[petrochina]

That is clear, Thank You!)

[petrochina]

Thank you Mike)))))

[petrochina]

@petrochina said:

What do you mean by “pickup any point elsewear”? –

Do you mean there could ideas in the question which I can use to asnwer another questions?

[petrochina]

Mike, thank you for the ansawer, let me just clarify 2 things:

1) Do I understand correctly that I should spend some planning time to read the question which i decided not to answer??

What do you mean by “pickup any point elsewear”?

“Then read the entire question of the one that you have discarded (number 3, 4 or 5) and pick up any points that may be relevant elsewhere”

Do not undesnand the Idea behind that…

2) “Number of marks divided by 2 is an indication of just how much time you should be devoting to thinking about the required number of points to satisfy the number of marks available in the question or part question” – is that time include time which I should spend to read the question?

[petrochina]

Hello Mike,

1) Could you please specify how exactly I should spend 15 minutes reading and planning time? eg.

– read all the requirement in all 5 questions and choose 3rd and 4th question – how many minutes should I spend on it?

– What should I do then? Read and plan (ie. annotate, highlight, underline text, write down one-word bullet points on question sheet) 1st and 2nd question or read and plan 1st question only? How many minutes should I spend on it?

2) You are saying: “having divided the number of marks available in the question (and part questions) by 2, you now know the number of minutes that you should be spending on each separate part of the question in reading and planning”.

How should I practically apply it? I normally read the whole question then plan it or do reading and planning at the same time. Should I do it in the following way: say for 20 mark question – spend 10 minutes reading the whole question and planning (ie. annotate, highlight, underline text, write down one-word bullet points on question sheet) for all parts of the question and then write down answer spending no more than 1m 18 seconds per mark?

3) 12/07 Q1 Island, requirement a) states:

“Using the information provided, identify and explain the principal audit risks, and any other matters to be considered when planning the final audit for Island Co for the year ended 30 November 2007.”

There are a number of points in the text regarding risks and issues say:

REVENUE RECOGNITION

What maximum amount of marks will I receive explaining revenue risk? Maximum 1,5?

Because I can write how revenue should be recognized in accordance with accounting standard (1 mark), Then I can explain what could be wrong with revenue recognition with that particular company (1-2 marks), calculate and state whether matter is material in amount or in nature (1 mark).

Then I can finally sum up say ” there is a risk that revenue overstated because…” (1mark)

Therefore I can dedicate 5 marks to revenue.

So my question is:

I do not understand for sure how the question will be marked. What maximum amount of marks are available say for REVENUE issue (and every other single matter) in that particular question and other questions like this one?

Thank you in advance))

[petrochina]

Passed 71%, First attempt, Great thank to @John Moffat, I would not be able to pass it without your lectures and assisstance. 1000 times thank You John again!!!

[petrochina]

Thank you)

[petrochina]

@johnmoffat said:
The question says to assume that the delta of a put option is N(-d1).

d1 = -0.0551

So – d1 = – – 0.0551 = + 0.0551 (two minus’s make a plus)

So what you are looking up is N (+0.0551)

Sir, why do we need to make d1 to be positive insread of negative and vise versa? I see that question says assume N(-d), but what is the reason for that?

It is not in complience whith instruction at the bottom normal distribution table – “If di < 0, subtract the relevant number above from 0·5.”

[petrochina]

thanks you)

[petrochina]

@johnmoffat said:
1. The question says that 75% is other activities (and so 25% must be component production)

Sir, question says – “It can be assumed that 80% of Elfu Co’s debt finance and
75% of Elfu Co’s equity finance can be attributed to other activities excluding the component production.”

Other questions say directly e.g. – “75% of the activity of XXX company relate to XXX business”.

so me question is:

If I hear – 75% equity finance can be attributed to XXX activities – should i always assume that it relate to a weight?

My confusion is why question says that in a strange manner – “75% of Elfu Co’s equity finance”? What is the theoretical reason behind that? Activity can be financed partly by debt partly by equity – why only equity is accounted for in that question?

Thank you

[petrochina]

… There was my question but I found answer myself, sorry

[petrochina]

Thanks a lot!)))

[petrochina]

Is it reasonable to work through the exam kit 3 times? It means that we should do 300 questions…

[petrochina]

Sir,
Could you please advice an example of exact time management technique for P4. How long to spend reading time and writing time for Q1, Q2, Q3?

For example for P3 my strategy was:

Q1 – planning 25 minutes, writing 70 minutes
Choosing questions for part B – 10 minutes
Second question – planning 10 minutes, writing 35 minutes
Third question – planning 10 minutes, writing 35 minutes

Therefore I spent in total 55 minutes on planning and 140 minutes for writing (1,4 per mark, not 1,8).

Based on your experience what would be an appropriate time-management technique for P4?

[petrochina]

Thank you

[petrochina]

Sir,

Why in calculating financing effects for APV, 5% was taken as a discount rate but not the 13%?

am I right that we could take as a discount rate the following rates (assuming that all of them are risk – free):

1) Risk free rate of 3%
2) 13% and
3) 5%?

How to deal with interest rates in such situations?

So it is a bit confusing regarding the rates for APV in this particular question…

[petrochina]

Thank you, John!)) Another trick from the examiner…

[petrochina]

Thank you Sir))

[petrochina]

Sir, the examiner has used in MM2 formula actual pretax cost of debt 4,63%. Would it be correct to use a risk free rate instead which amounts to 4% (7-3)?

[petrochina]

Sorry, found out the answer myself and tried to delete the question but could not, so i left it as it is now…

[petrochina]

…

[petrochina]

Thank you!)

[petrochina]

Sir, I have the same question…

When we calculate annuity, why we take 4% growth rate but not the 2% growth rate?

Is it because it is stated in the question that “annual operating surplus in CASH TERMS…”?
So cash terms(I assume it is the same as money terms, right?) are changing every year (i.e. increase by 4%) That is why we increase revenue by 4% every year…

[petrochina]

@petrochina said:
Sir, regarding manufacturing division

1) Can I calculate PV from year 6 to infinity in the following way:
39,8/0,1 x 0,621(10% discount factor for 5 years) ?

2) Can I calculate PV from Years 6-15 in the following way:
39,8×6,145(10% annuity factor for 10 years)x0,621(10% discount factor for 5 years) ?

The reason why I am asking is because my result is a very very little bit slightly different from the examiner so I want to confirm that my approach is also correct…

Sir, is it correct? Please answer at least this part.

[petrochina]

One more question:

What is the reason to measure the value of divisions during the period of 15 years?

Does it make sence to compare market capitalisation of the company (which is assumed represent infinitely discounted cash flows) with a 15 years value of separate divisions?

As for me theoretically it does not make sense. However in practise it may make sense to see what will happen in the foreseebale future say 15 years (managers do not have infinite life))

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