have finished in time :’)

Bad news for me than. 🙁 Did not have time to assess the wuestion properly. 🙁 So… was there a strict prohibition to describe IAS 20 or I still can get something?

[jmmyjimmy]

@mackawara said:
same here .hope got full marks on goodwill

Hah! Hope it is correct. I wonder, how much points are credited for the gain on bardain purchase and goodwill.

[jmmyjimmy]

Guys, what do you remember about government grants?

I wrote that there has been a prepayment, which is subsequently reduced against spl.

The grant can be of income nature or capital nature. Hence it can be recognised either as other income, or against the prepayment?

Is it possible to recognise the grant as follows:

Dr Cash
Cr Prepayment

?

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