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@ds3ce said:
Those of you who have passed and still read this thread, can you please give us some exam tips?I studied OT lecture videos and OT notes, examiner’s articles, practised questions from the exam kit. Last Sept and Oct I used Kaplan textbook but it was way too boring and lenghty, ended up getting lost in the details so I stopped using textbook and if there was an area I was still unsure about , I googled it, did research on it to get an understanding.
I know this paper is about application rather than learning theory but my problem is that the Section A case study is way too long and my brain gets lost in the details.
Any tips and ideas on how to tackle such long case studies? I find it difficult to find the key points in the complicated case study and think about how to structure my answer under time pressure.
Section A in P level always contain long case studies (50 marks). And they key to tackle this is to keep practicing past exam questions. Try 4 recent exams first. Usually I spent 15 minutes just to read the case first and base on the mark allocation, I will decide the length of my answers. Remember, 1.8 minutes per mark! So if the question worth 10 marks, spend only 18 minutes then move to the next part.
Also, spend time reading Examiner’s Report on ACCA website. Each term they publish a report which contains their comments on student’s performance.
Thanks John. Can you explain more details about this. How reducing unsystematic risk impact shareholder value?
Thanks John. And I think that I post my question in the Ask the Tutor Forum 😀
No, I have not watched free lectures since I do not have much time. Thanks for suggesting though.
I have another question regarding risk management. In an article posted on ACCA website, there is a section of manager behaviour towards risk management.
Could you please explain what does it mean by “concentrated equity stakes” and what does the whole section imply?
The section content is as follows:
“Managers who hold concentrated equity stakes in a corporation face increased levels of risk when compared to other equity holders. As discussed previously, investors hold well-diversified portfolios and face exposure to systematic risk only. But managers with concentrated equity stakes would face both systematic and unsystematic risk. Therefore, they have a greater propensity to reduce the unsystematic risk.
However, if investors do not reward corporations that are reducing unsystematic risk, because they have diversified this risk away themselves. And if a corporation’s managers use the corporation’s resources to reduce unsystematic risk, thereby reducing the corporation’s value. Then it is worth exploring under what circumstances would equity investors allow managers to act to reduce unsystematic risk and whether such actions could actually result in the value of the corporation increasing.
Stulz argues that encouraging managers to hold concentrated equity positions but allowing them to reduce unsystematic risk at the same time, may enable them to act in the best interests of the corporation and the result may be an increase in the corporate value. He explains that managers, who do not have to worry about risks that are not under their control (because they have hedged them away), would be able to focus their time, expertise and experience on the strategies and operations that they can control. This focus may result in the increase in the value of the corporation, although the impact of this increase in value is not easily measurable or directly attributable to risk management activity.
As an aside, one could pose the question, why don’t managers, who are rewarded by equity, diversify the risk of concentrated equity investments themselves? They could sell equity in their own corporation and replace it by buying equity in other corporations. In this way they do not have to hold concentrated equity positions and then would be like the normal equity holders facing only systematic risk. A research study on wealth management, which looked at concentrated equity positions and risk management, found that senior managers are reluctant to reduce their concentrated equity positions because any attempt to sell the equity would send negative signals to the markets, and cause their corporation’s value to decrease unnecessarily.
Contrary to the behaviour of managers who hold concentrated equity stakes, managers who own equity options, which will be converted into equity at a future date, will actively seek to increase the risk of a corporation rather than reduce it. Managers who hold equity options are interested in maximising the future price of the equity. Therefore in order to maximise future profits and the price of the equity, they will be more inclined to undertake risky projects (and less inclined to manage risk). Equity options, as a form of reward, have been often criticised because they do not necessarily make managers behave in the best interests of the corporation or its equity investors, but encourage them to act in an overly risky manner.”
@myafenok said:
In case of only stadard windows production – no need for highly qualified designer in sales and marketing department, there is also no need for those part of sales and marketing team which was participated in negotiations with customers when they place orders for bespoke windows, i suggest that this ppl can be redundant in order to save costs.
I believe any reasonable suggestion which is suitable for clues given in the scenario can be valued, it’s all depends on how we can explain and prove our suggestions.Did you do Q2? I was having a hard time trying to list out the cultural web. It was hard to define in that question! I found organizational power, structure and control kind of mix together!
@elzeafry said:
Give me exampels for restructure in q1c I said for example inbound and outbound they can make contract for transportation input and output that will give discount and in production they can make test before selling Windows
Is this idea is right cuz I didn’t understand question?There are four departments in Question 1. Each of them has their own issue, mainly due to production combination of bespokes and standard.
Part a requires us to analyse the current issue with example given in Firgue 1.
Part c requires us to provide some recommendation of reconstruction (in each department) to solve part a issue under the circumstances that switching to produce bespokes only or standard only. The recommendation approach must be like Firgue 2
One example is the inbound and procurement if switching to bespokes ONLY. Part a points out due to strict deadline from customers, they cannot plan to buy materials in advance. They can only buy after there is a sales contract with customer. Hence, they cannot have a discount. So reconstruction ideas must be based on how to solve the issue and improve the department performance.
This is my opinion 🙂
@myafenok said:
The same in Russia – a five times lesse than regular Jun-Dec sessions.Q1a – value chain issues – simply strengths/weaknesses of departments as standalone and in cooperation between departments;
Q1b – Earnings per scarce resources – the scarce resource is working hours per day (too much unnecessary issues on setup-setdown-production time added by tutor i guess);
Q1C – restructuring of current departments in each case – only bespoke windows, only standard windows. Example was given (additional readings for not-native english speakers means extra pressure) in appendixes.
Q2a – strategic planning as design, ideas and experience;
Q2b – cultural web and changes with new CEO approach;
Q4a – 7Is of e-marketing;
Q4b – setting price – i’ve used approach, that price should meet customers expectations, and pricing strategy should be a Differentiator.Q4b: I took an analysis of competition, demand, objective (growth, control, efficiency or others?…), strategy adopted (it looks more like Focus Differentiation), regulation… to establish price.
@zhomart58: Mine is the same. Usually there will be around 250-300 students. Yesterday there was only 50! Maybe not many students register for March sitting!
First, go to ACCA website, check examining documents to see which IAS/IFRS are being tested.
Second, go to https://www.iasplus.com/en/standards/ias/ias36 This website contains basic knowledge of IFRS.
Third, start with Consolidation question because it always come up in the exam. Check Guidance from Examining Team from ACCA website.
Fourth, master the remaining questions if you get time.
ACCA stopped publishing June 2010 exams so I cannot read contents of Question 4. However regarding your question, please find full details of accounting treatment for leases below.
Remember to identify whether it is operating or finance lease first.
For a sale and leaseback transaction that results in a finance lease, any excess of proceeds over the carrying amount is deferred and amortised over the lease term. [IAS 17.59]
For a transaction that results in an operating lease: [IAS 17.61]
if the transaction is clearly carried out at fair value – the profit or loss should be recognised immediately if the sale price is below fair value – profit or loss should be recognised immediately, except if a loss is compensated for by future rentals at below market price, the loss it should be amortised over the period of use if the sale price is above fair value – the excess over fair value should be deferred and amortised over the period of use if the fair value at the time of the transaction is less than the carrying amount – a loss equal to the difference should be recognised immediately [IAS 17.63]
@amimarissa: The exam result will be announced on 18th Jan 16. So it is highly probable that they will publish the answer 1 week ealier.
Answer to question 9 is A.
The reason is stated in the BPP page 23
Traditional absorption costing systems, which assume that all products consume all support resources in proportion to production volumes, tend to allocate:
(a) too great a proportion of overheads to high volume products, which cause relatively little diversity and hence use fewer support services, and
(b) too small a proportion of overheads to low volume products (which cause greater diversity and therefore use more support services).
Activity based costing (ABC) attempts to overcome this problem.