[P2-D2]

Hi,

You are right that there are few changes but these changes impact a lot on the presentation of the statement of profit or loss. You will need to ensure that you get this correct in the exam, so I’d definitely look to purchase a new revision kit to ensure that you are getting the answers as per they should be for the real exam. If you use our class notes then that will be fine in relation to a substitute for the study text.

Thanks

[P2-D2]

It is a fair value adjustment as it is taking place within the group accounts, not the individual accounts.

[P2-D2]

An impairment is a downward revaluation, so they are talking about the same thing and are treated in the same way too.

[P2-D2]

Hi,

There isn’t a contradiction and the standard is merely reflecting the best possible use of the asset. We take the higher of the value in use and fair value less costs to sell as that is what we would decide to do with the asset, regardless if the other amount is less than the carrying value of the asset.

If the value in use was the higher of the two then we would continue to use it to bring economic benefit to the entity. If the FVLCTS was higher then we would be looking to sell the asset as that would bring the most benefit to the entity.

Thanks

[P2-D2]

Hi,

You need to look at the specific criteria in IAS 38 to help with this. The business would need to meet all the criteria to ensure that they are capitalising the costs appropriately. In an exam question it would be quite clear as to whether they are or are not meeting the criteria.

Thanks

[P2-D2]

This is another FV adjustment at acquisition, so required again to adjust the net assets of the subsidiary and the PPE line in the CSFP at the reporting date.

Thanks

[P2-D2]

This is another FV adjustment at acquisition, so required again to adjust the net assets of the subsidiary and the PPE line in the CSFP at the reporting date.

Thanks

[P2-D2]

Hi,

This is a fair value adjustment on acquisition. You would adjust the PPE for the initial FV uplift above the carrying value ($20 million), so adjusting S’s net assets at acquisition.

Usually there is no change in the FV since the acquisition date but in this instance there is, which is $24 million. So adjust S’s net assets at the reporting date by this amount and also the PPE line on the group SFP.

You would then also need to look at the movement in the FV adjustment and give P and S their shares in the appropriate workings (NCI and Group RE).

Thanks

[P2-D2]

Hi,

Sorry to hear about the attempt in June and I’m sure that you are in a much better position to achieve your aims in September.

There is a big change in the syllabus with IFRS18 replacing IAS1. It isn’t a huge technical knowledge change involving debits and credits but it does have an impact on the presentation of the statement of profit or loss. I’d therefore recommend looking at acquiring the new materials to ensure that you are not losing marks due to using the old IAS 1 presentation.

Thanks

[P2-D2]

Hi,

The class notes have been updated and the video lectures will be updated in due course. You will not be disadvantaged by using the current video lecture as the only change is to the presentation of the statement of profit or loss.

Thanks

[P2-D2]

Hi,

We only need to account for the goods-in-transit for the PUP as that is what will have been sold at a profit between the group companies and has not yet been sold outside of the group.

We aren’t told anything about the other $1.6 million that is due between the group companies, so we have to assume that the have been sold outside of the group and no PUP adjustment is required.

Thanks.

[P2-D2]

Hi,

The class notes have been updated for the new IFRS 18 replacing IAS 1. The videos will be updated in due course but you can easily use the current videos as the change to IAS 1 only impacts the statement of profit or loss, and it is easy to spot the changes.

Thanks

[P2-D2]

Hi,

The gain/loss arises from our day-to-day operations so would be better suited as an operating expense. We’d only use investment income in relation to income from financing activities (e.g. bank interest/dividends received etc.).

Thanks

[P2-D2]

Hi,

The only significant change is the replacement of IAS 1 with IFRS 18. The class notes have been updated to reflect the changes and the videos will be updated in due course. Given the only significant difference is the presentation of the statement of profit or loss then using the current videos will be fine until the newer ones are ready.

Thanks

[P2-D2]

Hi,

The only change to the syllabus is of IFRS18 replacing IAS1. The videos will currently reflect IAS1 and will be updated in due course for IFRS18 but you can easily identify the differences as the changes only really relate to the statement of profit or loss.

Thanks.

[P2-D2]

Hi Anfaal,

Welcome to FR and I hope you enjoy the studies. You can use the videos as although there are changes with the new IFRS18, the changes can easily be identified from the old videos. We’ll look to be updating the videos in due course but the only impact you will see if on the statement of profit or loss presentation.

Thanks and good luck.

[P2-D2]

Hi,

IFRS 6 is not on the FR syllabus, so I’m afraid you will have to look elsewhere and I’d suggest that you be a bit more polite in your enquiries too……..

Thanks

[P2-D2]

Hi,

If the acquisition date is 1 May then we will add 4 months of the profit for the year to the opening retained earnings balance. So we will add 5/12 of 140 to the 350 figures given in the question.

This is quite a common scenario in the exam so please keep an eye out for it.

Thanks

[P2-D2]

Hi,

In example 1 the sales are intra-group and so we will always eliminate the sales from revenue and cost of sales in full, regardless of what is still held in inventory at the year. We are applying the single entity concept where we cannot sell to ourselves and inflate the revenues and costs.

In example 2 the adjustment given in the answer is for the PUP, eliminating the intra-group profit on consolidation. There isn’t anything in the question to say that the amounts due are still outstanding at the reporting date and so there is no requirement to eliminate the receivable/payable balance.

Good luck with the exam.

Thanks

[P2-D2]

Hi,

The current notes are valid up to and including the June 2025 exam sitting. For the September exam sitting onwards we will see the introduction of IFRS 18 and new class notes will be provided for this. They are nearly complete and will be on the website shortly.

Thanks,

[P2-D2]

Hi,

The current notes are valid up to and including the June 2025 exam sitting. For the September exam sitting onwards we will see the introduction of IFRS 18 and new class notes will be provided for this. They are nearly complete and will be on the website shortly.

Thanks,

[P2-D2]

Yes, possibly but I’m unsure why they’d want to do so. However, you don’t need to worry about it at this level.

Thanks

[P2-D2]

If you are asked to calculate the total equity then this will include the NCI balance too. There is enough information in the question to be able to calculate this figure, so I’m surprised to hear that it has not been taken into account. You can calculate it using the proportionate share of net assets method.

Thanks.

[P2-D2]

Hi,

I think that only (iii) is permitted under IFRS (IAS 12 Deferred Tax).

(i) is not permitted as there is no obligation to replace, plus the asset could be sold in the time period and so no provision required.

(ii) is not permitted as a change in useful life of an item of PPE is a change in estimate and so accounted for by spreading the carrying value over the new remaining useful life, there is no adjustment to what has happened in the past.

(iii) the revaluation increases the CV of the asset and so creates a larger temporary difference than we previous had and so an increased deferred tax liability, even though we will not sell it there is a gain in OCI that requires an associated tax adjustment to match the tax to the period in which it relates.

Thanks

[P2-D2]

Hi,

When looking at the income tax expense figure you need to look at the current tax and deferred tax components. The current tax is given to you in the question, the challenge is the deferred tax aspect.

When looking at the deferred tax aspect then remember the steps that we went through in the class notes and the videos.

1. Calc. TD where we compare the CV vs. Tax base. – Given in the question at 8.2 million. Just note that 3.6 million is revaluation, so only the difference of 4.6 million will impact profit of loss.
2. TD x tax rate 25%
3. Movement to profit or loss. So compare to the opening balance of 3.2 million to get the movement.

Attempt the question given the above and let me know how you get on.

Thanks

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