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Consideration 68
Contingent consideration 16×25% =4
Nci 2.5 mil (the group bought 10 mil shares (80%)) shares x 4.25
Net assets (70)
Fv adj of na (5)
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Goodwill 7.625My understanding of the question was that the group bought 10 mil shares. The total shares were 12.5 mil.
@miraji Can’t remember how many marks, but the issues that were came up were intangibles (quite a bit, particularly development costs), the respective definitions of an asset, and what defines a business as opposed to an activity.
The questions were what you’d expect really – “discuss the differences between accounting treatments of xyz”, “would abc be acceptable under FRS102”, and the assets one asked you to compare definitions under current IFRS to proposed IFRS to FRS102. I could not remember that last one for love nor money.
I hated this paper. I didn’t finish which is unusual for me, but then I’m a numbers person and this had so many wordy questions. I ended up playing it strategically, making sure that at the very least I’d answered all of the easier bits to maximise those marks and cutting my losses where necessary \*cough\* second part of cashflow question
The one thing I did do last night was go through the ‘read the mind of an SBR examiner’ article on the ACCA website, and I ended up answering some of the questions slightly differently than I would have done as result. Whether that will have helped enough, time will tell…
What did everyone write about the potential issues investors would have re intangible assets? The question asked about the different acceptable valuation models, the capitalisation and one other thing which I can’t remember?
For capitalisation of intangibles I wrote that assets would increase which could decrease ROCE.
Not sure if I was on the right tracks with this one??
@ds3ce My main advice would be never to take a new paper at the first sitting if you can help it, lol
Fortunately for you that won’t happen!
Paper was very similar to one of the specimen exams, of course being lazy I did a half effort at the specimen exam and suffered during the exam because I could have aced it…. Anyway did not struggle MUCH did leave 11arks out thou and for discussion question I blab so much for 6 marks…. Ey I really hope I blabbed enough to get a pass just 50%, please god
This paper was not made for me!!!
Qstn 1 (a) (i)calculation of goodwill after amendments made to figures of purchase consideration, nci and fv of identifiable net assets (ii) disposal of subsidiary to simple investment (40% to 10%) (iii) *dnt remember*
(b) definition of financial asset
(c) sale of bond
Qstn 2 IAS 37 provisions, asset held for sale and ethical issues
Qstn 3 IAS 38 Intangible Assets-compare definitions, disclosures- effects on investors, accounting policies, conceptual framework
Qstn 4 APM and cashflowThis is as much as i remember..definitely my worst paper ever!!!!
Was a wrong decision to resit P2 as SBR!Saw some new terms for the first time…operating free cashflows!! Cashflow qstn was soooo confusing!
In the specimen exam the contingent consideration was included at 100% its fair value are you certain the the fair value had to be at 25% of the pv of the present value?
Too much leanthy, lot of complexity, didn’t expect for a new paper, very unfair
…It had asked about the why investors find it difficult to analyse intangible assets under 3 parameters 1)Acquired intangibles 2) don’t remember (anyone remembers?) 3) Capitalized development costs
Was there an explicit reference in question about “different acceptable valuation models, the capitalisation and one other thing which I can’t remember”?
and how Integrated report will help them with their Analysis – I believe this was second part
Section A-
Q1) I got this as the rectification entry
Dr G/W 2
Dr Land 5
Cr Liab 4
Cr NCI 3Q2&3) Was Ok – About significant influence and Associate disposal Got a Gain of Something
Q4) It is a business as it had an Input and Process
Q5) I wrote the bond should not be derecognized as they still have risk and reward and they should record the amount received as Financial Liability.
Please don’t say everything is wrong!!!!!! I will end up with 0 then
For the selling of development project question (only 4 marks I think), I wrote that revenue shouldn’t have been recognised as the sale wasn’t part of the entities usual business activity and this is the definition of revenue. Anyone else put this?
Has any one got ideas on the bond question? I was convinced I’d seen a similar question but can’t see where? I waffles about recognising loss through OCI not through profit or loss as saying this will be reversed when if we purchase the bonds back, but it’s not a disposal as we still have some of the risks and rewRds involved. However we can’t provision for the risks as the market could go up or down ( like treatment of a derivative )
I am pretty sure I got this for q1
Section A-
Q1) I got this as the rectification entry
Dr G/W 2
Dr Land 5
Cr Liab 4
Cr NCI 3Q2&3) Was Ok – About significant influence and Associate disposal Got a Gain of Something
Q4) It is a business as it had an Input and Process
Q5) I wrote the bond should not be derecognized as they still have risk and reward and they should record the amount received as Financial Liability.
Please don’t say everything is wrong!!!!!! I will end up with 0 then
@ds3ce said:
Based on the poll it looks like this paper was a disaster. Not very reassuring for those of us yet to sit this exam. I failed P2 in June but won’t sit SBR until March as I am struggling with APM at the moment.I failed P2 in June exam. Today’s exam was weird. Question 4 talked about something I had never heard of ‘operating free cash flow’ or something and there was a LOT of focus on current issues such as integrated reporting, APM’s and proposed revision of conceptual framework. A very different format to P2 and my hand was hurting by the end as it involved a lot of writing and minimal calculations
Hello,
I dont know if its just me but it seems like many people on here did OK in most of the questions in general.
Can anyone please tell me if they used the Kaplan material or the BBP material and found it ‘easier’
I found exam very hard and i used the Kaplan material.
Many thanks
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Q1 goodwill
consi 68
Cont consi 16
Nci (20×20%×4.25) 17
Net asset (70+5 ) (75)
_____
26Contingent cons at fair value accounting at the acquisition date .. subsequent changes do not impact goodwill but are accounted for separately
If the amount of contingent consideration changes as a result of a post-acquisition event (such as meeting an earnings target), accounting for the change in consideration depends on whether the additional consideration is classified as an equity instrument or an asset or liability: [IFRS 3.58]If the contingent consideration is classified as an equity instrument, the original amount is not remeasured If the additional consideration is classified as an asset or liability that is a financial instrument, the contingent consideration is measured at fair value and gains and losses are recognised in either profit or loss or other comprehensive income in accordance with IFRS 9 Financial Instruments
Miraji,
I remember the following topics:
Q1 Write explanation note to directors regarding three issues:
– Calculate Goodwill and explain directors what they did wrong in initial calculation and show the journal to amend their error;
– Correct treatment of the disposal of Associate from 40% to 10%;
– Derecognition of the Financial asset (bonds) with calculation according to Principles of derecognition in IFRS 9.Q2 Show correct accounting treatment and ethical issues re Provision/disclocure for Subsidence of the production line, where repair in the next year was probable but no information about costs. Also, proposal to account 80% of subsidiary as an Asset held for sale because this part of business was not profitable (if I remember correctly).
Q3 – 3 questions re Intangibles including difference in recognition principles btw IFRS & FRS 102; what should be capitalised, accounting policies re cost and revaluation etc.
Q4 a) discuss how fair would be inclusion of particular entity’s APMs into FS (EBITDAR* (*rent), Income from Operating cash free activities (free from PPE purchase, intangible purchase and issue of shares) and something else.
b) cash flow (killer one). I was struggling to understand the requirements for this confusing question.
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