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My understanding of trade profit is that the first year is to the end of the first tax year.
The second tax year has only one month in it before end of first period. So instead for the second tax year you tax the first twelve months of trading. This will be the full four months of trading for the first period 01/01/13 plus the first 8 months of the second period.
The second year (and therefore the year to be taxed for 2013/14 is from 01/01/13-31/12/13 (12 months)
For Q5 I thought the Nil band is used up by the CLT then the PET. Basically to tax PET you look back 7 years and find that some of the Nil band was used by the CLT (though the CLT is not death tax chargeable it does use up The nil band). Anyway I take the CLT of the Nil band then apply the remaining Nil band to the PET. I got death tax on PET of £24,800. After that as far as I see there is no Nil band left to reduce the death estate. So it is just a matter of adding up all the estate value, deducting funeral expenses and multiplying the lot by 40%.
What do other people think?
For Q5 I figured the transfer was £146,000 less two years of annual allowance gives £140,000. This is deducted from Nil band to get £325,000 – £140,000 = £185,000.
I deducted the remaining Nil band of £185,000 from the chargeable PET of £253,000, I then also deducted two years annual allowance (as it is more than 2 years from the initial CLT) from this to get £253,000 – £6,000 – £185,000 = £62,000. I taxed this at 0% with no taper relief to get £24,800
Does anyone agree/disagree?????
Sorry everyone, please ignore the above question. I would remove it but i don’t think that is possible. I am so dumb. Of course the answer is that if there had been an opening inventory and it changed then it would be automatically be balanced by a combination of sales and closing inventory.
So in my example if I introduce an additional Opening Inventory then before I even start I need to either increase Sales by the same amount or increase Closing Inventory by that amount. The problem I had was not starting with a balanced situation to begin with. I feel really silly and I hope I haven’t wasted anyone’s time.
I have sent everyone, who requested it, an email with my document about the test. If you do not get it then let me know and I will try again
I don’t think self interest was one of the options for the self-threat. I think the options were Advocacy, Intimidation, Self-review, and Familarity. There was no hint of familiarity, they didn’t offer advocacy, and as there were no additional services (e.g. consultancy, tax calculation, internal audit), there could be no fear of having to review themselves as part of external audit.
But I agree that I had expected an option to be about protecting fees. I just don’t remember it being there.
Everyone, Thanks for the emails. It will take aday or two to get them all typed up then I will send them toyou. I am to have the document ready by Friday.
Paul
@ smokes2k6, @srushe01, @cheesecake, @garish31,
Does anyone know if I can send personal messages to people who are registered on this forum? I wanted to write out all the questions I can remember (roughly 45) with my answers and send them to people. I thought some people would like to see them and I was hoping they would then comment and send back. But to do it I probably have to send a Word document in an email. So can we just post our personal email addresses or is there another way to send personal messages directly on this site?Here was another one. There was a question about what is an “Economically sustainable product”? Now there were some options about environmental impacts but I chose the one that said something like – a product that would continue to sell for a long time (something like that). I guessed the point was to fool us with the word sustainable and its obvious “Green” common usage. That was my guess anyway.
But here is the thing, I had never heard the term before, so I googled it. I can’t find it anywhere as any sort of standard or recognisable term. It seems like something that was a bit made up. So there was a question to define something that isn’t even properly defined in reality.
Am I wrong? Is anyone else familiar with the term?
The controls question was system controls (can’t remember if I said systems or operational) but I checked the text and it is definitely systems. As for the training question, I thought it was unfairly obscure. The recipients were referred to as trainees but were sent away to engage in general leadership exercises and then sent to acquire skills that did not relate to their job but would generally enhance them and may be useful in the future. The text book says:
“Training is the planned and systematic modification of behaviour through learning events…which enables individuals achieve the level of knowledge, skills and competencies to carry out their work effectively”
“Development includes a range of learning activities and experiences to enhance employees’ portfolio of competence, experience and capabilities, with a view to personal, professional, or career progression.”
The second one sounds a lot like what was being offered but was it TRAINING courses to help develop that was being described, or DEVELOPMENT itself being described?
I really don’t know. I don’t think it is fair to ask a multiple choice question that is actually a debatable issue. You could debate either way in a good essay. I think it is unfair to ask a Multiple choice question that isn’t 100% correct with three 100% wrong answers. Basically you may well be right, BUT not right enough???
What did other people choose?
The director one with a wife was really tricky. There were two serious options. They guy either steps down from the board until negotiations are over, or he declares his interest and continues but just doesn’t take part in the contract negotiations. I really think either is a realistic option and could actually happen but I felt leaving board altogether was a bit extreme. So I also opted for declaring and avoiding vote. I found this on a website about boardroom disputes (but they don’t quote sources so I am not sure how definitive it is):
“Directors are legally obliged to declare any potential conflict of interest, and must not use their position to make private profits at the company’s expense. Suitable policies – requiring directors to declare conflicts and to abstain from votes where they may have a conflict – should be strictly enforced and recorded.”
As for Kolb, I got it wrong I said reflection stage. But Cheesecake got it right, I checked the book afterwards.
What did people choose for a company acting in public interest? One option was care for all stakeholders it serves, one satisfy all stakeholders all the time without detriment to any of them, and another was implement environmentally friendly policies? I figures first choice was actually the opposite as the stakeholders IT SERVES means the shareholders and not the public. I figured the second option is valid but just too extreme – you can never satisfy everyone’s needs ALL the time. So I choose to implement environmental policies. It seemed too easy, sticking out like a sore thumb so I was wondering, did I miss something? Did anyone see something else in this question?
There was one about controls on a call centre that was suffering identity theft. They asked what was the best preventative method. There was a spot check option, a detailed check option, a threat of sacking, and an option to check references carefully. The sacking option was irrelevant because the thieves all left after 3 months anyway and I felt the other two were detect controls not prevent controls. Therefore I said the best PREVENT control would be to check references carefully. This was not the most useful control but it was the most useful prevent control mentioned. What do other people say?
As for the exclusion clause question – I also chose the producer. After all that is exactly what they are for in real life. When have you ever seen an exclusion clause written by a supplier for the benefit of the customer? However looking it up online I think I was wrong. Technically it is a clause to protect one of the parties from breach of contract action. So in truth it could be either of them, but I can’t remember any option to say either were protected. Did anyone choose anything else?
On the self threat issue I also opted for Intimidation. I didn’t see any actual intimidation but I suppose there was a possibility it could come. The main reason was that the others didn’t seem to fit for me. There could be no self review as they offered no other services, there wasn’t advocacy as they didn’t say they represented the client in the negotiation, and there was no implication of friendliness or over familiarity.
As for trade union one I also chose directors to settle it as you can’t expect either party (CEO or Union) to be responsible for sorting their own mess and to be honest I thought it was above the heads of the HR department as they had already failed.
For the rowdy teenagers I thought Utilitarianism, as the owner didn’t have an absolute rule to implement but did what was best for the greatest number of people (there are more families than teenagers). More people end up happy than unhappy.
I think I got fiduciary wrong I don’t remember trust being an option. I chose the option – “to take reasonable care and diligence”. It is part of it for sure, but I think maybe it is also such a low level that maybe that it is regraded as basic and slightly below fiduciary.
I found it a really tough exam and was not expecting the long questions. None of the practice tests had so many long interpretive questions, they were mostly short and factual. Could anyone else give their opinions on the questions and our answers. I would be grateful and I suspect Cheesecake would be too.
I am not sure that is true. Here is the FRC’s UK Corporate Governance Code:
I searched it and I see no mention of CEOs being excluded from being members of other boards. It does say:
B.3.3. The board should not agree to a full time executive director taking on more than one non-executive directorship in a FTSE 100 company nor the chairmanship of such a company.
The question didn’t mention anything about FTSE 100 company being involved and didn’t say he was a member of more than two boards. Aslo here is an article from a Australian web forum for CEO’s which indicates it si quite common:
Okay so next question. There was one about corporate governance & ethics. Mary is a Finance Director in company A and Non-exec director in company B. She sits on risk & rumeneration committees in Company B. Johnny is CEO of company B and Non-exec director at company A, he sits on remuneration committee in Company A.
The options were: (A)Mary shouldn’t be on a risk committee, (B)Neither should be on two committees, (C)Johnny shouldn’t be CEO of one company and Non-Exec on another at all, or (D)that at least one of them should step down from the rumenartion committee.
My thinking was – The first two are just wrong as finance Non-Execs should be on risk committees, and You want non-execs on more than one committee to make use of them. The third one is trickier as it is a potential conflict of interest, but the option in the question was universal not case specific. It said a CEO should never be Non-exec elsewhere. Well it is common practice in USA, rare in OZ and about 20-30% in UK. So my thinking was that that was wrong. That leaves the final option being the only one left and also the only one that dealt directly with the objectivity problem of them judging each other’s pay. So my answer was – At least one should step down from the rumenertion committee.
What does everyone else think?
Are we allowed to discuss the exact questions? I can remember a lot of them and like all Multiple choice exams a lot of them came down to two very close options. Starting off –
There was a question early on about fraud. I felt that two options were marginal deception, and one was theft (removal of assets). I think the answer was Deng who was moving money from pirated CDs to an offshore account. What does everyone else think?
