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Expected values of operating profits considering all economic conditions by using probabilities.
Examiner Asked in Q3 (ii) about EXPECTED VALUES of operating profits with evaluation and response of different stakeholders like bankers are reluctant for any new project to invest, so they will either prefer to not invest in new project or consider least profitability (e.g. maximin). VC refered to minimax regret I guess.!!.
While technique of uncertainty (e.g. sensitivity analysis) can be used for different variables e.g. fixed and variable costs to judge response of different stakeholders.
I got Passed in first attempt…… Very Happy by getting 51 although very busy while giving exam in job
Thanks Cuteleo110,
It seems a wise pattern to tackle the difficulties in this paper. Do u suggest anything else to improve further…?
Both answers are right… The difference b/w both answers is the requirement asked in question. In “Highmoor”, CSFP is required, while in “Highveldt”, only Goodwill, Group Reserves, and NCI is required.
In “Highmoor”, the intrest income has already been recorded by the parent, so no need of further addition in group reserves. Whereas, in 2nd question, interest has not been recorded, therefore it will added to Group reserves.