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1a) -Purchase consideration for Thyme should be discounted for 3 years right?
-FV NCI of Basil is somewhere around 37m. Got the price per share according to the PE ratio given and then reduce it by 25%.
-Goodwill impairment of 10, split between parent and NCI.
-Joint operation but forgot how to deal with the cash contribution. Added 50% share of NCA, CA and CL to the SOFP. Share of losses taken to RE too.
-Overall net assets of group decreased. I got 1.7m only for RE :/
-Provision for restructuring 4m. This is wrong, I forgot the onerous contracts.
-Sale and leaseback as operating lease. Gave an additional gain of 3m because CA is 15 while FV is 12 and sale proceeds is 20.1b) Left it blank.
1c) Simply wrote what i can about integrity and professional behaviour.
2a) Talked a bit about IAS 21 on translating retail outlet and loan at spot rate at spot rate, depreciation and finance cost for 6 months(or 5 i don’t remember) at average rate, retranslate them at closing rate. Retail outlet has an exchange loss on retranslation while loan has exchange gain. Exchange gain and loss taken to profit or loss. Don’t remember imparing anything as i thought the CA of loan/retail outlet is lower than RA.
2b) Tough for me. Got a goodwill of 2m and provided DTL for it. Didn’t bother completing the other stuff.
2c) Simply do not understand what the question is asking for.
3a) Talked only about the second option. Touched on disclosing the second option as contingent liability as cost cannot be reliably estimated. Then about adjusting event too.
3b) Just churned out what I remember for IFRS 5. Said the reasons for entity to not recognise NCAHFS is invalid.
3c) Question talked about investment property at cost model and capitalizing tax expense. I didn’t write anything related to the IAS, just said the tax expense shouldn’t be capitalized.
Overall a tough paper for me. 🙁
@farhantahir786 said:
I didn’t add reserves as the market value of shares should already have it in consideration. But unsure lol.Only ordinary shares are included when using MV.
If using BV, reserves will be added too.Not in correct order. My answer in bracket.
1. Project specific cost of discount. (11%)
2. Equivalent annual costs for replacement. (20120 something like this. Remember it was C, or the third project.)
3. Transaction risk for a company with subsidiaries ( 1,2,3 )
4. Reverse yield gap ( Chose A, but should be C )
5. Perfect capital market in MM theory
6. Total shareholder return ( $9.76 )
7. Discount money market instrument
8. Traditional view about WACC I think. ( 1,4 )
9. Future spot rate using purchase power parity
10. What’s most relevant to someone selling a company. ( NRV )That’s all I can recall. There are some questions asking to choose the correct one.
Do you mind adding in what you remember? 🙂
I personally find this exam a bit hard. Q1,2,3 is the hardest for me.
MCQ is okay.
Section B
Q1a) I got 38.5% D/E ratio.
Q1b) Didn’t know what this question is about so i just simply calculated interest cover and D/E. Interest cover is 4 point something. D/E is 56%. Then commented financial risk increase so shareholders require higher return, and share price may decrease.Q2a) Chose lead payment as it’s my first time doing lead payment question. So i just simply did it. Didn’t know interest have to be included 🙁 But the money market hedge i calculated is more expensive than forward exchange if i remember correctly.
Q2b) Skipped.Q3a) Benefit > Cost by 373k. I got a revised receivables day of 35days. Saving in finance cost 24k. Cost of discount 108k but this is wrong I guess. Reduction in bad debts 12k.
Q3b) Forgot what i wrote but I know it’s wrong after checking the technical articles.Q4a) NPV is 1336k something. Incremental WC i put it in Year 0-3 with no recovery (wrong again).
Q4b) Hard and soft capital rationing.Q5a) Current WACC – 11.4% , Revised WACC – 11.1%.
Q5b) MM irrelevancy theory only because I couldn’t think much anymore.Let’s just hope we can pass this paper!