[pavithra]

P3 March 18 questions
Again 1st question over ran but managed to do well in 2nd question. Struggled for time for 4th question.
1. Publishing company – establishef in 1991.publishes history books
Evaluate performance over 10 yrs 20X7 to 20X17 in the context of strategic drift.
2. Analyse the differences in strategy when old CEO (Robert Hart) in position and after takeover by Venture Capitalist
3. Discuss the critical success factors and key performance indicators in relation takeover from venture capitalist
4. Define mission statement, how it can impart value. Discuss how integrated reporting can explain the objectives in mission statement
2. ALG -airline company. Parental developer.
A. Discuss how parental developer can add value in the context of BCG and Ashridge matrices
– Supreme holidays
– High growth in revenue and profits
– high market share. Market growth declining. Highly competitive market. Cash cow
– Provider of luxury holidays
– High feel and high benefit – Edge of heartland or heartland
– Vital gym
– Low market share and low growth. But acquired with view to turn around. Potential for capturing high market share once problems with booking and customer service addressed. Dog but can be turned to problem child. Retain in portfolio until losses are made
– Value trap business
– Soft drink manufacturer
– Low market share. Low industry growth. Dominant competitors. Dog and alien territory

B. Discuss advantages and disadvantages of benchmarking in this context.
4. Discuss how formal terms of refernce and business case document could have averted project slippage
B. Discuss the differences between post implementation review, post project review and benefits realisation review in context.

[pavithra]

Q4. Comment on the ethical and professional issues raised and reccommend actions taken
A. DINGO LTDListed client. Previois auditor given modified opinions in respect of purchase licenses expensed and not capitalised. B. Foxtrot ltd.
Longstanding client. Audit partner on audit team fr 12 years.Client threatens not to renew contract if partner removed.
C. Review engagement. Really cant remember. Rushed these towards the endI remember there was self interrest and intimidation threat.
Hope I wrote enough to pass.
• Pavithra

[pavithra]

Q3.Due diligence of a new acq. Explain the implications of 2 issues below and further investigation to be done

[pavithra]

2. Goldline plc. Petroleum company.
A. Decommissioning provision
Recognised in FS
430m y.e 30.6.17
488m y.e 30.6.16
Change in policy of estimating decommission amount. Previously used expert. Discount rate 8%, now but 6%prior yr.
Expected to decommission by 2046
Mgt estimated this yr.
B. Depreciation of Plant & equipment.
Pe carrying value £65m. Change in estimation policy. Useful life 10yrs. Chnge to 15yrs. Straight line depn policy. Finance director informed the reason being the assets were now anticipated to last longer
Restated prior period figures causing an increase PPE value by £20m. Taken to retained earnings. Depn recognised in accounts £12m nw prior yr £15m

3. Trade receivables
Residential and business customers.
Loss allowance for credit loss recognised when customer pay more than 90 days late n have a history of non payment.
Receivables days increased in 2017 to 65 days compared to 58days in 2016.

Comment on the matters and audit evidemce expected to find in the file review.

[pavithra]

P2 March 2017 Questions
Q1. Statement of Financial Position for year ended 31st December 2016
Sub 1. Acquired 60% holding on 1/1/16
For $30million
Share capital:$30million
Retained Earnings at Acquistion date:$23million
Fair value of NCI:$18million
Goodwill not impaired
Disposed 6% holding on 31st Dec 2016
Paid$5million cash
NCI increased to 46%

Sub 2. Foreign sub with functional currency Dra
Acquired 1/1/16
Had trade losses at year end Dra 30.8 million
Property at Carrying Value Dra 12million
Fair value Dra 22 million
50% for rental
50% owner occupied
15% impairment loss recognised
No OCE in either

Also had Share Appreciation Rights
5000 options
100 managers
4 year scheme
Scheme Start date 1.1.15

FV at year end 31.12.15
Fv at year end 31.12.16 -$10

Foreign Exchange rates
$:Dra
1.1.16 – 2
31.12.16-2.8

1a.Uk Group acquired. Directors are not sure how to account for Sub. Not understand much about FRS101 and FRS102.
Directors decide not to show Directors Remuneration using the True and Fair Override in the Companies Act 2006.
Discuss

1c. Foreign Exchange Effects on Translating using the average rate at year end. Discuss how average method calculated, ethical issues and effects of using average rate

Q3.a. Carsoon Co-retailer of motor vehicles
Lease vehicles to customers for 3 years
Contract terms: Penalty if Drive more than 10,000miles. Vehicle cannot be used in other jurisdictions. Maintenance responsibility remains with Carsoon
Vehicle should be unmodified during lease term
Vehicle can be bought at above market value at the end of lease term
Or returned to Carsoon who will subsequently sell it at its retail outlets.
Discuss how to account lease from inception to the sale 8marks

Q3b. Debt instrument $6m. Interest -4% Effective rate of interest-4%
6 years term
Credit losses equal to $400000
Fair value as per Level 1 -$5.3m
Company forecast using own fair valuation method-$5.5m
Sold instrument after year end for $5.3m
Discuss how the debt instrument should be recorded at the end of year with reference to relevant standards?

Q3c. Carsoon enters into a contract to construct retail outlet on customers land. Contract terms state penalty payable to customer if delays in construction likewise Carsoon penalises customer if they cannot gain access.
Project was delayed and also there was restricted access. Additional costs incurred. Carsoon wants to offset penalty payable against the penalty receivable. Additional costs including Administrative expenses incurred.
Developed a storage facility. Capitalised expenses as asset.
Discuss how to account for the above?

Q4. A1.Discuss how users percieve Financial Statements are fairly represented?
A2. Outline how recognition criteria in Conceptual Framework is differentiated in Exposure Draft?
A3. Discuss the benefits of Integrated Reporting

4B. A co enters into a purchase contract to buy machinery for $4m and $6m. Delays in delivery is penalised and supplier should compensate $500k
Contract 1. Machine Delivery delayed. Compensation received
Contract 2. Machinery not received. No compensation received. Instead ACo had to hire machinery to meet production targets..
Discuss how to account for this using relevant standards.

[pavithra]

Hi Ooi, I did Q4. For the first part. Fair presentation, I just discussed about the fundamental and enhancing characteristics of Financial statements and how they aid in the decision of users like investors. Then discussed a bit about how errors and ommissions affect decisions. Forgot to talk about damage to reputation.
4a2. Outline how exposure draft differs in recognition criteria. I mentioned the definitions for assets, liabilities, equity, income and expenses stated in conceptual framework. I chose to discuss about the current issue on Leases which address Liabilities. Mentioned Exposure Draft is now redefining all leases as that which transfers risks and rewards. Operating Lease to be included. Type A and Type B lease
4a3. Discuss benefits of Integrated Framework
I mentioned about non-financial being provided. Narrative of the contents.
4b. Purchase agreement 1. Record cost as there has been transfer of asset. Mentioned IAS16. Contingent Asset recorded.
Purchase agreement 2. Contingent Asset not recorded as its not probable that the supplier will not pay compensation. Breach of contract. I might have made a mistake here but I said that hire purchase of the machinery and additional costs incurred recognised as per IAS16. Mentioned Provision should be recognised for the possible obligation to pay supplier if contract terms fulfiled.

[pavithra]

Q4 was good question. The rest were tricky in places. Hated Q2. Incorporation relief. Q1 about relieving losses and Q5 part a about winding up was OK.

[pavithra]

Passed 68%

[pavithra]

My advice is to have one page for just the proforma

eg: Statement of Profit and Loss and Comprehensive Income for year ended 31 MArch 2013
Revenue
Cost of Sale
Gross Profit
Administration Expenses
Profit Before Interest and Tax
Interest paid
Profit Before Tax
Tax (Working 1)
Net Profit for the year
You get 0.5 marks for just writing this in its prescribed order. If there are any workings to do for the calculation of cost of sale, taxation, admininstration expenses and other expenses you do them on a second page. You should avoid writing anything like (tax = 20% of profit )on the face on the income statement, just write Working 1 as shown above. So please leave the first page just for the proforma. Similarly for balance sheet and cash flow statement.
This will make the difference between the dreaded 49 and 50%.
Good Luck

[pavithra]

Hi there Ragwa,

I believe that for F7 the most important thing is to practice ACCA past papers as the questions 1, 2 and 3(sometimes) have mostly calculations. 4 and 5 are the most difficult since there are a number of IASs which you need to know and how they overlap becomes the main part of your explanation.
So do learn the Proformas for Income Statement (ie Statement of ProfitLoss and other comprehensive income), Balance Sheet (statement of Financial Position) and Cash flow statement thoroughly. I can’t stress enough how important these proformas are for your first three questions. I use the BPP study text just to get a brief view of the IASs. Mostly I practice with the Revision Kit. Please supplement your revision of the IASs using Open Tuition lectures they are very much focused on what’s really needed for the exam.
Hope this advice helps.
Take Care

[pavithra]

I believe the child benefit becoming taxable is quite new. To calculate child benefit tax:
Nothing to pay by entitiy with income upto £50000 and 1% on every £100 exceeding the £50000 limit.
child benefit tax most probably going to come up as its quite new.
Also the residence rules have been changed to include:
Non-resident: staying in the UK for < 16 days, <46 days
Resident: > 183 days stay in Uk and 5 UK ties including having close family, doing substantive work in UK, etc…….

Just doing some revision now…..

[pavithra]

Hi there,

I am also applying for the same kind of jobs and I have had some offers from reed.co.uk.
Basically I made a profile on reed accountancy and I uploaded my CV and cover letter. So they have been calling me with full time job offers for junior accounting admin, accounts assistant, trainee accountant.
Also you could put up your CV on recruitment agency websites like Brook Street, Hays Accountancy, cityjobs (if you are in London).
Please don’t apply for Bookkeeper jobs as they want fully qualified AAT students.
Good luck.
Hope my advise helps

[pavithra]

I bought my BPP exam study text and revision kit from amazon. It was a used book (which was also cheaper than the current year version) as the syllabus hasn’t changed at all since 2012 so you can buy even those for exams in 2012. I am sure there are books available for 2013 but it won’t make much difference.

The main things to learn in F7 are the IASs which haven’t changed since 2012, and to make sure you really know how to apply it to questions on Group accounts and Individual company Income statement and Balance sheet proforma.
Hope this helps.

[pavithra]

F4 today covered almost all the topics. Did my best with tort of negligence – duty of care and standard of care. Consideration, leglisaltive approach did reasonable justice. CDDA and statement of share of capital was just facts writing so hopefully i covered enough on it. Q6 on limited partenership and limited company was ok, Question 7 on emplyment law- constructive dismissal was really good and its remedies also was easy to answer. Q8 scenario on unsigned contracts, exclusion clause and unfair terms was answrable but i waffled on q9 company secretary and q10 wrote 2 lines unfortately could not remember anything on shares, debts, floating charges and order in which debt is settled. Hopefully there was enough detail in there for 50%. Thank you open tuition for helping me remember all the cases for contract law and negligence which I really did justice on.

[pavithra]

i would also add Revising Bribery Act 2010 as it was recently examined in June 2013 and a Technical article on it has been published.

Also Market Abuse is very much likely to come up as Kaplan exam reviewer hinted.

[pavithra]

I found this paper very tricky.

Made a lot of silly mistakes under time pressure. Q2 I did in the last fifteen minutes and calculated the adjusted profit and added expenses which shud have been deducted. Corporation tax liability I believe was in the marginal rate so I taxed upto lower limit of 300000 at 20% and the excess at 25%. I calculated the capital allowance for only the heating and water supply, as they were integral and then allocated AIA of the value I believe £8200 so used that to deduct from the PRofits.

Inhertiance tax, I just looked at one of the technical articles and it was almost the same question about shares. I calculated that the value of shares gifted as 52000, [(6500/8000)*64000]. I should have read the note carefully about the prices for the %s of holdings. Then I made a bigger mistake on allocating the nil rate band to these shares first and then to the trust, so then I charged the total death estate less husband’s 150,000 at 40% since there was no nil rate band to be used.

Shares gifted value calcuated using the quarter up rule, can’t remember which question but I think I allocated the annual exemption (£10600) to it and (£3000).
I think part 3c about partnership i lost easy marks by forgetting to calculate the tax liabilty and just worked out the profits for each. I found the holdover relief for part 3a I calcuated it like part disposal using the gain and multiplying it by the cost/total cost. So that I lost out. I got the entrepreneur’s relief part for the dad alright so there would have been CGT rat of 10% instead of 28%.

I found question 1 VAT part OK, just hope that the reasons I wrote down for compliance investigation were correct and also the dates for VAT registration.

So on the whole I have a feeling that I will be attempting this paper again in june. So gotta revise now for F4. Good luck to everyone, and just hope for the best.

[pavithra]

I used Kaplan study text. It was easier to understand and much more structured than BPP.

BPP textbooks have too much information and its not easy to assimilate all that information.

So use Kaplan Textbooks but BPP Exam Kit.

Thats my best advice.
Good Luck
Pavithra

[pavithra]

So have you passed the Foundations in Proffesionalism as well? It can be accessed on the ACCA website. I believe you will need to start contacting job agency for a entry level role like finance trainee, or junior accountant.

If you experience with SAGE it would be very much to your advantage, good luck. I hope to finish my FIA soon and will be applying for some work experience in accountancy or finance.

[pavithra]

Hey everyone,

I have my CBE on Friday this week and I have been revising from Kaplan and Open tuition. Could anyone who has done it recently please let me know if there were more calculations than the multiple true/false questions… Also if you could please let me know whether there was any sections of F2 which were highly examined.
I read on ACCA that high low method, ratio analysis, budgeting, forecast, standard costing, performance evaluation are the core areas to be examined. So please could anyone hint if the last four sections mentioned came up lots. I have revised all of it but its so close I want to focus more on these topics. Please help, your advise will be much appreciated. Many Many
Thanks in advance
PAvithra

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