*** ACCA Paper SBR March 2019 Exam was.. Instant Poll and comments ***

I chose Subsidiary I don’t know

@johnramos said:
What did you guys write about leases??

this was about the only thing i knew about
some leases are not on the balance sheet, if low value or 12 months long
therefore that can distort ratios, such as gearing and ROCE

Who else found confusing on the dates in question one regarding disposal?
there was rate closing rate on September 20×6 right?
there was no net assets or profits on september 20×6
all dates were either January 20×6 or December 210×5 exept two dates
and the question asked to calculate disposal on september 20×6

how was this possible?
anyone remember the mark allocation on this particular question
I got confused and left it there

Hard paper! Lots to ask…

Q1) What did people say was the functional currency? This wasn’t so straightforward to me. And goodwill balance? Feel like I definitely made some errors! The explanation of calculating the goodwill was ok just explained which rates to use.

Q2) Hudson and professional ethics. Didn’t really understand the settlement question either to be honest. I did say that a settlement in the accounts that relates to restructuring means there has been a curtailment. I said it is supposed to reduce the value of the net assets on the benefit plan and also reduce the liabilities as a payment would have been made. Also means a cash decrease. I also said the contributions to the plan are supposed to increase the assets. Remeasuremennt component I said is supposed to be the net amounts when you compare the asset/liability balances at their opening and closing and also the net costs and then the net gains. Not sure.

Also, could they claim the deferred tax asset losses?? Normally I’d say yes but I couldn’t be sure as they had kept making losses. I thought the point of claiming the tax asset was tied to the business being forecasted to make profits as well not just losses. I mentioned that the market was in decline as well and it was unlikely the profits the directors predicted would be actualised. I said if anything they could only claim losses for the last 2 years then?

Q3) Was this the sub/joint venture question? I said they were effectively a sub and I wasn’t sure either. Unanimous decision was needed but as they could choose 50% of the numbers it effectively meant they had much more of a say-so otherwise decisions wouldn’t be reached? The highest shareholder had 18% which was not even enough to be classed as an associate. So tricky.

Revenue question was okay but again like others said, confusing but I just talked about the criteria for revenue recognition like it is contract, separately identifiable and distinct, commercial substance, performance obligations etc. Leases question. I just wrote the definitions and explanations of each ratio, gearing, but didn’t have enough time to relate that to the statement about the leases.

Q4) This was mostly OK.

Contingent assets and liabilities and inconsistencies with the recognitions of assets and liabilities – I talked about the probability test and how it’s different to the reliable and probable criteria of recognition. Hope that was right. Also for the business combinations I said the individual accounts would only disclose or provide for assets/liabilities depending on the probability test but with a combination then they would have a FV and would be taxed (deferred tax).

Did the UK version and they threw in more foreign currency questions and differences between UK and INT accounting on business combinations. Felt like I was repeating myself as it was a similar topic to Q1). Also asked about differences in the UK FRS102 and IAS on how foreign business combinations are accounted for? I said something about the transaction costs being included as part of the costs of acquiring the sub and NCI is only measured proportionately under FRS102.

Really hard to tell with this exam. Long wait for the results as per.

If you left your calculator at home, it would have made no difference. A lot of discussion, confusion and waffling summed it up for me.

i thought under IFRS it could be a subsidiary as there was 50% board representation which could veto everything, furthermore the four were from one shareholder while the 55% was split amongst 5 shareholders. Under FRS 102 it could not be a subsidiary
Under IFRS Crypto could be seen to have control

There was definitely reference to Crypto having a “veto” over decisions. Although they had 50%, and the FRS says there is a need for over 50%, there are exceptions: “Control also exists when the parent owns half or less of the voting power of an entity but it has…..”

Section 9.5 of the actual FRS – reading the text I think such a veto would make control apparent. I therefore took this to mean under FRS102 that they had effective control (and thus subsiduary rules).

https://www.frc.org.uk/getattachment/e1d6b167-6cdb-4550-bde3-f94484226fbd/FRS-102-WEB-Ready-2015.pdf

What do you think? Sound logic or ramblings of a mad man!
P.S. found it hard – especially CF comparisons and FRS102 which is certainly not prominent in the BPP mock exams.

Can anyone remind me which one was 30 marks and which was 20 please?

30 mark was the foreign entity, 20 marks was the pension one

Great, thanks.

I believe you will pass SBR.

Areas tested:

Q1Foreign susidiary goodwill calculation. Disposal of said subsidiary after 4 year. During the year.
Q2Pension scheme ethical issue ( settlement amount recognised as remesurement)
Q3Leases and impact of IFRS16
Q4Some issues about Conceptual Framework

IFRS15
IFRS11 Joint arrangements

This is what I can remember

Noted the decision is made on majority not consensus. So no Jo or JV here.

Cyrpto has biggset share and no others individually can challege it.

Cyrpto involves in operating through 4 or half of directors. Not an inactive investor or associate.

So there is control between Crypto and Kuran.