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Hello Dear Mike,

In P7 exam, when we are answering questions about audit report, then we should refer to the new style or it is OK to answer the questions as before.

I meandoes the new report style change the answering method?!!!

I learned how to answer audit report questions by solving past papers. Now I am worry whether this new style could affect the approach which was used in past papers??!!!!

No changes in location and title of paragraphs?!!

I mean as usual it is for exampe

Basis for qualified opinion
…….

Qualified opinion
…………..

Emphasis of other matters
………….

Other matters
………

As always, thank you
Regards

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Many thanks for your clear answer, Mr. Mike 😉

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Hi Mr Mike,

Thank you for your reply. And soooo sorry to ask those questions.
I do apologize load and clear ! 🙂

I will look to the notes again and I hope I will find the answers. 😉

Thank you again with all your help.
Kind Regards

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Number 1 : Thank
Number 2 : You
Number 3 : Very much

After all, “Thank You Very Much” ! 🙂

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Hello Mr Moffat,

Hope you are fine.
My question is about the calculation of tax in FCF & FCFE when we have interest.
I know that in FCFE we should deduct the interest and in FCF we should NOT deduct the interest. But my question is why we do NOT deduct interest in FCF for calculation of the tax?

I mean when it is FCFE
1 – first we should deduct the interest in order to calculate the PBT,
2- then we calculate and deduct the tax,

But when it is the FCF method I believe that we should do:
1 – first we should deduct the interest in order to calculate the PBT,
2- then we calculate and deduct the tax,
3- Add back the interest.

But ACCA answer for FCF says something like:
1- first we should calculate the PBT (ignoring any interest),
2- then we calculate and deduct the tax.

So my question is :
1 – Is it correct to say interest has no effect on tax calculation in FCF method?
2 – If yes, why ?

Thank you in advance
Kind Regards

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Thank you for your CLEAR answer.
Many Thanks

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Can I say any other word instead of “OK” after your perfect explanation 🙂 !!!!!!
Many thanks! 😉

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Hello Mr Moffat,
Thank you for you your reply.

Excuse me I am a little confused yet.
Would you please confirm whether it is correct to say :

We can determine the value the entity by two ways :

1 – Free cash flow techniques (FCF) :
– It is BEFORE interest
– We should use cost of capital for discounting

2 – Free cash flow to equity techniques (FCFE) :
– It is AFTER interest
– We should use cost of equity for discounting

And the question usually says what technique should be used? FCF or FCFE (I mean there is to tricky point about which one should be used and it depends on what technique examiner wants. )

Correct ?!!!!

Thank you for your help.
Kind Regards

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Thank you for your reply!

I though about 50% of P6 would be about calculation! But 30% is very low!!!!!

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Hello MR Moffat
I have another question about part a. Calculating the cost of debts.

The answer says cost of debt is : 4.65 – 25% = %3.4875.

But I think it should be :
(5.6 + 45 points) – 25% = %4.5375

because in the part b, when we want to calculate the cost of debt it has done the similar approach . Ie,:
(1.8% + 50 points)/2 + (4.6% + 85 points)/2 = %3.875 and so cost of debt is : %3.875 – 25% = 2.9062%.

Why there is inconsistency between the way of calculation of cost of debt in part a and b ?

Kind Regards

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Many Thanks

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Hi Mr Moffat,

Excuse me, would you please let me know what percentage of the exam (on average) is aboout calculation in each of P4 and P5?

Thank you in advance.

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Thank you for your advice

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Thank you for your advice

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I know my “thank you” comment will make you again busy because you will reply it, but this can not prevent me to do so!
Thank you for your fast and clear answers to all my questions Mr Mike! 😉
Many Thanks ….

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Hello Mike!
Thank you with your answer.

So in fact :
market approach is Level 1,
cost approach is level 2,
and income approach is level 3
Yes ?

Thank you in advance …

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Thank you dear Mike! Many thanks 😉

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Thank you Mike 😉

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Thank you dear Mike 😉

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Many Thanks

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Thank you

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Hello & Thank you for your answer Mr. Mike! 🙂

So you mean because the question is giving the RETAINED EARNINGS at the two dates , so in fact the dividend was already deducted to reach to $27M which the the rerained earnings at the year end.

Now would you please let me know the answer IF the question had given us the PROFIT AFTER TAX instead of the reatined earnings.
According to my understanding, in that case the answer would be : 11*80% – 2 =6.6 ?

Many Thanks
Regards

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Hi,

I don’t know! What is the name of this news IFRS?
Now what does this new IFRS say? We should transfer or not ?

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Hello Mike
Thanks for your answer! Unfortunately I am confused yet!

See, according to the second post, when we received a dividend we should :
Dr Cash (SoFP)
& Cr investment income (P&L)

But in the above post we are DEDUCTING dividend from investment in associate , i.e, we are :
Dr cash (SOFP)
& Cr investment in associate (SoFP)

???
Thank you in advance

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Hello Mike
Thanks for your answer! Well, would you please have a look at December 2012, question 1, note iv.
What I understand from the answer (W3), is that the investment in associate is :

Investment in associate = Cost + post-acquisition profit – dividend received.
So in fact are adding profit to investment and deducting dividend received from the investment in associate and this is confusing me as I think it is NOT the same as your answers in the above post.

Kind Regards

[Author]

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