[P2-D2]

Hi,

The key piece of narrative information that you are missing is that in the additional information it says that the loss of $2 million is what has been made at that date, i.e. this is the profit for the six-month period and so no pro-rating is required. In this question the profits do not accrue evenly during the year.

Thanks,

[P2-D2]

Hi,

Yes, with the bonus issue you do not need to do any weighting calculation. There is no impact on cash (as none was received in a bonus issue) and so no impact on profits, so we do not need to weight the share issue.

Thanks

[P2-D2]

Hi,

A slightly different approach is required here. You have the cash (working capital) cycle at 70 days so would need to use this alongside the inventory days and payable days to get the receivable days.

Payable days can be calculated from the credit purchases and the cost of sales figures.

Inventory days can be calculated from the inventory turnover period. If we are turning over inventory over six times in a year (365 days) then we are holding it for on average 365/6 days.

We then know that the total of 70 days is equal to inventory + receivables – payables so you should then be able to find the answer.

Let me know if you do not.

Thanks

[P2-D2]

Yes, I think that you should be able to use the materials from 23-24 as this will have the most up to date versions of the standards on revenue, leases and the IASB Framework. You will though be missing some of the most up to date exam questions but you should be able to access them through the ACCA website.

Good luck with the studies.

Thanks

[P2-D2]

Yes, I think that you should be able to use the materials from 23-24 as this will have the most up to date versions of the standards on revenue, leases and the IASB Framework. You will though be missing some of the most up to date exam questions but you should be able to access them through the ACCA website.

Good luck with the studies.

Thanks

[P2-D2]

Hi,

I’d not look to get too deep into this part of leases. You might get a small part of the exam covering is and if so then I’d leave it and move on as it gets far too complicated.

Thanks

[P2-D2]

Hi,

In this instance the accounting treatment has been done incorrectly as the annual payments should not go through profit or loss (Cost of Sales in this instance). The payments should reduce the value of the lease liability recognised on the SFP, where we are using the amortised cost accounting treatment.

Thanks

[P2-D2]

Hi,

The question is looking for the value of the asset in the SFP at the reporting date, hence the answer showing the full FV.

It is the movement that goes through OCI.

Thanks

[P2-D2]

Hi,

The key aspect missing here is that the company is issuing the debt and not acquiring the debt.

When issuing the debt we have a liability, so when we pay the costs (CR Bank) the other side reduces the liability (DR Debt).

When purchasing the debt (investing in debt) we have an asset and so the costs are added to the asset (DR Asset).

Thanks

[P2-D2]

From what I see then the ACCA Study Hub is correct. We do not provide for the costs, as we could simple decide to sell the asset before the date the refurbishment is required, hence no obligation. What is done is that we split the cost of the NCA, so that part of it relates to the refurbishment cost and the rest related to the rest of the NCA. Each part is then depreciated separately, with the refurbishment cost over the period until refurbishment and the rest of the cost over the useful life.

Thanks

[P2-D2]

Hi,

A is correct as it is remote, so we do nothing. B is correct as the asset is probable, and not virtually certain.

C is incorrect as we would recognise a provision as it is probable.

D is incorrect too as we would also recognise a provision as it is probable.

Thanks,

[P2-D2]

Hi,

A is correct as it is remote, so we do nothing. B is correct as the asset is probable, and not virtually certain.

C is incorrect as we would recognise a provision as it is probable.

D is incorrect too as we would also recognise a provision as it is probable.

Thanks,

[P2-D2]

Hi,

You are correct in your understanding of FVTPL being the default category but it says in the question that the business has opted to take the alternative treatment, i.e. FVTOCI.

In adopting this category the transaction costs are capitalised at initial recognition, we do not need to do anything with them at the reporting date. At the reporting date we work out the FV of the shares as has been done at $45,000, and then look at the movement from the amount recognised at initial recognition.

Thanks

[P2-D2]

Hi,

Are you referring to the dividend adjustment? If so then we would need to account for the dividend as normal in the individual financial statements of the parent and the subsidiary before then processing any group adjustments in the group accounts.

In the group accounts we need to remove P’s share of the dividend received from S as it is intra-group.

Thanks

[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.

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.

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.

Thanks

[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.

Thanks

[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.

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.

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).

Thanks

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