[P2-D2]

Hi,

No there isn’t a mistake in the text book. When looking at the profitability of the contract we would look at all the costs linked to it to get the final profitability figure and so we should look at the overheads mentioned above.

Thanks

[P2-D2]

Hi,

Yes, it would aid comparability as we see the results of what we can expect to continue with in the future. it also would allow comparison to other entities where we see what our discontinued operation amounts are compared to other entities in a similar industry.

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[P2-D2]

Hi,

Yes, it would aid comparability as we see the results of what we can expect to continue with in the future. it also would allow comparison to other entities where we see what our discontinued operation amounts are compared to other entities in a similar industry.

Thanks

[P2-D2]

Hi,

Faithful representation links back to the concept of substance, i.e. the economic reality and not the legal element.

The first one is not applying substance if we show in full as a liability. There is an equity element that must be shown as part of split accounting for a convertible debt instrument.

The second one is showing the substance of the transaction as by showing an interest component it reflect the substance of the transaction in that there is interest on the sale. Saying that it is interest free is just sales jargon when the item is sold at above its true value. The difference between the two is the interest component.

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[P2-D2]

Hi,

There will be profit in the lease arrangement, so I wouldn’t worry too much about the economic aspect. Keep the focus on the numbers and how to account for them.

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[P2-D2]

There haven’t been any changes in the syllabus since you studied in 2023. The most recent standards being both IFRS 15 and IFRS 16 would have been on the syllabus in 2023.

Hope all the work and family commitments are all OK.

Thanks

[P2-D2]

These would be expensed through profit or loss.

[P2-D2]

Hi,

Yes, you will find that your numbers and entries above are correct. You have recorded the new depreciation on the revalued amount over the remaining life of 3 years. You have then transferred the excess depreciation as a reserve transfer in the SOCIE.

Top work!

Thanks

[P2-D2]

Hi,

Where does it say that it need to be incremental costs? I don’t think that it does and so the fair value less costs to sell will include any cost to get the asset in a saleable condition.

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[P2-D2]

Hi,

Where does it say that it need to be incremental costs? I don’t think that it does and so the fair value less costs to sell will include any cost to get the asset in a saleable condition.

Thanks

[P2-D2]

Hi,

It is likely to be the current year estimate (given in the additional information) plus the under provision from the previous year (shown in the TB).

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[P2-D2]

Hi,

Is there a question in the above post? If you let me know what you are struggling with then I can help you out.

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[P2-D2]

The provision would be a non-current liability until the year before it is due to be settled.

[P2-D2]

Hi,

If the project has been abandoned then there will be no future benefit and the asset likely impaired to the recoverable amount. We’d need more information as to the recoverable amount in this question but if below the carrying value then it would reduce the carrying value and the other side of the entry taken through profit or loss.

Thanks

[P2-D2]

Hi,

The cost to dismantle is recognised as a provision at present value, where an obligation exists. The discounted cost it added to the cost of the PPE, held within non-current assets.

The dismantling cost provision will be held within non-current liabilities and unwound to its terminal/final value using the discount rate applied. The adjustment increases the provision with the other side recognised through profit or loss as a finance cost.

Thanks

[P2-D2]

Hi,

The provision has already been discounted to present value and added to the cost of the PPE. We then simply depreciate this combined figure, with no further adjustment for discounting to present value as the provision amount in PPE is already at present value.

The only adjustment for discounting is made to the provision when it is unwound to its terminal value using the applied discount rate, and this adjustment is taken through finance costs.

Thanks

[P2-D2]

Hi,

Remember how the tax figures in the accounts work. We record the estimate at the year end in the SFP as a current liability and then in the following financial year we pay the tax authorities the actual amount, which might be more of less than the estimate at the year-end.

We don not adjust the prior year figures for any differences between what is paid and what was estimated. The difference is accounted for in the year the payment is made.

In this scenario it looks like the estimate last year was less than what was paid as the 10 is being added to the 135 estimate of the current year. So, we could have estimated 90 last year and then paid 100 this year, giving the additional 10 to be charged (an underprovision) in the current year.

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[P2-D2]

I’ve not got the question to hand but presumably the current assets have already been considered in the original impairment assessment and are not impaired. There is likely to be something in the question that suggests this, plus inventory would be held at lower of cost and NRV, with receivables at their recoverable amount.

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[P2-D2]

Sorry, I should have said other income to link to the specifics of the question. As long as it goes through some form of finance/other income then that is appropriate.

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[P2-D2]

Hi,

If there is a rent free period then we normally see this where we have made the exemption for a short lease asset. We would just total all the payments and divide by the number of years on the lease.

If we do not take an exemption then there would not be anything to add to the ROU asset and there would be nothing to deduct in the lease liability table.

Thanks

[P2-D2]

Hi,

The subsidiary has been acquired part way through the year and so we need to adjust the opening retained earnings figure to calculate the retained earnings at the acquisition date. This is done by pro-rating the profit for the year and adding it to the opening retained earnings figure.

Not sure about your NCI query as this is calculated in the usual fashion. We take the NCI% of the profit for the year after making the necessary adjustments.

Thanks

[P2-D2]

Hi,

The lease rentals are in advance as they are at the start of the lease period, being 1 April.

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[P2-D2]

Hi,

The opening balance is the PV of the future lease rentals so the 250,000 figure. There is no requirement to add the 90,000 first payment to the lease liability. It will need to be added to the value of the ROU asset. There are illustrations in the class notes that cover this scenario.

Thanks

[P2-D2]

Hi,

It is being removed from cost of sales (an expense in profit or loss), so we add back the profit to the expense to remove it.

Remember that the removal is a debit entry too.

Thanks

[P2-D2]

Yes. Updates will be needed for September onwards with IFRS18 taking effect.

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