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You forgot to say that before “regearing” the company for new industry it intends to enter, we “degear” it for its current industry (say Engineering). This is so to eliminate the previous risk profile and assume the new one in order to culculate the beta asset of the company in the new industry (say Property).
You cannot then continue to use its prevous asset beta as a proxy as you are weighing the options of getting into the new industry. so you will have to choose a company operating in the new industry for a proxy.
Unltimately, there will be a new WACC for the company which incorporates its entry into the new industry.
Did I get you correctly?
@Pizzaaa . I think you should skip registering the subject in the next exam. Do the next paper. When you come back to it, throw away everything (notes) you have on the subject. Start on a clean sheet. Reforcus: if you could do all Fs and other Ps , you can do it, with the right attitude. Timed Practice, Practice, Practice. Discipline, discipline, discipline.
63%. First attempt, self study. To God be the Glory . OT, Kaplan, BPP Thank you
As I see it there are two issues here. 1. IAS17: An unavoidable lease Obligation of $50000 that has to be shown on the SOFP. 2. IAS37: The subleting part of the “equation” cannot be recognized because it is not measurable and the directors have no signed uncancellable contract as evidence that they will recieve the $10000. if they had it then this would be an asset seperate from the lease liability. In onother light a contingent asset can only be disclosed by way of notes and not recognised on the face of the financial statements. Just thinking
What is confusing you is the defination of a liability and an asset. Put simply, id say Net liability = Plan liability – Plan Asset, allways. The way you account for an increase or a decrease in a provision is the same way you account for an increase in the obligation. By the way, the plan asset arises out of the firm setting aside resources to meet the future obligation, say in your instance you have an obligation (liablility) to pay 200 in x6, however you have an asset “money” set aside for this which is 190, so your net liability is 10. SFP should have a DBP Liabilty of 10. What goes to the SPL is the “movement” between succesive net obligations. If the plan was established in x6, ie, had 0 bal in x5, then in the SPL you have an xpense of 10 to complete the double entry. In x7 the net obligation has moved from 10 in x6 to 15. So the increase in provision of 5 goes to SPL as an expense while your SFP will have 15 as a liability. Take other numbers as “workings” for the liability in the SFP and the pension cost in the SPL, you will not loose the bigger picture. If the assets investments set aside exceed the liability then you have a net asset – follow the the entries you do for an incease/decrease in debtors/prepayments. I hope I am clear enough
It is called discounting factor. Using infor you put here I would profer this help: From your F9 studies (check out the formular sheet for any paper) the present value of $1 receivable in n yrs is 1 * (1+r)^-n or 1/(1+r)^n . In the formular r = 0.08, ^ = “power of” n= number of periods to recieve. Pluging in your data into the formular : the PV of 884 receivable ate the end of Yr4 is 884/(1+0.08)^4 or 884*1.08^-4 = $649.77. Since i.t.o. IAS19 you have to take into consideration time value of money here you therefor cannot ignore the discounting aspect. Hope that helps,
Ngu
Thumbs up to Usf for painting such a graphic picture. This is called Talent. I love it!
Thank you Sir for the reply
I went along that angle as well but still I cannot reconcile to the given solution. If learning ended in Oct the the cumulative average time for all successive batches would be the same as that for the first four to Oct,that is 136.2944 giving a total time of 2180.7104 for the 8 units produced in Nov. Valuing this at $12 gives us a labor cost of $13089 as compared to the examiner’s $10800. Is this line of thinking flawed?
Two types of tests TOCs & TOD/ Substantive tests. Under TOD you do APs. To add on to what MR Keymaster has said. I think you have to realise that APs are used as pointers to identify where further work needs to be done eg when you reculculate stock days cover and produce 50 days when managements said they keep two weeks inventory then you have to obtain futher evidence on inventories APs are performed at: 1. Planing Stage of Audit as a means of identifying high risk areas to minimise detection risk (DR) 2. At the auditing stage as part of substantive test proceedures 3. Review Stage as means of checking overal reasonableness of the finstats in light of other corroborating evidence
@ chaybooyee. it will not reduce reserve balances but will increase them. take it as gaining something / an asset “for free”.
ITO IFRS 3 . 34- 35 a gain from burgain purchase should be recognised in the SOP&L in full, likewise goodwill armotisation has been disallowed. This means that it becomes part of the distributable reserves in the SOFP. ITO IFRS1 there is no such thing as negative goodwill to be presented on the face of the SOFP. I am not sure what other jurisdictions prescribe but if you writting the INT version then the above is the required treatment. I hope that helps
your decision to study is very important to be left to “Someone”. Just because they got bored does not mean you will be bored as well. After you are done with lectures from this site try answer the questions in the kit as well as past exam papers. Idf you dont strugle, then good for you. If you struggle use, the bpp material
Ninska I have gone through the answer as you suggested. The examiner put a tutorial note that the cost of holding buffer stock can be ignored since it does not change when either of the policies is implemented. I guess it needed an open mind aproach. Surprisingly i printed the dec 2010 paper intending to practise on it but i dont know how i skipped it when i did most of the other F9 past papers. Thanks. All I know is ill be doing P papers next sitting
1. Identify the group structure( what share of total assets was aquired and when) 450k/TotalShares
2. Identify the purchase consideration $1.54m (FVPC)
3. Identify fair value of NCI/ Its share of net assets (FVNCI)
4. Identify what was bought which is share capital, ratained earnings and some adjustments on assets eigther upwards or downwards (140k+28k+?+adj)
5. Work out Net assets of sub @ SOFP date.
6. Goodwill @ DOA = 3+2-4
7 workout group ret earnings = parent earnings + group share of changes in net assets of sub since DOA
8. Nci @DoSOFP = NCI%*netasset@DoSOFP
having all these figures then you slot them into your profoma SOFP. Goodluck, I hope this isnt too lateHow then did you calculate the total ordering costs to add to the holding cost. I just ignored the buffer component only to realise the holding costs and ordering cost could not equal each other as they should when the total cost is minimised
IAS 21.47 requires that income statement item be translated at rates ruling at the date of the transaction. Any diffs arising be recognised in OCI. Comply with the standard. Mind the definations given thereon, they guide you.
Thank you, I think i have to apply the examiners instruction as it is like you say.as a student im often ask myself what if its a trap. Goodluck to Neil as well, thanks
just split your cashflows between initial outlay, annual cashflows and scrape value/ teminal cashflows. You cannot layout a fifty year table on one sheet so you will have to culculate a terminal value of cashflows after say 3years. Disc factor is computed as (1+r)^-t eg for demolition cost it would be 1.18^-50. For an annuity it is computed as (1-(1+r)^-n)/r. Its at the top of your discount tables. Surveyors fees are sunk costs and thereforr irrelevant. Goodluck
Let me guess: first calculate the WANES outstanding during the year. Divide attrib earnings by WANES. Restate prio year eps by the bonus adj factor of 9/7. Thus: Wanes = 2m* 6/12*9/7 held for six moths + bal b/f +full mkt issue for 2 months 5m*2/12*9/7 + shares held for 4 months 5m *9/7 *4/12 = 4500000 shares. Eps for FY2009 = 600k/4.5m = 13c. Adjusted Eps for FY2008 = 16* 9/7 = 21c. There are a total of 9 shares after an capitalisation issue of 2 for 7. Cornfirm Mr Tutor.