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@shrops
You are right for question 2, it said calculate the two derivatives only and advise on the MMH (not calculate).
Can’t help with Q4 unfortunately, I did Q5.
Good luck everyone!
Overall it was a really time pressured exam! But I guess that’s to be expected at this level.
A bit disappointed there were no models, I learnt them inside out as tutors suggested.
Hoping for a pass!I got 8.46% for the WACC, and a positive EVA of $0.2Mill.
ROCE was around 5.98% (using Regulated operating profit of $46m divided by the average capital employed calc’d by the regulator for the year which was around $770m).
Just to update on this post in case you find yourself in a similar situation, I have decided to go for P4. Mostly because I find it a far more practical exam for me as I work in industry and the knowledge this paper gives you is important from that perspective. I also find it more interesting than audit so I think I knew it was always going to be P4 I was just put off by the comments on difficulty which I think is irrelevant when you get to the Options papers.
an investment in an equity instrument can be held at FV through OCI if the irrevocable election is made under IFRS 9, so its correct.
although investments in subsidiaries are not shown as a separate asset in a business combination.actuarial gains and losses are recognised in OCI and should be recognised immediately with no deferral allowed. that’s what i put anyway.
q3a was a range of issues, from the properties not being held at the correct fair value. there was an active market to obtain a fair value from in accordance with IFRS13.
goodwill was being impaired because of events after acquisition which is incorrect as they were not related to the carrying value of the of the investment, and it was also valued using the incorrevt FVNA as this was based on the DCF model rather than the IFRS13 basis.
this had a knock-on effect on deferred tax because the carrying value was incorrect meaning the temporary diff was wrong and so the deferred tax.
there was also a going concern issue which means IFRS 5 may have to be adopted for preparation of the FS.you would have gotten marks for the 5m consideration plus NCI at FV plus consideration for the 55%. i wouldnt worry about the other bit, you wont get marked down for it but i dont think the financial assets should have been adjusted as the cost of the investments were held separately.
the dividends were an intergroup transaction and so it needed to be removed completely. my reversal was dr OCE cr Cash.
thank you. which question was it that you saw with this adjustment?
The rationale is that if the fair value of the assets at acquisition were understated then the fair value of the net assets would be understated as well, i.e. dr PPE, cr revaluation reserve and therefore increase FVNA.
because the FV adjustment existed at the date of acquisition and was pending the final sign off it should have been included as part of the fair value of the net assets at acquisition giving you 6 goodwill.
@gwen2000ie
You had to add the fair value of the previously held equity interest, which was $5m. That would have given you a positive goodwill of $1m.
Alios was the only one entitled to Entrepreneurs relief as it was a Personal Trading Co. of his. so the share disposal was at 10% and the investment prop disposal at 28%.
Bon, yes.
Cherry, yes. The pension contributions would have increased the basic rate tax band.
I think the inheritance part was there to confuse people. But, yes, irrelevant.
Louibee answered the rest…
Q4 was something like 3,4,2,3,3 i think…
yeah, gilts were gross 🙂
you would have lost 1/2 a mark at most for using both bonuses. don’t worry about it!NS&I interest is tax free up to £15,000 per year.
Only one bonus was assessable in 10/11 as they are assessed in the year of entitlement. As he was entitled to the first bonus on the 10/03/2010 it fell into the 09/10 tax year, not 10/11. Only £6,000 was part of the 10/11 employment income.
@armaghansabri99 you needed to apply 50% to the employment income and deduct it from the tax liability as part of the ‘Tax deducted @ source’ under PAYE.
@CuriousMeerkat Let’s hope we’re not both wrong then!! 🙂
Also, there is another fraction for lease premiums, gives you the same figure, which is £68000 x (51-6)/50.
Got the same for IHT. PET uses part of the nil rate band on death and the rest is used on the CLT on death.
@CuriousMeerkat question 2 revenue expenditure the portable partitions needed to be deducted as well as these were not integral to the building. I forgot to adjust for the opening accrual for loan stock interest but other than that i think i did exactly the same as you on all questions.
Q5 was a dream! I was really hoping that we would get a 15 marker for IHT. Thanks to OT that went from being my worst subject to my favourite!!
@uid0191 According to A Student’s Guide to International Financial Reporting Standards by Claire Finch page 64 IAS 16 – “A change in the method of depreciation is only allowed on the grounds of truth and fairnessand does not constitute a change of accounting policy.” If we apply the standard IAS 8 to this extract then only will a change in accounting policy have retrospective effect, which a change in method is not.
Q4 depreciation was wrong. you cannot retrospectively charge depreciation if the method changes (IAS16 and IAS8)
Q5 IFRS 5 – Discontinued Ops, didn’t write too much about it as i was running out of time.
Q1 messed up the time apportionment (did 3 months instead of 4 for some reason) but it was consistently throughout my workings and CSOCI so i should get the marks anyway…
Q2 everything was pretty straightforward, just not enough time! didn’t finish my SOCIE bt got the dividend and share issue workings done.
Q3 was time constrained too, but got a good 12 ratios in and two pages of analysis with all 3 headings and a conclusion.