[rajeshram]

@nathan488 said:
Yeah I looked at the ED540 too, really confident to smash the question to not have it mentioned!

CF wise I treated it as PFI and did various procedures such as:
– Obtain draft loan agreement (as they’re currently negotiating it) and agree loan amount and interest rate
– recalculate finance cost
– inquire with management if the loan has been received yet as well as inspect PYE bank statements for evidence of the loan receipt and thus if it’s correct to include the loan in January XX as the forecast had done
– obtain sales forecast and most recent budgets to determine and assess if large 25% move in revenue looks normal
– again, inquire as to how they expect to turn a 1.Xm overdraft balance to 1.7m cash balance – seems unlikely
– I also said about assess competence of preparer since it would impact the data produced
– agree opening balances to PY signed financials
– recast and recalculate whole forecast for accuracy

Etc etc

I included them as well. How about the audit risk and Business risk?

[rajeshram]

Q1 ROMM – Revenue – Distinct perf obligation , Allocation of TP to PO and Over a period. High risk
Related part disclosure
IFRS 9 – loan
Govt grant – Not deferred
Control risk – Higher as internal audit not independent
Analytical procedues – Revenue Overstated – Operating costs Understated
Staff costs- Didn’t increase considering the acq of two new sites.

These were the risk of MM i was able to locate,

As far as Business risk
1- Health and safety breach – Going concern
2- Scuba diving – not relative experience –
3- Lack of cash – No sure if its a point though
4- Data Management system – Implemented parallel – Staff not trained errors in the system
5- Data management system – Does not record the Unemployed free times – Risk we are providing more hours for free

Q2:
Going concern – Lot of indicators – Falling profit margins , Inventory days and receivable days increasing payable days decreasing poor cash position, Fall in interest cover , Current ratios – breach of covenants lenders may request to repay

Cash flow procedures – Wrote few general like Op bal. to Bank over draft , Competence of person preparing etc and few specific to scenario

Q3-
MLCP
Train staff etc

Indicators were – Cash oriented business easy to place , More emphasis to sell to friends and receive commission (No profit motive) , Layering by transferring to Off shore account making it legitimate and clean

Ethics – Skipped first part due to time
IT system – Self interest and management role
Gift- Self interest immaterial and with intent to build relations.

Anyone with me on this? I was finding it difficult to analyse the data i.e no. of members , no of centres etc. Basically Q1 was bit difficult as i was not sure about the Advt contract and capital expenditure.

[rajeshram]

Hi Claire,

This is Rajesh from India , I am sitting for SBL and AAA in December (Final Papers), Looking for a study buddy to understand and discuss SBL topics and Mocks. Ping me through whatsapp +91 9952050521.

Thanks

[rajeshram]

Hi ,

Looking for a study buddy for SBL December sitting. To discuss the topics , mocks and exam approach. If anyone is still looking for a study buddy. Please ping through whatsapp +91 9952050521 .

Thanks

[rajeshram]

@yogeniem23 said:
In the Q3a
I think it should go like:
Value of acquiring co.= 50m shares × 6.5 = $325m
Fcfe of acquiring co.= $325m/8=$40.63m

Value of victim co. = 7(1+0.03)/(0.15-0.03) = $60m (using gordon growth model)
Fcfe of victim=$7m which is given

Value of combined =(40.63+7+5)*8=$421m

Gain in value = $421-(325+60)= 36m

Offer of 5 shares for 1 of victim gives 10m shares to victim.

Share value of new combined company= $421/(50+10) = $7.02

Gain by victim= $7.02*10m shares – $60m = $10.2m (17% gain)

Gain by acquirer=$7.02*50m shares – $325m = $26m (8% gain)

Anyone dome this.
Correct me if i m wrong.
Let me know if anyone has done it this way.

Boom!! I got the same answers

[rajeshram]

Yeah did the same thing , Missed converting it to the Mid year Spot ie 6 months . Thus discounted the Cash flow using Year 0, 1, 2 ,3 4 spots instead of 0.5,1.5,2.5,3.5 , 4.5 spot rate

[rajeshram]

Section A-

Q1) I got this as the rectification entry
Dr G/W 2
Dr Land 5
Cr Liab 4
Cr NCI 3

Q2&3) Was Ok – About significant influence and Associate disposal Got a Gain of Something

Q4) It is a business as it had an Input and Process

Q5) I wrote the bond should not be derecognized as they still have risk and reward and they should record the amount received as Financial Liability.

Please don’t say everything is wrong!!!!!! I will end up with 0 then

[rajeshram]

It had asked about the why investors find it difficult to analyse intangible assets under 3 parameters 1)Acquired intangibles 2) don’t remember (anyone remembers?) 3) Capitalized development costs

Was there an explicit reference in question about “different acceptable valuation models, the capitalisation and one other thing which I can’t remember”?

and how Integrated report will help them with their Analysis – I believe this was second part

[rajeshram]

@schon1234 said:
………………………………it was written in the end that the machine can be used for other project which will give 110k profit

My understanding is that. We had 2 options

A) Either to use the exiting one B) get a new one

A) Using exiting one would mean that we will not be able to sell it (at NRV for 90k) or use it in a project which generates net income of 110k (i guess question said net income) – Remember, we always forgo the next best opportunity – in this case higher of 90k or 110k , which is 110k

B) Buying a new one will result in us spending 120k.

So the one making decision would select the option that minimizes the cost, so lower of A or B , which is A – 110k.

Hope we all pass, I don’t want to attend this annoying paper againnn!!!

[rajeshram]

@sal2222 said:
i also wrote about the company not charging enough. The Europe revenue dropped by 20% total sales increase by 17% i think but cost of sales went up by 38%. which suggested the costs were too high in proportion to sales Revenue.

Do u remember the question ? was it to asses the financial performance?

[rajeshram]

@heychi said:
How much did everyone write for question 32? I wrote 1 page and 1/4

I wrote for one and a half pages , do remember the question wordings?

I mentioned about the increase in costs , increase in advertaisment , foreign exchange losses and also payroll – even though they said the salaries were increased by 10% , the actual increase was by 5% , so they have been laying off employees and probability chances of more court litigations as already they had a dispute with an employee.. sales was increasing mainly due to North American business this would be because of better advertising and stuff ..

I did not read the question , directly started to write about financial performance , was that the question? If not then oops

[rajeshram]

@accountinglearner said:
For the final part of question 31, for 9 marks I calculated the sales price and sales volume variances for D6 and D7, and also looked at the 10% increase in market size for D7 and so calculated a revised budget for that one and computed planning and operational variances for it and then just made some comments about what I calculated.

Hopefully that was a reasonable thing to do and that the marking guides are open ended enough to allow credit for doing that, as I must admit I was a bit lost as to what to do exactly.

What was q32 ? Wasn’t it asses the financial performance ? Like comparative results ?

[rajeshram]

@heychi said:
I think with penetration pricing they can also sell products at a loss to gain market share.

I also found this on google so I put both options are valid:

https://smallbusiness.chron.com/companies-keep-unprofitable-product-line-10280.html

Yes that makes sense , but what I thought was with selling at a loss , the mindset of costumers would be that the product is of inferior quality and hence that might not increase market share ..

[rajeshram]

@heychi said:
Guys there was a question about continuing to make a product that was budgeted to make a loss. Options for valid reasons were:

To gain market market share and another option. The question asked which reasons were valid/acceptable – Was the answer both?

Another option was to sell as complementary product ? I selected only 1 i.e only complementary products, hbu?

[rajeshram]

What’s the answer for the rolling budget sum? Was that 890?

[rajeshram]

@heychi said:
Yes – In fact I just remembered one that said was it useful in a highly automated manufacturing environment or something like that?

I can’t remember if there were any more on throughput.

Was that long term highly automated ? Option B?

[rajeshram]

@odean20 said:
It can also be wrong who knows.

All the best still

Not sure if I am right , but commission is an expense right ? Shouldn’t it be subtracted , so ideally the contribution would be 27 instead of 33?

[rajeshram]

@odean20 said:
The margin of safety is 55% you should include the 10% sales commission

I got 44% isn’t sales commission 5% or something ?

[rajeshram]

@jgoodall said:
I got $110,000 for the Relevant Cost Question, as the machine could have been used to produce a separate product making $110,000, therefore being the opportunity cost.

Last question i calculated Gross Profit Margin, Net Profit Margin, Interest Cover and talked about the 50% admin expenses, the compensation costs and the foreign currency fall of 25% etc.

Anyone get what the Lifecycle Costing one was? I remember guessing that one.

Lol seems like everyone has taken a guess for that question ?

[rajeshram]

@heychi said:
Omg this gives me hope haha! and did you get weird decimals as well in between the sales mix variance? like they weren’t whole numbers. I worried I was doing it wrong.

I also selected the last option about perishability too. The others made more sense to me really.

Yes very weird decimal points , I am more worried about the relevan costing in section B , did anyone select 110k for new machine cost ?

[rajeshram]

I selected option which said , services can be stored and used or something , my understanding was services are perishable ,

Regarding the Variance question – boom ! Got the exact same numbers

[rajeshram]

Haha, I also put primary external info for the type of data question ,

I was stuck in the life cycle costing question and ended up randomly selecting the last option

What’s was ur answer for throughput accounting question I.e q14 I guess

[rajeshram]

ROI q3 I believe only one manager would go for it as the ROI was higher than than the target ROI ,

I put differential and opportunity for relevant costing

The last one I believe it’s ERP as question said something like integrate

Anyone with me on thesee

[Author]

Posts