SBR*** December 2021 ACCA SBR exam – Instant Poll and comments ***

Totally a million % agree! I looked through and thought there must be easy marks but hardly! Grrr. So unfair. Took ages just to comprehend what they’re asking!

Firstly it was a very difficult exam versus previous papers and study book examples. If you don't understand the business or can relate to it then in exam situation it throws you off. Even the cashflow statement - loads of previous examples of acquisitions and actually preparing a statement from the notes but this was totally different and harder in my opinion. Not absolutely fair in a time pressured situation I don't think. The ethics part in 2nd question was fairly simple. The forestry company was setting up for ESG when asking about important to investors of risks etc. Thats why they picked a 'forestry' company i.e. sustainability. The crypto's was confusing - cryptos are not financial assets so nothing to do with IFRS9 and don't really have a standard - they are intangibles so that would imply IAS 38 but this was a crypto broker who holds tokens in normal course of business so surely this would be Inventories IAS2? (account as lower of cost and NRV in that case) I thought the question on the deferred tax asset was also hard than normal as the business model of the company was confusing to understand before even getting to the question which for me killed time.

Very difficult exam. I practiced a lot of examples and attended revision classes but this was nothing like them. I think we are being challenged by this exam

I found this on PwC article - identical near enough to question in exam.. Background Real London enters into a loan agreement with Madrid United, whereby Yazenito, under contractual agreement with that club, would temporarily be transferred to Real London for a two-year period. There are no ‘call back’ options. As part of the loan agreement, Real London agrees to: ? pay €100 to Madrid United, and ? take over responsibility to pay Yazenito’s wages, amounting to €200 per year for two years. The loan agreement contains an unconditional obligation to transfer Yazenito at the end of the loan period permanently. The fee to be paid to the former club for the permanent transfer amounts to €500, payable at the end of the two-year loan period. Management has determined that each of the components of the agreement are priced at market value. How should management account for this transaction? Accounting for Real London In substance, the loan constitutes a permanent transfer, because there is an unconditional obligation to transfer at signature but there is a deferred payment arrangement (Framework para 4.6). There are no circumstances in which either club could elect to cancel on the arrangement. It would then be appropriate to account for the transaction as a permanent transfer (see solution #1) from contract inception, when control of the registration rights has transferred to Real London. Real London would capitalise the present value of the total payable (€100 + €500) and amortise it over the full player contract term. If the components are not priced at market values, the total consideration would be assigned to each component (that is, in this case, to the consideration for purchase of the registration rights and to the employee benefit) on a relative stand-alone selling price basis. Accounting for Madrid United Similar to the above, and since the arrangement constitutes a permanent transfer, Madrid United should derecognise the intangible asset (player registration rights) when control transfers to Real London, resulting in a gain or loss on sale being recognised. The gain would be calculated based on the present value of €600.

Just to add this is solution for 'Permanent Transfer' IAS 38 paras 8, 12, 21, 27, 97–99, 112–116 IAS 32 para 42 IFRS 15 para 56 Solution Accounting for the ‘recruiting club’ (Real London) As part of a player’s transfer, Real London incurs various costs to register the player with the local football association. The player’s registration rights meet the definition of an asset, because they are a resource controlled by Real London, and they meet the definition of an intangible asset in paragraph 8 of IAS 38, because they arise from legal rights (IAS 38 para 12) and lack physical substance. The asset is recognised when control transfers to Real London and it is probable that economic benefits will flow to Real London (IAS 38 para 21). Judgement is sometimes needed to determine when control has transferred. Indicators to consider might include notification from the local league, or conditions in the transfer agreement. The costs directly attributable to the purchase of the registration rights are capitalised, including (but not limited to) the transfer fees paid to Madrid United, for an amount of €1,000 (IAS 38 para 27). In accordance with paragraphs 97–99 of IAS 38, player’s registration rights would typically be amortised on a straight-line basis over the rights period, corresponding to the term of the contract that the club has signed with the player. The original amortisation period might be revisited in case of an early renewal of the player’s contract. Real London is not impacted by the sell-on clause between Madrid United and Olympique Milan.

I feel like it’s not a permanent transfer but more of a « on loan player - temporary transfer » no? I said it was intangible asset but thinking back about the exam I guess it was a lease because there was already a question testing intangible asset for development costs and promotional costs. They use to test different ifrs in each question in each exam so for me it was a lease. Arrrggghhhh

Hi all, I had the same exam version with crypto as most of you. I have answered in following way for harder part of questions: Question 1 a) (ii) Calculation of the profit: Net consideration: 35,000 FV of interest o retained interest: 1,000*5(market price)*0,8(FV of losing control)=4,000 Net asset: (45,000) Goodwill: (3,600) NCI using Fair value method (10,000*20%*5(it is not including the losing of control): 10,000 Profit: 400 (iii) CF Adjustment CF from operations: 146.4 Working capital: deduct all working capital of subsidiary(IFRS10) Contributions into Benefit plan (12) Financial asset increase: (15) - this is not operating activity and it should be divided into: (3) acquisition of the bond on reporting date- investing activity in minus and no interest in financing activities as acquired on reporting date (1) acquisition of new financial asset- investing activity in minus (6) increase in the value of associate and it is non-cash event. Therefore, no impact on CF and only dividend from associate for 1 should be recognized in investing in plus (5) the deposit was made in April, hence investing activities in minus and interest to financing for half a year The remaining adjustments were easy ones Question 2 b) The accounting treatment for FC Gate Co for the transaction over 3 years: In Kaplan Exam kit there was similar question with player contracts and football club. It would state the player contracts should be recognized as Intangibles Assets. However in this question I wrote that important to determine under IFRS 15 Revenue if the transfer was a sale. The hard part was that usually in exam questions the entity sales something and in this case there was a buyer.... I concluded it was not a sale as there is no obligatory of purchase a player after expiry of contract, therefore it should be treated as leasing under IFRS 16, where PV of liability(7,000(initial payment)+2,600 per year discunted by 5% should be ROU depreciated under 3 years. The initial payment should be included in calculation as transaction was at reporting date 31.12.2017 and contract starts on 1.01.2018. Therefore it should be recognized... I think I might be wrong... c) the government grants as of 31.03.2017 and 31.03.2018: (i) Company received decision of obtaining the grant concerning the stadium in December 2016, however final condition was met in July 2017. Therefore grant should be recognized in 2018 as deduction from total costs or def income. As of 31.03.2017 there was not reasonably assurance and it should be not recognized as it is not virtually certain (ii) Grant refers to cost incurred in March 2017 and was received in July 2017. I wrote that grant receivable as compensation for costs already incurred, should be recognised as income or retained earnings in 2018 (iii) I do not remember Question 3 (a) There was a scheme under, which Lucid(forestry company) is financing it liquidity towards the supplier of trees via reverse factoring. The question was, whether liability towards the bank should be trade payables or debt. For me it was easy one as i have recently wrote FM and there are factors that indicates that is debt: - the repayment period of the reverse factoring liability is significantly longer than the normal payment date. Lucid has 90 days to Bank and on invoice was 30 days - interest is charged by the bank and interests were 7% (b) Under IAS 12 Company can recognize DTA to the extent of that it would be used against a profit. Current law stated losses from prior year can be carried forward indefinitely, however the is possibility to change this to limit it to 3 years. As of the reporting date there was significant historical losses, potential tax law changes and no profit in near future Company cannot recognize DTA. Question 4 (a) Crypto asset disclosure requirements - Just wrote the faithful presentation and relevance of FS disclosure. (b) Whether the development cost and promotional costs can be capitalised as intangible asset. The development of trading platform meets the requirements of IAS38 for capitalisation as it is providing economy benefit. The promotional costs should be expensed to PL C) I just wrote that the token can be treated as crowdfunding, where the profits are gained on % of transactions in the market by the Company. The investors [provided money to company for token, however in exhibit there were two times stated that it is not equity. Hence I treated is a liability and made following journals( DR Cash 1mln; CR Liability 1mln)(DR Cash 9mln; CR Liability 9mln) (d) The program was an employee benefit rather than a share based payment, because it not includes equity instrument in a settlement of transaction(in point C it was also important that token was not equity instrument)

i think the fact that as a group we still cant quite decide the answer, even after googling, shows how poor the exam was. These exams need to be clear cut demonstrations of learning the syllabus. ive discussed the questions with many of my fully qualified colleagues and even they struggle to know how to understand the questions and how to answer them.

I think the exam was ridiculous, questions were written far too complex to understand, even question 1 threw me with the cash flows being so many marks as it seemed the majority or transactions were to be investing transactions not operating..the forestry one was far too lengthy and confusing took a good bit of reading to fully understand the situation before making a start, and again a lot of marks for this the payables vs loan question was written confusingly again to the point where it needed a diagram to be understood, and the question on crypto, well no further comments needed really what a disaster of an exam hoping we all scrape a pass what will acca do if so many students perform poorly?

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for the debt or payables question, the company has the ability to withhold payments to the bank if the quality of wood is no sub standard. if this was debt, then the company would not have this right? this is and executory contract with the bank. the payable to the other company was settled and stock transferred to the bank.

Hi all, I had the same exam version with crypto as most of you. I have answered in following way: Question 1 a) (i) Concerning the Fair Value, the difficulty relates that the sale subsidiary caused loss of control, which is not taken account in a market share price of subsidiary. In accordance with IFRS13 the Level 2 prices had to be used, which is observable for disposal of similar sized companies, which includes losing the control. (ii) Calculation of the profit: Net consideration: 35,000 FV of interest o retained interest: 1,000*5(market price)*0,8(FV of losing control)=4,000 Net asset: (45,000) Goodwill: (3,600) NCI using Fair value method (10,000*20%*5(it is not including the losing of control): 10,000 Profit: 400 (iii) CF Adjustment CF from operations: 146.4 Working capital: deduct all working capital of subsidiary(IFRS10) Contributions into Benefit plan (12) Financial asset increase: (15) - this is not operating activity and it should be divided into: (3) acquisition of the bond on reporting date- investing activity in minus and no interest in financing activities as acquired on reporting date (1) acquisition of new financial asset- investing activity in minus (6) increase in the value of associate and it is non-cash event. Therefore, no impact on CF and only dividend from associate for 1 should be recognized in investing in plus (5) the deposit was made in April, hence investing activities in minus and interest to financing for half a year The remaining adjustments were easy one b) The dispute with supplier- that is typical question from AA/AAA exam, where the Company is obliged to adjust the FS after reporting date and before the publishing, if the subsequent is classified as adjusting event. The event occured in reporting year, hence it refers to that period. Question 2 a) ethical issue relates to lack of professional behaviour and competence. FD also demonstrated the breach of integrity and objectivity(did not tell the holding that there a liquidity problems) in his judgement of FS and non-compliance with other laws. The going concern and law non-compliance is at risk. Moreover I have added few sentences about lack of knowledge about the hedge(lack of competence as qualified accountant) b) The accounting treatment for FC Gate Co for the transaction over 3 years: In Kaplan Exam kit there was similar question with player contracts and football club. It would state the player contracts should be recognized as Intangibles Assets. However in this question i wrote that important to determine under IFRS 15 Revenue if the transfer was a sale. The hard part was that usually in exam questions the entity sales something and in this case there was a buyer.... I concluded it was not a sale as there is no obligatory of purchase a player after expiry of contract, therefore it should be treated as leasing under IFRS 16, where PV of liability(7,000(initial payment)+2,600 per year discunted by 5% should be ROU depreciated under 3 years. The initial payment should be included in calculation as transaction was at reporting date 31.12.2017 and contract starts on 1.01.2018. Therefore it should be recognized... I think I might be wrong... c) the government grants as of 31.03.2017 and 31.03.2018: Under IAS20 a government grant is recognised only when there is reasonable assurance that the entity will comply with any conditions attached to the grant and the grant will be received. (i) Company received decision of obtaining the grant concerning the stadium in December 2016, however final condition was met in July 2017. Therefore grant should be recognized in 2018 as deduction from total costs or def income. As of 31.03.2017 there was not reasonably assurance and it should be not recognized as it is not virtually certain (ii) Grant refers to cost incurred in March 2017 and was received in July 2017. I wrote that grant receivable as compensation for costs already incurred, should be recognised as income or retained earnings in 2018 (iii) I do not remember Question 3 (a) There was a scheme under, which Lucid(forestry company) is financing it liqudity towards the supplier of trees via reverse factoring. The question was, whether liability towards the bank should be trade payables or debt. For me it was easy one as i have recently wrote FM and there are factors that indicates that is debt: - the repayment period of the reverse factoring liability is significantly longer than the normal payment date. Lucid has 90 days to Bank and on invoice was 30 days - interest is charged by the bank and interests were 7% (b) Under IAS 12 Company can recognize DTA to the extent of that it would be used against a profit. Current law stated losses from prior year can be carried forward indefinitely, however the is possibility to change this to limit it to 3 years. As of the reporting date there was significant historical losses, potential tax law changes and no profit in near future Company cannot recognize DTA. (c) question relates to the investors risk in face of Management estimation and judgements, so I described Conceptual Framework and IAS37. Question 4 (a) Crypto asset disclosure requirements - Just wrote the faithful presentation and relevance of FS disclosure. (b) Whether the development cost and promotional costs can be capitalised as intangible asset. The development of trading platform meets the requirements of IAS38 for capitalisation as it is providing economy benefit. The promotional costs should be expensed to PL (c) I just wrote that the token can be treated as crowdfunding, where the profits are gained on % of transactions in the market by the Company. The investors [provided money to company for token, however in exhibit there were two times stated that it is not equity. Hence I treated is a liability and made following journals( DR Cash 1mln; CR Liability 1mln)(DR Cash 9mln; CR Liability 9mln) (d)The program was an employee benefit rather than a share based payment, because it not includes equity instrument in a settlement of transaction(in point C it was also important that token was not equity instrument) I must agree with you that questions in this exam were quite strange in comparison to prior exams... Also there was not many calculations to do. Hope everyone will pass

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Participants will have the opportunity to give feedback now as the emails requesting feedback from ACCA will be out soon. I do think they heed the feedback, at least I hope they. Leaving aside the unusual and confusing nature of the questions, a big issue for me was the time available to attempt 100 marks while also trying to untangle a riddle which is not at all realistic in any employment situation.

I think the questions were okay but appears that some people got the bad paper. Firstly, setting two different papers isn't fair learning assessment. Same thing happened on Monday with the audit paper, our risk question was an absolute disaster while others got Bus. Risk and M/MM... Back to SBR question Q1 - calculated the goodwill and ran out of time (i did this question last) Q2 - Ethical issues with development and implementation of analytics tool (similar to big data). basically talked about confidentiality issues (privacy and security), cost (could be self interest threat), professional competence (using to draw up FS could create risk of manipulation, also used conceptual framework in that new systems could produce unreliable or incomplete data if to managed Q3 - PPE, Impairment and IAS 8 change in accounting estimate relating to the UEL IFRS16 -i thought the question was vaguely worded so i just applied lessee accounting and gave it ROU and LL included subsequent treatment. Then put in a one liner for IFRS1 first time adaptation. Debt to equity impact IFRS 13 fair value was vague also, so just discussed determining FV of Inv property to be using 'highest or best use' and not company data so not compliant with rules for NFA under IFRS 13. The for the investments should prioritise level 1 inputs and level 3 should be last resort. Q4 - Share based payment - yeah i just included learned definitions for 4 marks and did my calculation but i separated the tax treatment because i wasn't sure Then the inventory purchased, i called it Equity settled, not sure but well i attempted the questions in this order Q2, Q3,Q4 and Q1

I hope we all pass

oh yeah.. also for ethics i talked about the integrity of finance director not reporting similarity in the name of the software could result in legal disputes

Yeh had the email for feedback earlier today. Gave my honest feedback but cant imagine it will help.

Had the same question! After reading what others got for their exam believe that it is unfair to complain about our version but still, the whole paper was confusing. Wish everyone GOOD LUCK!!!

God bless and good luck to me, this is the second to sit the exam, hope for the miracle!!!

Seems like you are the only person in this whole thread with the same exam as me. Goodwill - This was ok just did the translations, I reckon some of the rates I got wrong.. Did u get 24m USD for goodwill? It was strange the HR was 1:1 for dinar : usd so it basically stayed the same, did u find the same? (For GW) then assets translated at CR. Btw did u alsonthrow a lot of definitions in there...I put a lot like control definition and IFRS3 etc presentation currency IAS 21 etc TCI for NCI (9 marks) My worst question I probably got 1-2 mark here from definitions if I'm lucky But I moved on pretty quick once i got stuck because from experience I knew what would happen if I tried figuring it out any longer beyond the 9x1.8 mins EPS- What did u say in the eps question? I just defined eps and diluted eps and talked about share based payments could increase the denominator in the eps formula and thus impact diluted eps because of the "potentially outstanding shares" I also said investors see diluted eps as "worst case" and I said basic eps wouldnt be impacted IFRS13- Question with Alternate Co, I mentioned like u the fv hierarchy but because question specifically mentioned business model and financial assets I talked about the ifrs9 business model thingy Like held to collect only is amortised cost and held to collect and sell is fvtoci etc Did u say similar thing? SBP- The calculation question was equity settled right? I got caught off guard by the "cash settled" tax liability part...but if the whole calc was cash settled it would've been SARs that were issued to employees not share options no? For the calc I did the usual formula with the expense being the balancing figure but I messed up something with the vesting period elapsed Sale of trademark- Did usay IAS 10 events after the reporting period? There was a court case that was settled right, did u say adjusting event? I.e they had to adjust financial statement Internet domain name- I said the obvious IAS38 intangible assets etc I said also they made the right choice not to capitalise cost because internet domain name is not internally generated intangible asset and even then it would not be r&d and even then only the development phase expenditure can be capitalised IF the PIRATE thingy applies What were your thoughts? SBP- purchase raw cotton I think ur right ...it was IFRS 2 equity settled... I think I got this wrong.. I said IFRS9 ...I thought it was a futures contract because the entity was a manufacturer and raw cotton is a commodity asset...sigh.

Quote" I feel like it’s not a permanent transfer but more of a « on loan player – temporary transfer » no? I said it was intangible asset but thinking back about the exam I guess it was a lease because there was already a question testing intangible asset for development costs and promotional costs. They use to test different ifrs in each question in each exam so for me it was a lease. Arrrggghhhh" I don't think PwC would be wrong lol I wrote it was IFRS 16 lease also but this is wrong

I'm doubting an aspect of the crypto question now. Can anyone remember the specifics of the part about $1m from early investors and then 9m more from ICO. There was some percentage share going on somewhere? Anyone recall the specifics? Thanks

I vaguely remember the 1m. It said something along the lines of the company offered the tokens at 90% value to the investors in order to raise funding. If 9m worth of funding wasn’t raised then the icos were abandoned and so had to be paid back by investors by 30 September X6, They then told us that at 30 September X6 the company managed to raise 10m of funding. One of the questions was how to account for the funding, I genuinely had no idea.

I think you DR cash CR Liability at point of receipt, but then you have to wait until the condition has been met at which point DR liability CR income statement

Reply to abcd1234eg The forex is not 1:1, it is 1.1~ It is not adjusting event the court case decision dine after the fs being authorized. Also for the Internet domain, it is an intangible purchased by the entity in the question, it is not internally generated, the way you discuss you completely wrong. Nothing to do with r&d or pirate. It should be accounted at cost, and should use cost model and reval model unlikely due to inexistence of active market. Also the useful life need to be judged

thatnixonkid wrote:I think you DR cash CR Liability at point of receipt, but then you have to wait until the condition has been met at which point DR liability CR income statement

I think at the initial when conditions were not met, it should be treated as a liability since refund was probable. However, after the condition was met, there is no refund plus the company oferred to give them part of the profit of about 10% probably as dividend. At this point, I said it should be treated as equity.?????

That was the hard part the question with the tokens as they cannot be treated as equity. It also relates to last question, which asked why the tokens graned to Directors was not Share Base Payment and were Employee Benefits. It was stated in exibit that tokens are not equity instruments. Also there was not any information that tokens are not refundable…. If tokens were equity, it would be simply share issues(tokens). Then DR 10mln Cash and CR 10mln Share Capital(Or Share Premium). However I wrote that this liability, which has to returned with profit to investors. Company will only retain % of profits.

It was a really tough paper and also a very lenghthy, like 10 mins reading time would be required for each question and might not seem enough. Its quite unfair dat u prepared so much and then gets bumped with time management. Q2, 3,4 carried less marks but looks like the equivalent of question 1. Q1: Consolidation of foreign subsidiary, goodwill calculation, intragroup interest free loan, deferred tax asset There were many requirements in respect of foreign currency translation and its accounting treatment Q2: Ethics and course of action, a finance director which is a qualified accountant, is not presenting all facts about a new product - an internet domain (WCOS) to its board of directors. The domain contains a spyware, resembles that of a competitor and other issues. FD hides all these issues from board. Another part was on competitor suing the company for copying their domain and out of court settlement was made. Q3: A very lenghthy question iro a transaction with a complex diagram/chart to illustrate same and a lot of info to read. Was about a financing arrangement where A buys on credit from B and B enters into a transaction with the bank to recover its debts. A has to pay the bank the amount due. Q4: Another lenghthy question about a forestry company, contained materiality judgements, defined obligations, restructiring costs

Me too got same question, i wasted like 5 to mins trying to make sense of the diagram and then theres the additional load of info that you have to read and grasp. Me too i feel lik you, i cant understand why they put such a lengthy question. We hv 3.15mins n not 4hrs! Its seems to be a factoring arrangement from a general viewpoint, but i dont know hw to account for it