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

Examiner must be bored with this paper after so long service. ACCA should consider to replace him immediately as he is out of world now. BTW exam was disaster after so much hard working

And anyone can describe what was happening in Q2 first paragraph where stent co receiving money ? in advance

Hi

Do YOu know when exam results will be avaiable?

@geologist81 said:
Question 1:
7pts, why is the replacement cost of 17 mil not a good fv for the building ?

This is IFRS3 FV measurements, non-financial assets FV are based on highest and best use if the conditions, that it must be financially and legally feasable, are met, which it is.
The market value of the building, for residential use, was 24 mil and also demolition plus permit costs of 1 mil. I did include this to come to a FV of 25 mil, but I was not fully sure if I had to include the 1 mil in the FV ??

I see several people have an impairment of 30 mil but I thought the RA and CV was for the whole company included the building, I might have misread the question.
CV = 106
RA=100 so impairment of 6 from which 4 for an asset so goodwill impaired by 2. Does anyone also has these numbers ? FV- 1.6 goes to RE and 0.4 to NCI. Proport shares, 2 goes to RE.

The SBP covered by IFRS 2, if there is an acquisition without obligation to pay the SBP, than is considered as SBP, if obligation to pay, than it is considered as a FV consideration for the acquisition. Problem here is that the old SBP, that the parent company is obliged to pay, is replaced by another one for the employees of the subsidiary. So here some part could be IFRS 2 and the other IFRS 3. FV of old SBP =15 mil. When making the calculation of the new SBP, I come to a total cost 19.2 mil without discounting. As the new one is bigger, the old SBP of 15 mil is dealt under IFRS2 and not FV consideration. Here it is also not clear cut, maybe the new SBP is considered obliged to pay and than 19.2 has to go in FV consideration, not sure.

Question 2:
– Advances to receivables: This is an advance for some future sales of goods. Under IFRS15 Revenues, the sale cannot be recognised and so the advance goes into liabilities
-Pref shares to exchange for ordinary shares or cash. Pref shares are considered as debts so this is equivalent to a convertible loan. The loan fails the test of “fixed for fixed”payment as part is equity and the other part liability.
-deferred tax- only to recognise if there is probable future profits.
-ethical part ok

Question 3:
-3 years license + 5% royalties:
to spread the revenue over 3 years. so by recognising the 7% shareholding we get this at Y/E: 1/3 FV 4-5 mil goes to P/L, 2/3 FV 4-5 mil goes in a liability account.

-Cryptocurrencies cost 3mil and FV of 4 mil and Building cost of 6 and FV of 10
The cryptocurrency is an intangibles asset, see technical articles. The cryptos has been sold at cost so it means a loss of 1 mil for Guidance. There was no information about the selling price of the building so I assumed it was sold at FV and so Guidance had a gain of 4 mil. Total gain 3 mil for Guidance.

Question 4: I missed the biggest part I have also 38% and 17%; the first part of the question about an evaluation of the ROE. There is a technical article Perf Measures dealing with it. The ROE is a good tool but has limitations, Perf measures are not covered by IFRS and so there is no standards on it so the calculation of it could be subject to interpretations, this lack of transparency is also a lack of comparability. I didn’t answer to the rest of the question.

I calculated impairment in Q1 the same as you and split between P and NCI

For the FV of the land do is it legally feasible if there was no planning permission granted?

Was a tough exam, even topics I was very confident with I got thrown out in the exam.

A very detailed and broad knowledge is needed.

No-one said it would be easy……. back to revision from Monday

Not much to add to comments above except the accounting policy …. not sure if I understood it right but I gave examples of ppe recognition on the 2 models cost vs revaluation and how identical assets can be accounted for different depending on policy choice. Also added impairment reviews are necessary to keep these differences to minimum. (Gosh I wish I worded it like this but time pressure got to me, hope I got the message across)

also debt/equity measurements of fvtpl and fvtoci and talked about how they effect profits as oci doesn’t effect profits straight away therefore hard to compare when different entities use different policy’s

Preference share I said it was part liability and part equity.

To be honest, there were questions which I have never came across in Study Text, Mock Exams, Revision Kit and Past Papers(mainly Question 1 and Question 3)

Q1: I calculated assest value to and adjusted to fair value of USD 24 mln +1mln site preparation for residential area. The concept was that highest and best use, aslo legally permissible. I including whole 25 mln in goodwill calculation as it was said that “fair value of net identifiable assets excluding the following asset”. Then calculated goodwill fir both NCI versions. Share based payment part of this question was a question that I have not seen before. So I did not figure out how to calculate consideration with SBP. Only thing that I did, Consideration+15 mln+5 mln(additional due SBP change)

Q2: It was easiest part. Advance payment is deferred revenue so it is liablility. Preference shares with the option to convert to equity is Compount instrument so liability(asset) and equity part should be separated and recognized in Financial Statements. Deferred tax asset should be recognized when there is evidence for future gains, to whch against these tax assets could be utilized. There was no sign of future profit. So it is not deferred tax asset.
Ethich part talked about, self interest and intimidation threat as link to professional ethics

Q3: This question was also difficult. For license I said that, it is single performance obligagtion as technical support and update side cannot be sold as separate performance obligation. It is linked to the license. I recongnized shares as financial assets in customers interets as it gives voting rights also(do not exactly whether correspondent Liability part should be recognized). For royalty, I said that it is perfromance obligation satisfied over time, so royalty should be recognized when the customer sells music to open public.
There was a joint arrangement. I treated it as Joint Venture as each company has equal shares and contribution to the Joint Venture. About the derecognition of assets I wrote that, it such sale of an asset to other company at fair value, so gain should be recognized(not sure whether it is correct).
Unfortunately, I recognized cryptocurrency as Financial Asset(but it is intangible asset), and said further recogniion will depend on business model of the company(whether at amortized cost or fv through profit or loss)
I have no idea about the amendment to Defined Benefit Plan. I wrote common sense, why calculation of net interest cost and current service cost is important. I calculated current cost at adjusted value 6 million and net interest cost at year end value x discount rate.

Q4: It was about ROE measure. The first part was about accounting policy and I wrorte here common sense why some companies choose different accounting policies.
Calculated ROE measure as Net Profit/Equity as all other figures eliminates itself in the formula. I only adjusted Net Profit figure by subtracting share of profit of associate and equity part by adding back shares which company has bought back.

All in all it was difficult exam. Past Papers were much morer easier. Hope will not fail

For the license I stated that the revenue should be recognised over time as the customer simultaneously received and consumed the benefits

@jessicafraser said:
I had calculated the FV of the building as 23 mil – do you not deduct the demolition costs of 1mil from the market value of 24mil to get the net amount? This is the cost to bring the asset to it’s highest and best use (residential use). I may have misread the question though!!

Ditto – i also got $23m. IFRS 3 explicitly states to expense any acquisition costs to the SPL.

This right here is how I felt in the exam room!! Graham Holt what was that??