FR*** ACCA F7 June 2017 Exam was.. Instant Poll and comments ***

The formula for excess depreciation is: Depreciation on historical cost minus depreciation on revaluation cost. So am confused.

Q32 tax comp CUD = P or L transfer Was there Current tax or it was 26% of PBT calculation on SPLOCI? I saw over, CR which would be treated negatively in CUD calc Opening deferred tax 0 closing deferred excess times 26% ... Movement transferred to CUD calc

I calculated it as follows: income tax for current year (PBT*26%) plus last year liability plus deferred tax change (basing on the temp taxable differences) Does it make any sense? I didn't know how to understand "the company had a liability of 1.5 m related to year ended on 31Dec20X7 (so past year)"

@aaradhya33 said: excess depn would be the increase in value i.e. 3.5m divided by 20. you do not require any extra info for that,because the depn has alreafy been charged on cost and so when the cost value increases,depn is only charged on that.

The question states that depreciation for the year was charged on the historical cost of the asset without considering the revaluation surplus so yes there will be be excess depreciation of 175$ against revaluation. The tricky part is people mistake the revaluation surplus which will be included under OCI to be net of depreciation which is not as revaluation to b shown under OCI is always gross unless if Deferred tax is applicable then it will be net of deferred tax. Also the question requires annual transfer which will be applicable to SOCE so revaluation surplus will be 3500-175= 3125 and the 175 to be credited to Retained earnings.

@raeesabbas - good to hear that :)

I think the only thing unclear to us all is the income tax expense for the year which I will suggest we ask the Tutor. we were to work for December 20x8 but we were given income tax liability of December 20x7 to be $1.4m and additional taxable temporary difference of 1.5m I think.... anyone with idea should pls share

I took last year's liability and added it to the deferred tax charge for the year which was 1.5 mill ×26%

@23123fd said: I took last year's liability and added it to the deferred tax charge for the year which was 1.5 mill ×26%

i did thesame but are we not suppose to consider PBT *26????

I don't think so , as all the practice sums I have done we have never done that , but I could be wrong

@23123fd said: I don't think so , as all the practice sums I have done we have never done that , but I could be wrong

Exactly i was going to say thesame....never came across a Q like dat b4 but anyways let's just hope for the best....Goodluck to us all!

The exam paper was manageable giving any one well prepared a fair chance at passing.

What is diluted eps guys??

3600 is the correct answer. We have to remove parents share of 60%, since minority share holders portions needs to be recognised as profit in the consolidated FS.

There was a question stating Research cost are expensed using straight line And another statement anyone remember Anyhow i put neither statement was correct since research costs are written off not apportioned somehow using straight line

@laughingcoffin said: There was a question stating Research cost are expensed using straight line And another statement anyone remember Anyhow i put neither statement was correct since research costs are written off not apportioned somehow using straight line

True research is expensed when incurred. however the plant depreciation used on development is capitalised

Damn thanks dude U learn something new everyday

@chally said: True research is expensed when incurred. however the plant depreciation used on development is capitalised

Really capitalizing depreciation? How can that be? Common man PPE are assets and depreciation on them are expensed as incurred no IAS or IFRS supported the capitalization of depreciation...maybe you should come clear on this!

@chally said: True research is expensed when incurred. however the plant depreciation used on development is capitalised

Ideally Development cost is capitalised when some conditions are met and which I believe we all know and remember we don't depreciate Development cost og not completed yet??? as depreciation starts from the date it is substantially completed so are you saying depreciation of plant should be added and re-depreciated? pls come clear

@hayor said: Ideally Development cost is capitalised when some conditions are met and which I believe we all know and remember we don't depreciate Development cost og not completed yet??? as depreciation starts from the date it is substantially completed so are you saying depreciation of plant should be added and re-depreciated? pls come clear

Related to Depreciation of plant used for development project, somewhere I read that Depreciation should be charged to profit or loss, unless it is included in the carrying amount of another asset. Since we are capitalizing development cost as an asset, we can capitalize those depreciation expense rather than charging to P&L

@denny1 said: Related to Depreciation of plant used for development project, somewhere I read that Depreciation should be charged to profit or loss, unless it is included in the carrying amount of another asset. Since we are capitalizing development cost as an asset, we can capitalize those depreciation expense rather than charging to P&L

So technically by adding depreciation to development cost the implication is that we are adding part of cost of an asset if not all to development cost???? please did any IAS or IFRS support that.....in my opinion not making it general....depreciation on capital asset should be expensed regardless of what purpose it serves as we do not recapitalize depreciation. Any opinion to the contrary will be welcomed....pls lets b clear.....i need to learn more

Oh maybe now I get it.....according to the standard "research cost other than on capital asset should be expensed" meaning an asset acquired for for research purpose should not be expensed but instead capitalized as PPE of an entity and depreciated in accordance with the provison of the standard.......No where did the standard supported the capitalization of depreciation of asset in relation to research.....

@hayor said: Ideally Development cost is capitalised when some conditions are met and which I believe we all know and remember we don't depreciate Development cost og not completed yet??? as depreciation starts from the date it is substantially completed so are you saying depreciation of plant should be added and re-depreciated? pls come clear

The kaplan text book stated that yes.

@hayor said: Oh maybe now I get it.....according to the standard "research cost other than on capital asset should be expensed" meaning an asset acquired for for research purpose should not be expensed but instead capitalized as PPE of an entity and depreciated in accordance with the provison of the standard.......No where did the standard supported the capitalization of depreciation of asset in relation to research.....

Future ecomic benefits will flow through the entity when the development capitalised is ready for sale and its intended use. so the depreciation on the plant used to prepare that development cost should be realised when the asset is read for use. hence the capitalisation.

@hayor said: So technically by adding depreciation to development cost the implication is that we are adding part of cost of an asset if not all to development cost???? please did any IAS or IFRS support that.....in my opinion not making it general....depreciation on capital asset should be expensed regardless of what purpose it serves as we do not recapitalize depreciation. Any opinion to the contrary will be welcomed....pls lets b clear.....i need to learn more

You need to capitalize depreciation because it's a cost that needs yo be incurred to make an asset(intangibles) to current location and condition. Its in accordance to IAS 38.

Section A was alright except for some tricky questions. Question 31 was a little tricky on my end with the ratios. I am not so sure about whether I had anything correct. Question 32 was a good question. I was able to prepare a Statement of profit or loss with workings and the Statement of Changes in equity.

I totally messed up the first section C question (CBE version of F7), I panicked during the disposal of the sub. I messed up the calc totally which left me in a very bad mental space for the rest of the question. My interps were not well thought out, ratios miscalculated, gosh what a horrible experience. The problem was I was then left with 25 minutes to complete the last sec C question which I was more comfortable with, but I did not have enough time to finish the question...my SOCIE was half complete, I could not attempt the Case Flow extracts..what a shame, I could have gained 3 or 4 marks which I did not have time to even put something down for. Felt totally upset for days after, hence only posting now!!! Probable resit for me :(

Yup, totally agree: very wide syllabus and timing in the exam is everything. As a result, I did not practise enough past papers in any particular area. I panicked during beginning of section C (saw disposal of sub and lost it), which meant my timing totally went off. Spent far too much on first question of sec C (getting very little right) and then, had just over 20 min to complete the last question (single entity) which I could have scored far better in, and did not manage to complete the SOCIE and left out Cash Flow extracts (not time). Going to do Paper version next time, the CBE format for section C caused me to work more slowly...I feel more in control when I'm writing on paper and can make notes on the Question paper. If I have to resit F7, I'll do the paper version. Still getting over disappointment of the whole experience! Was very upset after!

Did anyone please save the June 2017 questions? ACCA replaced the doc originally uploaded.

Depreciation is never capitalised......development costs are amortised due to they are intangible Both depreciation and amortisation are expensed whatever the condition

@mubeenjuma said: Depreciation is never capitalised......development costs are amortised due to they are intangible Both depreciation and amortisation are expensed whatever the condition

under IAS 38 intangible asset depreciation is capitalised when production expenditure meers the PIRATE criteria