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I’ve recieved this e-mail and I have done ethics + PER + 36 months and this was my final exam. My understanding is that now, after passing last exam, I’m automatically ACCA Affiliate and then I need to apply for membership to become ACCA member.
I had positive feeling after the exam which went reasonably well but still I’m not sure if e-mail is true. I’ll be furious if it turns out I failed last exam.
Yep, and that’s exactly why it is significant matter therefore modificated opinion is needed. On the other hand qualified opinion seems to be the most appropriate. In balance sheet it’s all about reclass (plus 1m diff on valuation) and in P&L it’s separate line but no impact to overall result. It’s therefore unlikely to assume it’s pervasive which is needed for adverse opinion. Once qualified it can be easily explained in basis for qualification and users will have all needed information to properly ready financial statement.
Well, we had revenues with significant growth for this division year over year so it’s hard to assume it was discontinued during the year. It was also clearly stated they are going to do this next year.
Division was indeed significant and disclosure is needed in this case as well as reclassification of assets to current and proper presentation of discontinued operations in P&L. For adverse opinion it needs to be pervasive though which in my opinion is not the case here. But probably if you explain somehow why this is pervasive to financial statement then adverse opinion is also an option.Qualified opinion as matter is significant but not pervasive. It should be classified as held for sale and discontinued operations.
Revenue recognition – revenue should be recognized as performance obligations are satisfied. The Company had too simplistic approach recognizing all revenue at the start of the cruise. It should be recognized over time (duration of the cruise) giving that it takes 2 to 6 weeks. Recognition at the beginning may result in cut-off issue.
In my opinion it’s highly probable. I’m from Poland and government today announced that schools etc will be closed due to coronavirus situation. It also means that big events are suspended and for example all professional exams like our national CPA most likely will be suspended as well. Much will of course depend how this epidemy will evolve in few weeks time. There is not much we can do about it – need to wait patiently and observe situation
Why would you use 40% if NCI were holding 52%? Share and control are two separate things. The company can have less than 50% but still having control. That was the case here. At this point option wasn’t exercised therefore NCI was 52%.
Couldn’t agree more. I felt like I have all the answers needed but I spent a lot of time to write Q1 & Q2. Then rushed through Q3 and missed last point of Q4 due to time…
Here are my thoughts:
Q1 – in the first part equity accounting, 30% as it was on 31 March and another purchase was on 1 Apr. Key part was land revaluation which suggest this part should go through OCI (as well as deferred tax related to it). Second part all about calculating goodwill and fair value. As mentioned before I made also adjustment for DTL. I made some comments about proportion NCI and what that means for goodwill in case of impairment.
Q2 – relatively easy, all based on ACCA code of ethics and illegal inside trading which is prohibited almost in all jurisdiction.
Q3 – I started with Conceptual Framework definitions and then for each film category I put different standard (IAS 2 Inventory, IAS 38 Intangible Assets and IFRS 15. Then I arrived at conclusion of joint venture. There was also question: debt vs equity for those 10m invested by the other company. I decided it is equity based on exposure draft (it’s not independent of company economic resources).
Q4 – little time, I stated definition of business then described how it should be accounted under both approaches. Asset should include cost (29m) and direct acquisition cost (1m) as well. Then I allocated that proportionally and calculated depreciation based on that. For business combination goodwill needs to be calculated including additional part of consideration. Then impairment will impact earnings. Direct acquistion costs are not part of consideration and should be expensed as incurred. Unfortunately I didn’t finish goodwill calculation and last point of the question due to lack of time….Hope it will be enough to pass.
Well, I got in Q1 actually a goodwill. I calculated fair value of non-current assets (adjusted for 10m related to land and 5 related to customer database). Then adjusted current assets to fair value as well. When it’s a business combination we always use fair value (not IAS 2 and NRV vs cost). Having that calculated I also recalculated deferred tax liability. It needs to be adjusted for all items you bring to fair value. It was therefore higher which at the end caused a goodwill (not bargain purchase) which is quite logical as negative goodwill happens rarely. I’m a little bit surprised lot of people have that outcome but maybe I’m wrong… will see in few weeks 🙂
