[P2-D2]

Hi,

If a specific asset is impaired then it should be done first as we cannot have it sat in the books then being unimpaired because we have taken it to goodwill first.

Thanks

[P2-D2]

Hi,

I think you’d need to check that the gains on IP are taxable under UK corporation tax. It could be that they are not taxable. Possibly worth checking with the tax tutor.

Thanks

[P2-D2]

Hi,

This is beyond the scope of what is in the FR exam and so isn’t something that you would need to address.

Thanks

[P2-D2]

Yes, I believe that you are correct and we will be updating this for the September 2025 sitting onwards.

Thanks

[P2-D2]

Notes and videos are valid for both March and June 2025. From September 2025 there will be IFRS18 that replaces IAS1 and so we will be required to update the notes and videos.

Thanks

[P2-D2]

Think about it the other way round. Why would it be capitalised? It isn’t doing anything in relation to enhancing the asset or generating economic benefit, so therefore would be expensed.

Thanks

[P2-D2]

Hi,

Under the revaluation model the losses would go through OCI if there has been a previous revaluation upwards and so OCI reserves available to use. If there are no OCI reserves to utilise then the loss would go through profit or loss as is seen in the example.

Thanks

[P2-D2]

Hi,

The key is that at the date of change we need the most up to date value, so we need to record any increase regardless of whether it has always been held under the cost model. As the revaluation is then done under IAS16 then we follow the principles there, i.e. gains through OCI.

From a business perspective, most property is held under the revaluation model and not the cost model, so we would rarely encounter the scenario where the property is held under the cost model.

Thanks

[P2-D2]

Hi,

I think that this question will be better posted in the SBR forum, but even then I don’t think it is on the syllabus.

Thanks

[P2-D2]

Hi,

I think that you’ve posted in the wrong forum. Is this not a tax question?

Thanks

[P2-D2]

Hi,

BPP’s answer is correct. We need to provide for the $0.02 per barrel as we are contractually obliged to pay this each time we extract a barrel of oil. Having extracted 150M barrels, we need to provide 150M x $0.02 to get the total cost for the year. However the $0.02 is the cost at the start of the year and so we need to grow this to the value at the reporting date by the 8% figure.

Hope that helps clear it up.

Thanks

[P2-D2]

Hi,

We would reverse the impairment loss and carry the asset at the new value at the end of the year.

Thanks

[P2-D2]

Hi,

We have acquired 80% of the 7 million shares in issue, so 5.6 million shares. We will be paying $3 for each of these shares and this will be done in two years time, hence the 0.826 (PV at 10% for two years) and 3 in the equation.

Hope that helps.

Thanks

[P2-D2]

Yes, the syllabus will not be changing until the September 2025 sitting. Thanks and good luck with the studies.

[P2-D2]

Hi,

The answer is correct based on the information given. It is an odd question as we are working backwards from the TERP to calculate the issue price, which we don’t usually do. In EPS questions we are usually required to calculate the TERP.

We currently have 4 shares at $3 market value, and then there will be 5 shares in total following the issue (4 old plus 1 new share) at £2.80 each. The 4 shares are worth $12 and the 5 shares are worth $14, meaning that the one share issued will have been issued at the difference between the two of $2.

This can then be used to work out the total amount of finance used.

Hope that helps.

Thanks

[P2-D2]

Hi,

By including the legal fees in the ROU asset value then you are capitalising them and depreciating them. They wouldn’t need discounting as they are being paid at the inception of the lease, so they are already given in today’s value terms.

Thanks

[P2-D2]

Hi,

We’re looking at an asset at the end of the year over which we have control in the SFP. Even though we may have acquired the subsidiary part way through the year we still have full control of the asset at the year-end and so will consolidate it 100%. We do not pro-rate the figure.

It is only in the SPL that we would look to pro-rate the revenues/costs as they will accrue from the date we gained control.

Thanks

[P2-D2]

Possibly to do with the contract starting halfway through the year.

[P2-D2]

Hi,

it is because at that stage we hadn’t introduced the FV method and were keeping things as simple as possible. Once we understood the fundamental principle of NCI then we began to look at the FV method to get a fairer valuation of the NCI and what it is worth.

Thanks

[P2-D2]

Hi,

Think about the approach to calculating the DT position. You need to look at the temporary difference by comparing the carrying value and the tax base, which you can do using the information in the question above. You then take this temporary difference and multiply by the 30% tax rate, which should then give you the answer as above.

Let me know how you get on and I can help further if required.

Thanks.

[P2-D2]

Hi,

It all depends on what time you have available to do the studying. Regardless of the time you need to be well organised and plan ahead for what you are going to study and when you are going to study it.

I’d personally recommend that you split the studying into a teaching and revision phase. So the teaching is working through the class notes and associated videos, to allow you to acquire the knowledge of the IAS/IFRS.

On completion of this phase you should then look at the revision, where I’d suggest that you work the past exam papers under timed exam conditions and without any notes. You need to replicate the exam environment as best as you are able to do so.

Thanks.

[P2-D2]

Hi,

If the property is rented to a subsidiary within the group then the property is not being rented outside of the group. It is therefore not being held for investment purposes by the group and so is accounted for as PPE given that it is still being used by the group itself. Remember that group accounting looks at everything from a single entity (group) perspective.

Thanks,

[P2-D2]

Hi,

Your understanding is correct in relation to when the goodwill is valued under the FV method. If the goodwill is valued under the proportionate share method then the impairment is only allocated to the parent, not the NCI. The question should be clear as to which method is being used to allow you to make the correct adjustments.

Thanks

[P2-D2]

Hi,

The first 30% is the margin and the second is the share of the associate. It is purely coincidence that they are the same figure.

Thanks

[P2-D2]

Hi,

If we own 65% that equates to 65,000 shares then there must be 100,000 total shares in issue, which have a $1 par value. We then add on the retained earnings at the acquisition date.

Thanks

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