*** ACCA P2 June 2018 Exam was.. Instant Poll and comments ***

Hate the autopsy after the exam…UK variant and did questions 2 and 4.

Q1 – not the worst – quite fair. Annoyed that I forgot two adjustments that would have made my balance sheet balance!!!!! Did the calcs but didnt put the gain on BP to RE and didnt increase current liabilities for the provision otherwise would have balanced.

Q2 – detailed and tricky but hoping a lot of theory and sensible comments using facts will pick up marks. I think the gas contract was a ROU Asset that should have been impaired as part if the CGU impairment review – not an intangible but I didnt put this in the exam which is annoying (wrote about CGU impairment review then the intangible criteria and that this doesnt meet intangible criteria so should be derec and a liability held at pv with interest payments at effective rate etc).

Q4 wasnt too bad but part 4a i and ii was a bit waffly and poorly written because of the time pressure! Part 4b was very nice.

The UK variant bits were nice and hoping for some easy marks but never know.

Lets all enjoy the sun and get merry!!!

Disposal 10%
I used 180 share capital and got a value of 48
Calculated increase to nci and difference recorded to oce

Impairment 14

Goodwill sub 1 -20 something and sub 2 70 something

Got a negative post profit -6 for sub 1 and sub 2 was 42 i think but these included increase in other components of equity which i seperated after

Deducted 5 for contingent liability

Fv plant was 80 and land 30

@lannajacques said:
Disposal 10%
I used 180 share capital and got a value of 48
Calculated increase to nci and difference recorded to oce

Impairment 14

Goodwill sub 1 -20 something and sub 2 70 something

Got a negative post profit -6 for sub 1 and sub 2 was 42 i think but these included increase in other components of equity which i seperated after

Deducted 5 for contingent liability

Fv plant was 80 and land 30

May I ask why you take the adjustment to OCE, I took mine to RE (realistically a 0.5-1 mark difference)

Every question I’ve done before has taken it to RE, I know this was a disposal in exchange for shares in another company, but the NCI portion itself I took to RE

Ah yes the part in Q2 about the defered tax – added a few lines of waffle in there about the potentially hyper inflationary environment of the sub and the possibility of valuing it in dollars which could stop the huge operating losses, and the massive gain being mainly down to FX rates.

Good points – didnt have time to write about parent functional currency potentially being the same for sub but that would make great sense!

@natha488

The entries for a decrease in ownership without loosing control is

DR cash (usually)
CR NCI
CR Other components of equity

@mackawara said:
same here .hope got full marks on goodwill

Me too

@mackawara said:
I got 48m consideration and calculated 10% of net assets and goodwill at year end and got 1,9 gain to equity.

I did same also…phew

@nathan488 said:
The question said right at the end that it’s not accounted or recognised under IAS 20 grants :/

But your actual accounting seems okay.

I wrote for the £4m non refundable fee TO the other entity that they need to defer the expense (deferred expense) until it’s at that date, since they’ve paid for it but haven’t yet consumed the “benefit” of these trials

Then for the other free of £2m being received, I think I said to defer it as deferred income again for the similar reasons

I also waffled a bit about IFRS 15 and performance obligations.

At that point I had gone through an answer booklet and was just glad to have finished in time :’)

Bad news for me than. 🙁 Did not have time to assess the wuestion properly. 🙁 So… was there a strict prohibition to describe IAS 20 or I still can get something?

I got exactly the same as you. Hopefully that’s a good thing!

@jmmyjimmy You will not be penalised. Put your mind at rest. You will get mark in other areas that will give you pass mark.

Best of luck

@almirak said:
.

fully agree.

I thought that was quite a kind exam. Question 1a was simpler than most of the practice questions. No major disposals, no foreign sub, no complicated adjustments requiring you to calculate a PV etc.

I finished it quite quickly, although my balance sheet didn’t balance by 6m. I think I forgot to add the fair value of the provision to liabilities and maybe made another mistake somewhere . Not sure I treated the provision correctly within goodwill either, I used 5m but maybe 10.6m was the correct figure to use. Hopefully I still got most of the marks.

For the share exchange, the shares received were in the new company. It stated no control or significant influence was gained so I calculated the value as 2/3 * 180 * 10% * 4 = 48m and debited that to other financial investments. The increase in NCI I got as 390 * 10% = 39m so there was a 9m credit to other components of equity.

I think 1b and 1c were fairly straightforward and well prepared students should have been able to pick up plenty of marks there.

I did 2 & 3. The gas storage facility, I wrote over a page on impairment of intangible assets before realising that actually the contract was probably a lease! I was out of time for that question then but I had a few minutes at the end. I came back and wrote some points about it being a lease and so should be dealt with as an accounting error and adjusted retrospectively.

Can’t really remember the details of the IFRS 9 question but I just waffled about the various rules about FVTPL, FVTOCI, amortised cost and expected credit losses for ages then applied them to the scenario.

For deferred tax I said they would need firm evidence, like confirmed bids, that the sale was likely to make profits big enough to use the tax losses and would have to disclose their reasoning for this.

The medical equipment I said it was a finance lease as lessee controlled the asset for the entire useful life. IFRS 16 does distinguish between operating and finance lease, but only for the lessor. I also said that although it was provided ‘free of charge’, it came under the scope of IFRS 15 as it was part of the same contract, so consideration could be calculated based on standalone selling price.

The prepaid research and income, I said research costs would be expensed but as hadn’t happened yet would be treated as a receivable until then. The non refundable deposit from the government I said was deferred income and couldn’t be recognised as revenue until control of the vaccine has passed over as it likely had value to other parties.

The legal provision I said they should recognise a provision of 7m and disclose and contingent liability of 6m. I said that the fact they they made the offer indicated there was a likely outflow of benefits. I didn’t talk about constructive obligations though. Not entirely convinced I got that right.

Overall I think it was a pretty reasonable paper. It felt like the examiner was trying to give everyone a decent chance of passing without making it too easy. Good luck in July everyone!