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Piecemeal acquisition (SFP)
Disposal from associate to equity accounting
Bond (sale and buyback option)
Benefit plan
PPE cost and dismantling cost for asset under finance lease
Financing arrangement (recourse and non recourse)
EthicsShare option (share based payment)
Translation of loan and retail division
Flood damaging warehouse and insurance
(IAS 16/ias36/ias10/ias37)Manufacturing unit and listening of sales and marketing, contingent consideration recognised as a finance income
Intangible asset (does legal cost of 600k constitute part of the asset cost) and changes in equity (want to purchase remaining 10% of the 90% owned subsi)
Deffered tax asset and the unutilised tax losses
They give some taxable temporary difference and expect future even more losses.Correct me if I’m wrong… I’m not sure
Exam was ok. Attempted all. Hoping for the best results. If I fail it I won’t regret it as only had 5 days off work to actually prepare for it. Best of luck to all students
Piecemeal acquisition (SFP)
Disposal from associate to equity accounting
Bond (sale and buyback option)
Benefit plan
PPE cost and dismantling cost for asset under finance lease
Financing arrangement (recourse and non recourse)
EthicsShare option (share based payment)
Translation of loan and retail division
Flood damaging warehouse and insurance
(IAS 16/ias36/ias10/ias37)Manufacturing unit and listening of sales and marketing, contingent consideration recognised as a finance income
Intangible asset (does legal cost of 600k constitute part of the asset cost) and changes in equity (want to purchase remaining 10% of the 90% owned subsi)
Deffered tax asset and the unutilised tax losses
They give some taxable temporary difference and expect future even more losses.Q4 is something bout conceptual framework
I might be wrong, I’m not sure
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Can you share more about question 1?
A bit confused on Q1 about the second subs..
Another confusion came when Q gives amount of profit that accrued evenly for associate.. Not sure what to do with that..
After all I’m glad because SOFP came out..
Sad since cannot answer AT ALL factoring (recourse & non recourse) – 9 marks, Q3a manufacturing unit (which standards apply here?)- 9 marks, Q3b licensing agreement + legal costs (no idea when I read the requirement – “derecognition of licensing agreemet”) :((((, Q3c deferred tax asset – 7 marks..
HOPING FOR GOD’S MIRACLE TO LET ME PASS!Yeah i think its IFRS 15 because its license agreement.
Anyhow does anyone know when will the result will be released? Mid august?
Question 1a and 2 is quite straightforward, and not that hard. But question 3 is disaster. I know all about the standard and how to answer, but they make it so hard to answer. I seriously don’t know what to answer. 3a is about discontiue product, even if it is discontinue, they still receive royalty from license. 3b they want to buy 10% of interest, the purchase is consideration is the license from 3a. 3c is about deferres tax. I also struggle with 1b and 1c, they ask about factoring. And i don’t read a single thing about it. I hope i get high marks from questiom 1a and 2, and a little bit help from question 3.
Factoring is a topic studied at a much lower level, i remember it from F3 or possibly F7, surprised when that came up. Factoring with recourse is not passing the risks of the debt going bad to the factor as you would have to refund the factor if this happens.
Without recourse the factor bears the risks, but something in the question stated that the longer the debt remains uncollected the more the business would have had to pay in interest… or something along those lines?
It really is basic receivables stuff. Basic double entry of when the cash is received the receivables is wiped out and a provision for bad debts is created, etc etc etc
Hard to get 9 marks there though, not sure if others found it the same!
The deferred tax asset they wanted to recognise, something along the lines of tax losses cannot be accumulated and held for future tax gains unless its likely the business will be profit making in the future…
They were expecting to make losses for an additional 4 years, so this must mean its not allowed to be recognised…
Something about a going concern status in there? Im sure tax assets cannot be held in a going concern scenario?
That was a pretty tough and testing paper to work out the specific areas they want answers to focus on!
@aries134 said:
A bit confused on Q1 about the second subs..
Another confusion came when Q gives amount of profit that accrued evenly for associate.. Not sure what to do with that..
After all I’m glad because SOFP came out..
Sad since cannot answer AT ALL factoring (recourse & non recourse) – 9 marks, Q3a manufacturing unit (which standards apply here?)- 9 marks, Q3b licensing agreement + legal costs (no idea when I read the requirement – “derecognition of licensing agreemet”) :((((, Q3c deferred tax asset – 7 marks..
HOPING FOR GOD’S MIRACLE TO LET ME PASS!The profit accrued evenly for the associate is relevant because it was an associate for 6/12 months of the financial reporting period. Somewhere in there was the $20m profit for the year x 6/12 giving share of associates profit before disposal of $10m. Im guessing this is what needed to be included when working out the gain or loss on the sale of shares in that associate to lose control. Something along those lines anyway…
Q1a was a bit of a lifesaver in this exam i felt? Anyone else?
The basic workings for net assets, goodwill, nci, etc were very straightforward. FV adj for the land in the first sub, FV plant and depreciation on it for the second sub, no impairment for goodwill… the toughest bits on that question were the additional notes for me
The cost of the investment for second sub on SoFP is different from cash + FV of 40% equity held, there must have been some loss recognised on the carrying amount of investment but I also dont know if it was recorded in RE or OCE…
The adjustment for Finance lease was tricky as well, not sure if I did it right but I reversed the alternation cost and recognised a provision on the cost at end life, then depreciate the 2 amounts added to Finance lease asset and also recognised 6% interest expense on the provision…
Was not able to answer the factoring one ==’, and then the ethics one based on that… that was one hell paper ==’
Hi, Instan pool is closed for comments. Maybe we can discuss here.
Can you please tell me what were your treatments for the questions? I found it pretty difficult.
In q1 -35
forgot to make investment revaluation to FV and to include it in RE for acquisition of control.
How did you transfer associate? Did you transfer on CV and then revalued or did you revalue first?How did you treat bonds? Got completely confused there…
Q1 (b) – factoring… (9p). Really? Not a single word about it in my book….
Q2 (c) – depends on q2(b), obviously not that good. Unless they will enjoy my general comments….- Topics: 0
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On Q1 for the secondary subsidary it something about their FV based on market shared of £5 parent and £1.60 sub for the NCI and the 40% acq. We’re we supposed to use this instead of consideration to work out goodwill?
@sallyf18 said:
On Q1 for the secondary subsidary it something about their FV based on market shared of £5 parent and £1.60 sub for the NCI and the 40% acq. We’re we supposed to use this instead of consideration to work out goodwill?I think yes? Cash consideration is 500 + FV of 40% equity at 1.6 * 700 * 40% = 948, then NCI at 1.6 * 700 * 15% = 168, so GW = 948 + 168 – 1062 = 54. Not sure if right or wrong ==’
Then I saw the investment on SoFP at 928 so I thought there was some revaluation there and I adjusted retained earning as Dr Investment 20 and Cr RE 20….
@kpmgkpmg said:
How did you dispose associate?
And anyone knows what was there with bonds?I calculated investment in associate to data of acquisition, then difference between FV 40% and that amount is the gain/loss to RE
For the bonds I recognized it at FV 38, a loss to OCE of 42-38 = 4, then the cash amount received I treated as liability as there was repurchase agreement with repurchase price > sale price…
The exam was easier than I had expected.
No complex groups in Q1, no foreign sub, but a great deal of changes in shareholdings.
All other questions looked familiar especially after revising a hundred of past exam questions within a reasonable time of 1 month.I wish everybody have had good luck today!
Okay – so I found question 1 a lot simpler than over papers , question 2 was reasonable
Question 3 … Well , I’m hoping for a pass ..
It’s my Last paper so would be nice to get 50 and say goodbye to all this pressure …
As for disposal of associate , it’s my understanding it’s similar to disposal of a subsidiary…
Consideration received
PLUS: FV of % maintainedLess : carrying amount of the associate at the time of disposal
The profit or loss goes to retained earnings.
**The 6 months profits at 25% should be added to the carrying value – as this would give you the overall carrying value at disposal ( I think )
I’m keen to see if I pass .
I studied every question in BPP AND Kaplan and still struggled .. Seriously hoping for the best :-/
Good luck all x
Hi everyone,
This is how I calculated the Disposal of associate. Might be wrong ..please let me know how you did it?
Sales proceeds 42
Carrying value at disposal date:
Profit for 6 mths
(20mil x 6/12 x 25%) 2.5
Investment value at date of disposal 110
CV at disposal = 112.5
Value sold (112.5 ×10/25) 45Loss on sale of associate (42-45) 3
Thanks !!
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I got 22 and 25 for my goodwills. Did anyone get anything similar?
I think I got 22 but for the second I think I got more ? Can’t remember exactly how much..for the second subsidiary I used the FV of the shares(not the carrying value) , I think it was 700 ×40%×1.6$= 448…which also meant a gains should be recorded for the difference between the FV and CV for the 40% interest?
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