*** ACCA Paper SBR December 2018 Exam was.. Instant Poll and comments ***

@kbourne said:
it wouldn’t. the valuation of 28m affected the ratio as it would have increased equity and reduced gearing. I just double checked on ifrs.org and actually think I am wrong about the long term lease. I think this would result in property being classified as owner occupied under IAS16…and not IAS40. wish I hadn’t looked!

Didn’t we have to work out the gearing ration using the figures listed above. There was like a balance sheet extract?
Why else would they have put these figures in for? I worked it out at 49% using the figures above, but assumed it included the $28m and when we reduced it down to $22m, it affected the equity by reducing the value, which tipped the ratio into 52% region.

The only long term debt item was the bank loan at $50k.
Then the equity came in at something like $10k+$70k+$20k ish.

Then if that equity included the $6m revaluation gain in OCE and we removed it, then the equity figure reduced down to less than $100k and the gearing ratio was at 52%.

I probably totally made that up, but seemed to make sense to me in the moment.

Anybody else recall their answer?

@sr100 said:
Didn’t we have to work out the gearing ration using the figures listed above. There was like a balance sheet extract?
Why else would they have put these figures in for? I worked it out at 49% using the figures above, but assumed it included the $28m and when we reduced it down to $22m, it affected the equity by reducing the value, which tipped the ratio into 52% region.

The only long term debt item was the bank loan at $50k.
Then the equity came in at something like $10k+$70k+$20k ish.

Then if that equity included the $6m revaluation gain in OCE and we removed it, then the equity figure reduced down to less than $100k and the gearing ratio was at 52%.

I probably totally made that up, but seemed to make sense to me in the moment.

Anybody else recall their answer?

am sure it said when the MD realised that the gearing ratio was 51%….he revalued the property to 22m. ignoring the financial reporting standards. I got 49 using the provided figures too.

Same here

@sr100 said:
maybe i made a mistake in reading it.
I thought it was included at 28m, because if it was included at 22m and the gearing ratio came out at 49%, then there wouldn’t be an issue. 49% is less than 50%.

sorry – yes…28! that was his own valuation wasn’t it? and the professional valuation was 22m. 50/104 gives you 49%….so you are correct it includes the entity own valuation of 28m. however it should have been 22m which would result in 50/98 giving you 51%.

Q2

Gearing with 28m revaluation ( 8 millimeters is other equity component) is 49.7%, with arm length fair value 22m the OQE reduced by 6m, then gearing is 52%. The correct accounting treatment means loan repay in full immediately where md is try to avoid.

Deposit is not revenue, it is refundable if asset is not complete constructed, so it shall be liability.

Revenue cannot recognize in stage as the performance obligations in contract is on completion of building asset.

MD is try to boost the revenue to obtain profit to ease the worries from investors and bank.

Accountant ethical as usual staffs.

Ive complained and sent a long email to ACCA as well. This paper was a joke.

If I was a head of an organisation, I would not hire someone who passed this paper cos simply it was not fair.

Hiring someone who just knows conceptual framework but doesn’t test them on consolidation, IFRS and IAS but instead just IAS 12 (12-14 marks). ACCA is coming across as a scam whilst other people under CIMA and ACA are qualifying. There must be a reason why CIMA is quite popular now…

This exam was a disaster for me, as for question 1 and 4 really tricky. i wonder which study material would prepare me better for SBR, thought Kaplan was better.

@jamioio said:
IFRS 16 Leases states that a lease is probably a finance lease if one or more of the following apply:
1) The lease term (including any secondary periods) is for the major part of the asset’s economic life
2) At the inception of the lease, the present value of the lease payments amounts to at least substantially all of the fair value of the leased asset

Both of these were found within the scenario text.

The property could therefore be de-recognised as an asset, and re-recognised as a receivable discounted to present value.

The discounting will lower the value of non-current assets and push gearing over the allowed limit. Further, the receivable is broken into non-current and current, again affecting the gearing ratio.

I think this question is open to interpretation, perhaps the examiner will just want to see your point, and that it is well explained. I certainly appreciate the argument with regards to level 1 and 2 inputs.

Personally, I found the IFRS 13 Fair Values element to be more useful in the ethical issues part of the question.

A receivable has no impact on the gearing ratio

@moo123 said:
If anyone interested, SBR december exam is now added to past exams papers on ACCA website.

Thanks for heads up. That’s quick!

What did you say in Q3 – b, recognizing the provision? and indicator of impairment?
I said do not recognize the 3m provision as there is no obligation, and decline in price is an external indicator of impairment ..

@ritaalbu said:
What did you say in Q3 – b, recognizing the provision? and indicator of impairment?
I said do not recognize the 3m provision as there is no obligation, and decline in price is an external indicator of impairment ..

Ok I’m very concerned now, my question 3 was completely different to this one, same company Fill but my question 2 included a question about how NCI should be measured, is this because I sat a uk variant or? Personally I prefer the question 3 on the website. Or did I just get a duff paper

I said that a provision should be included because although there was no legal obligation, there was still a constructive obligation but I am probably completely wrong!

@ritaalbu said:
What did you say in Q3 – b, recognizing the provision? and indicator of impairment?
I said do not recognize the 3m provision as there is no obligation, and decline in price is an external indicator of impairment ..