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Hi Sir,
Hope you had a nice weekend. Would you please help to answer BPP Kit (Financial Reporting) Sec A & B Questions as below? Cheers!79. Why don’t we need to consider the Depreciation element of the Special Plant in this question?
82. The answer says “Cost to date” deducts “Loss to Date”. But the figure in the answer put on for “Loss” to date is “3”, which is the Total Loss. Why the Loss to date figure is not 3*40%= “1.2”? Is the answer wrong?
84. Which has been correctly included in Revenue according to IFRS15 Revenue from Contracts with customers.
Why the answer D is wrong?93. Which is not considered at FV of NCA (according to IFRS13).
Why the answer is not “A: The characteristic of the asset”?
Why the answer is “B: The price paid to acquire the Asset”?99. When we calculate the Premium(Cash Repayment) for the first year, why do we need need to use Principle amount 550,000*6%, not Fair Value 500,000*6%?
Also, what does “Principle amount mean?132. The Question asks “Profit or Loss Income Tax Liability”. What does it mean? I assume Income Tax Liability is in SFP, not in P/L? Why it put them together?
Also, how can we deal this question by T account?170. Which is Not giving rise to a Temporary difference.
*Why cannot we choose “D”(Revenue included in accounting profit when invoiced but only liable for tax when the cash is received?
*Why should we choose “C”(Accrued expenses which have already been deducted for Tax purposes)?
Can you please explain and give an example?Thank you very much for your help.
Hi,
It was a great weekend, thanks. Always is when Liverpool win the Champions League!
79. It has been considered as the specialist plant is depreciated from 8 to nil, and they’ve deducted the 8 in the calculation.
82. The answer is not wrong. The 6 is the contract asset, which is reduced by the loss of 3. Losses are recognised in full immediately.
84. The sale should be recongised at present value, so you cannot recognise the amount in full. There is a financing element to the transaction that needs to be recognised.
93. That is what is stated in the standard and I think it is more relevant to SBR than FR so I’d not worry too much about it.
99. The coupon rate of 6% is applied to the par value of $550,000.
132. It is asking for the tax expense in the statement of profit or loss.
170. If an expense is recognised and is also deducted for tax purposes then they have both gone through PBT and PCTCT so no TD. A simple utility bill accrual would be an example. If we’ve included revenue it is in PBT but if it is not taxed until it is received then it is not in PCTCT and hence a TD. Overseas dividend income is something similar to this.
Thanks
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