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Could you please explain for me?.

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5) The cost of the second-hand office building purchased on 10 February 2014 for £280,000 includes fixtures qualifying as plant and machinery (but not as integral features). These fixtures originally cost £11,200, and at the date of purchase had a market value of £6,200 and a written down value of £3,400. Sofa Ltd and the vendor of the office building have made a joint election regarding the sale price of the fixtures to enable Sofa Ltd to claim the maximum possible amount of capital allowances in respect of them.
Would you explain how did vendor and Sofa ltd make a joint election(the mechanism) and what is the implication of joint election.

[zaca]

in question 2) 36 months only for cease of trading of company, i mean trading loss of individual in normal condition

[zaca]

hello, share me your text book and revision kit for finance act 2014 and I will go to the church to pray for your passing. ^^

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When you said ” the taxman has allowed you to claim capital allowances “early” against the cost of PPE “, it mean i can choose the policy for dep’, say, i choose the reducing balance basic is 30%, tax only allow 15%, cost of asset 1mil, the tax you will pay is still the tax liability with 15% dep’ but the you also have a tax relief = capital allowance (30%.1mil) *tax rate which reduce the tax liability.

[zaca]

Hi
I read the solution of the case Stone holiday, in explain how the audit function helps an entity deal with risk of fraud and error.they said:
-risk assessment -the internal audit function may carry out the risk of assessment to identify the main risk of fraud and error or may review the process carried out by the management.
-control recommendation: internal audit report may recommend controls to address the identified risk.
In text book they wrote, to ensure the objectivity of the internal auditor, they would not be involved in the assessment of risk and design the system.
So in term ” recommend ” , i think it can be acceptable, because it likes positive advice but carry out the risk assessment to identify risk is completely involved in the the risk assessment,.
Would you explain for me why they said like that?

[zaca]

The question is 13 Brideford /15 mark page413 ,BPP textbook F9

Birdgeford is considering whether or not to invest in the development of new product. which would have an expected market life of 5 years.

The managing is in favor about the project because its estimated ARR would be over 15%
His estimates for the project are as follow.

year 0 1 2 3 4 5
cos of equipment
total invesment in WC
sale
material cost
labour cost
overhead cost
interest
dep’
total cost
profit

the average anual profit is 530000 with corp tax = 35%, the average anual profit after tax is 344500,with initial investment=2200000, it give ARR= 15.7%

As finace director, you have some criticism of the managing director’s estimates. His figure ignore both inflation and capital allowance on the equipment, and u decide to prepare an amended assessment of the project with the following data.
a) selling price and overhead expense will increase with inflation by 5% pa
b)…
c)…….
d) ….
e)…….
(b->e, contain no any information relevant to overhead cost, it for the inflation rate of material and labour cost, the tax allowance dep’, the nominal rate etc….)

Then they required NPV, and assess the project?
I check the solution and see they include overhead in cash out flow

[zaca]

Hi,
English is not my 1st language so got problem in understanding this sentences, ( i can guess the meaning base on the context but not sure it’s 100% right)
“In light of the surrounding circumstances” , would you please explain the meaning for me?

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Hi, (^!^)
Would you please explain for me

1)Rhapshopdy (6/7)
After the Oder detail is transferred to the Inventory control system, 2 packing list are printed in seed warehouse. The first one is sent to customer and second one is sent to accounting dep’.
Warehouse did’nt hold any copy
In book,
they said there should be 3 copies and one copy should be retained at ware house
If account misplace this copy there is no physical record of documentation sent to customer in case of dispute. This may lead to financial loss.

In my opinion ,in case of dispute the warehouse can ask the accounting dep’ for copy and send to the customer, so why they need to retain a copy, they just need prepare a inventory summary and send to accounting dep’.

2) In “Planing attendance at inventory count”
In Plan procedure
they said : Ensure a representative selection of Location, Inventory and Procedures are covered.
so what is the meaning of the this sentence
Is it mean the auditor have to decide the which count at which location the auditor member have to observe for “representative selection of location+ inventory”
Decide the scope of audit testing to perform during the count base on professional judgement for ” procedures”

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Hi,again
Would you please explain for me why
Test of control(revenue cycle) for Segregation duties, authorization and credit check is classified at Occurrence and Existence assertion level

In completeness assertion Control objective : All revenue relating to goods dispatched is recorded , control procedure : accounting for numerical sequence invoices, control test : review and test entity’s procedure for accouting for numerical invoice:
Would you explain for me the procedure for accounting for numerical invoice is what procedures?

is it right when i said
to ensure the authorisation of credit term to customer i would OBSERVE the procedure of authorisation ,( only authorizing credit term to customer after checking the credit reference/credit limit) and sampling a number of customer order, INSPECTING the audit evidence for poper credit approval by looking at the signature of senior manager of credit control staff in approved credit limit file.

In bbp book : the control test for authorisation is REVIEW the procedure for granting credit, EXAMINE a sample of sale order for poper credit approval

I’m so confused in using the verb here, why they use Review for procedure instead of Observe and in my opinion Inspect document include the meaning of Examine, Scrutinize ,Reading, Scaning, why the don’t use Inspect instead of Examine

[zaca]

ah, thank so much, million thanks!

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thank you alot, to day i do a kit and got stuck in this problem ” Trade in allowance “, i search the book of bpp and can find the explanation
” Old equipment that had cost 6ml and replace with new eqip had gross cost 8mil, the equipment manufacture allow ” trade in allowance ” for 0.5ml.

Is the ” trade in allowance ” = cost of equip 6ml – acc’dep’ – trade in value

and would you please clearly explain the record transaction in this case.

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I remember the question 1 Abc is the one of question of mock exam of BPP, yeah mock exam 2 Bpp2013 for june 2014, awesome

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oh, Thank you alot. Have a nice day

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I’,m sorry, but why share prices tend to be affected by longer-term expectations of future profits rather than just the current profitability?
Could you give me more example?

p/s : I can easily guess the answer like yours, everyone know in order reduce short-termism , we have to balance the shorterm target and longterm goal, so, if they say” link the bonus to share price”, it means the share price increase will reflect the longterm goal achived in that.

The point i want to know here is Why increase in share price indicate the longterm expectation is taken to account of manager, represent the manger have put an effort to get the long -term expectation rather than just only concern about the short-term target.

In a previous question , I asked about why ZBB increase the goal congruence through Flexibility.
I mean What is the Flexibility in here and how flexibility can lead to goal congruence
I think about it alot, Does flexibility means ” the operatinal manger will know which activities will be focus and which activity will be stop through the budget and then they will have time to prepare and focus on what they think suppose to be happened , well in manged and fast-respond to the command from top manger”.? so if they have scheme incentive + flexibility they will fully committed and disposed toward the longterm goal lead to goal congruence.

I hope you will answer me more specific, no offend, but too general and define some ” word” have their own their definition in book is too boring.

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Hi
Would you please explain for me the meaning of this sentence

If ” incentive schemes” are based on the the budget setting process it may be argued that ZBB encourage goal congruence through the flexibility.
What are the “incentive schemes” and how they encourage goal congruence through flexibility,

Thank you alot!

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Dear, John
I got some problem when calculating the yield variance
Assuming actual input is 56,000, actual output is 53,000kgs .
the loss in process is 10%

Yield variance :
(In Bpp)
should be yield : 56,000*0.9= 50,400
acutal yield : 53,000
variance 2,600 (F)

(in Kaplan)
intput should used: 53,000/0.9=58,888.(8)
actual inpu usedt: 56,000
variance 2,888.(8)(F)

so, which way is right , I’m so confused.
Thank you alot

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I’m sorry, i make a mistake when call it “tax provision”, I mean, it is ” movement in current tax payable” for during the year.
Thank for very detail,I did understand in the wrong way, so 1,900 represent for the tax paid in this year but for the tax in the previous year. Am I right?

I adjust the income tax expense in I/S for : movement in deferred tax, under/over provision, and the tax asset to arrive the “movement in current tax payable” =(600) ( Dr side)
open T account for current tax payable
Opening : CR 2500
movement:DR :600
cash out(b/l)DR:1900
closing bal: 0
Is this a right way?

[zaca]

Dear, Mike

Assuming
-Opening period : deferred tax : 800, current tax : 2500
-closing period : deferred tax : 1200, current tax: 0 , tax refund : 500
tax income : 700
(figures from 86 Deltoid)

I think “tax provision” = (tax income) -movement in deferred tax asset-(tax refund)= (700)-400-(500)= (600) ( receivable)

actual tax paid = 2500-600=1900

problem here is : tax provision is (600) receivable, but actual paid is 1,900, so why they have a significant difference between estimation and actual, What is the under/over provision in this case. Could you give me a practical circumstance in real life about the under and over provision, please!

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Dear John,
Would you explain for me the meaning of ABC in following sentence :
a) Different activity levels will provide a foundation for the base package and incremental packages of ZBB
the problem i got here is “Is it mean transfer from using ABC to Zbb or combine them together”
base package is a essential minimum level for operation and incremental package is optional additional activities, activity levels is the usage of cost driver( I think so), so why the different active level provide a “foundation” for these package

b) In the benefit of rolling budget, they said realistic budget are likely to have better motivational influence on manager. Why they have a better motivational?

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Dear, Mike
1) I still got a little bit of confused about problem involves to calculate the ” actual tax paid “”cash out flow”, if we dont’ use the losses this year, while we still net them off, the ” actual tax paid-cash out flow” will be reduce by an amount of losses be net-off
Does it effect the consolidated cashflow or maybe they will produced 2 seperate cash flow and consolidate them with non any affect. I know it reaches out the scope of F7 but a little bit of curious.

2) I check the revision kit, and the problem involves to Pricewell (6/09)
The total revenue of the company is 234,500,000, but only a small of revenue 8 mil represents for acting like an agent. So It’s quite obviously the nature of business is not purely selling agent and is an incidental part of agent’s income. But they still treat like that. ???

3) They don’t give more any information, lack of some important information, yout answer make me more confidence.

Have a nice day!

[zaca]

Dear, Mike

I got a problem here:

1) Tax loss carried forward, Assuming Parent acquired Sub, at the day of acquisition the Parent notice that the previous financial year, Sub have a tax -loss, P wants to utilise the advantage of tax loss and recognise the deferred tax asset .”Until the year ended, the group had not yet utilised any of these losses”
assuming tax refund = 10
My problem here, IF they had not yet use the losses, so we have to recognise:
Dr current asset / tax credit : 10
Cr tax credit ( i/s) :10
when consolidate we have current asset of tax credit :10

but the answer i read, they net off with deferred tax and show off an reduce amount in long-term liability when consolidating
the balance sheet sill balance but if they don’t use the losses, why they have to net them off?

2) The commision sales, A ,acting for selling good of B to earn commision
Assuming : revenue is 10, earn commision 3 and transfer back to B for 7 cash
so the revenue is unreal and Cog is unreal
I think we have to eliminate the unreal revenue 10 from sale and 7 from cog, add back commision to
CR: Other income, sale commision :3

Why they treat like : Dr revenue 7 , Cr Cog 7 , still the same results but which the method is right, the method in answer don’t show the commision of sale and conceal it in revenue.

3) Construction contract last 2 year, first year ended, material unused is x, estimation cost to complete the contract in next year is y, actual cost to date is m
The total estimation cost to complete the contract is
(1)y+ m or (2)m+x +y

Some books i read, with no more information, they show ” estimation cost to complete the contract in next year also included the unused material cost ” and give (1) result, material here is just for the purpose of calculating the amount due from/to customer

but in Bpp they show me the result (2), they sum all together,
which method is right

[zaca]

Omg!, my photo book lost the word ” indefinitely”, it’s just ” inde”, so i didn’t pay more attention to it. Thank you alot. Awesome!!!

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It’s very useful, now i understand the substance, the problem i got comes from the BBP revison kit. I’m still using the video lecture and course note of Opentuition. Awesome!!! I appreciate it. Thank you alot.

[zaca]

Hello, Mike
Just posting to remind you^^

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