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Who had the question on the emissions rights grant? Didn’t have a clue on that one
All my questions were intangible assets ffs probably weren’t even but that’s what I picked up on lol
I had the emissions grants one – thought it was quite interesting!
I wrote that it was a provision of 77,000 since they went over by 1,000 tonnes and it was a requirement by gov made in the beginning of the year (past event) with a penalty of breaching the limit (present obligation) and it could be measured reliably at $55 x 140% mark up penalty.
They also wanted to recognize a contingent asset but cant because IAS20 requires proof of government acceptance on the request by the company.
For the Q1 groups consol did anyone get a negative goodwill? I couldn’t figure out how to get goodwill with 2.10 per share x 8 million shares = 16.8mil consideration and FVNA = 20 (with the tax effect?) wasn’t sure what to do with the DTA.
Q4 was crazy – could hardly think of what to write about the APM of underlying PBT but just went ahead with usefulness and broke it down via conceptual framework.
That’s interesting my mind just went blank. I was focusing on how to account for the rights granted by the government, was this an intangible asset? I got the bit regarding disclosing the contingent asset.
Yes on the groups question I got a negative goodwill using the fair value method. I couldn’t figure out how to calculate the FV of NCI as there was no share price given?
Wow the exam was very very refreshing as always 🙂
First question unrealized tax losses ?
The rest for consolidation quite straight forward
The ethics was weird, can’t generate too much from different issues, the scenario was quite repetitive
Government grand , I think I stepped on it quite long , I showed 40,000 tones as a deferred asset and calculated its FV based on price given on 1 Jan, not sure amount it at all but I sounded reasonably for me on that moment
It was something about the option and less back just skipped it, not my cup of tea 🙂
Revenue recognition quite straight forward
Justify why the transaction is not a lease and not intangible asset, pretty good
Question about APM what a mess! Very very general question and speaking about everything and nothingAh yes the rights should be an intangible asset
For FV NCI I just did two ways – under prop net asset approach:
FV NCI at acq = 20% (their share) x FVNA of 20 = 4
FV approach:
FV NCI at acq = 4 + NCI goodwill of -0.8 = 3.2
NCI goodwill = 20/80 x CI goodwill… so 20/80 x -3.2 = -0.8
how about the loan that was repayable only if certain conditions in development were met? what was that about??
Such a tricky one but not sure if the rest of you got something along similar lines:
The loan was received on 1 Jan X7 to be repaid on 31 Dec X8 at $10mil.
So I discounted the loan back 2 years @ 0.826 discount rate. Unwind each interest expense every year for 2 years through an amortized cost table and it should end up with the final amount at $11 mil repaid back including interest of 10%.
Which sort makes sense since 10 mil + (10% x 10) = 11 on 31 Dec X8. It’s likely that the loan will be repaid since they signed some agreement to make sure it met the regulation approval thingy.
It was a really difficult paper, even the put option element (which I said was a financial derivative liability) was so out of the ordinary from what we were used to
So challenging! SO MUCH about intangibles, it didn’t seem balanced at all.
No group consolidation, NCI, cashflows – a lot of theory not many calculations at all just a goodwill working for 5 marks.
The first question was to recognise if the following in the acquisition:
customer relationships & contracts – I didn’t include but now thinking it should have been as it stated it was measured reliably.For the manufacturing unit that was sold two months after, I put that it was a discontinued op – does that get included in the net assets on acq?
Then a retail function that was not ready to sell for 11 months so didn’t recognise as a disc. op. and included in net assets at FV.
The question then went on to say what do you do in x6 and x7. I simply just didn’t have a lot to say and then wasted so much time!
Any thoughts on the share-based payment where the employee paid for them by a loan plus interest?
UK FRS – were you supposed to impair the loan even though it was in the following year and only the interest?
Completed ran out of time for the CGU question at the end.
ARGHH not varied at all. The other version sounds a lot nicer
There was a question whether the government auction was an active market? I said yes but I wasn’t sure.
Also the question about sale agreement and warranty did not have a clue! I said a warranty should be accounted for as a provision but that’s it.
APM question mentioned that it’s helpful for comparison but also didn’t know much.
The good will calculation. The P’s investment (80%) was $2.10 x 8m= $16.8 then the NCI was $2.10 x 2m= $4.2 (FV) then taking off the NA at $20 gave a goodwill of $1m…No?
Did anyone get the question asking what the treatment was of the 2 year software Contract? The question said it wasn’t a lease or Intangiable, so what was it?
No you’re right, sorry I was mistaken on the goodwill calc. ahhhhh careless marks lost
FVNA = 20
80% share x 20 = 16
COI = 16.820% share x 20 = 4
FVNCI = 4.216.8 – 16 = 0.8
4.2 – 4 = 0.2
Goodwill (FV approach) = 0.8 + 0.2
Goodwill (Prop NA approach) = 0.8I got this one. I thought that given they only had access to the software and not control that the expense should be spread over the 2 years of the contract with the initial cost being a prepayment
I said to treat it as a prepayment over the 2 years as well! After the exam I was thinking I messed that question up!
Considering how big the topics are at SBR and that tutors keep telling us to learn a bit of everything, not a lot actually came up for me apart from a tiny bit of consolidation (mainly NCI calcs), revenue, APM, ethics, intangibles. That’s it I think…
Goodluck to everyone! 🙂
Not to worry about! You get more marks for the writing than the numbers on SBR anyway.
I thought the APM question was fine – they shouldn’t give APM more prominence than IFRS (which they did by putting it in bold), nor should they give an over optimistic view of company performance. And the question said specifically about usefulness and appropriateness to investors – that bizarre speculative statement on what profit could’ve been wasn’t appropriate and giving a misleading view of profits when really you are loss making is just trying to mislead investors
dominiquehooper wrote:So challenging! SO MUCH about intangibles, it didn’t seem balanced at all.
Yes this is paper that I got too. I couldnt believe how much was on the paper about intangibles, goodwill and impairment kept popping up everywhere. I spent more than I really had to be strict with myself and force myself to move onto the next question just I made sure I answered everything. Have to say I was happy that cashflows didn’t come up, wished that there was a little more variation on the paper since there’s so much in the syllabus to cover.
There was also a question about Gymadvisor – it was an ethics question to do with the customer data breach and how the finance director & company should have dealt with it.The time really flies and no matter how many ACCA exams you do, still cant find that balance of time!!!
why did you do 55 *140% as 40,000 were given by gov and 10000 were purchased i guess so shouldn’t it be 5*140%? also for inital 50000 were they considered as government grant?
Frooti wrote:why did you do 55 *140% as 40,000 were given by gov and 10000 were purchased i guess so shouldn’t it be 5*140%? also for inital 50000 were they considered as government grant?
Q mentioned a penalty of 140% on the price per tonne of the grant and it was 55 on 31 Dec. They had 40,000 initially and purchased 10,000 extra so 50,000 tonnes within their rights limit. They then used 51,000 tonnes by year end hence exceeded by 1,000.
From what I understand 1,000 x 55 x 140% penalty = provision recognized
I also don’t think the emissions right can be grant because it needs to be offset against a PL expense or if it’s an SOFP be written off against carrying value of the asset the grant is for. I can’t identify a specific expense or asset for it to be written off against where it would recognize it as deferred income which couldn’t make sense since there was no receipt of funds or a reduction for the asset/expense. Any thoughts? I wrote it was an intangible because it could direct the activities of the emission in operations and had probable Econ benefits from the rights and cost can measured reliably with no physical presence
Did the afternoon exam. Can someone explain the the goodwill bit. So it was customer contract at 0.5m and then they had fair value of expected customer contract renewal of 3.6m. Not sure if the 3.6 gets added to goodwill?
Also didn’t understand for the facility it still had the 0.5m of contracts to complete before it could be sold?
I was focusing on the usefulness of investors so just benefits of APM rather than drawbacks. I said it’s useful for comparison, decision making preventing risks. I also said apm is voluntary which improves the reputation of the company
I think I tackled this question from the wrong perspective. Would you please let me know?Jessica1997w wrote:I was focusing on the usefulness of investors so just benefits of APM rather than drawbacks. I said it’s useful for comparison, decision making preventing risks. I also said apm is voluntary which improves the reputation of the company
I think I tackled this question from the wrong perspective. Would you please let me know?We couldn’t state general facts about what APM was or what benefits could be obtained from it i.e. preventing risks etc or improved reputation I think (esp in SBR)
I had the exact same points as @catherinemulcair for the APM – I discussed that there was a serious issue with it being useful.
The issue was a disclosure uselessness problem with no benefits as to what the co’s underlying PBT was trying to do. Impairment and redundancy costs are operational and reflective of the co.s performance, users analyze an FS to assess the performance of a co. during a recession specifically to make decisions catered to a recession. Adding it back would only show a hypothetical picture of a company without a recession but is completely useless if you think about what that number even means from a decision making and forecasting point of view. The primary elements of usefulness (relevance and faithful rep) were clearly compromised.
I referred to enhancing characteristics – mainly a lack of understandability and verifiability due to it not being regulated under IFRS (essentially what an APM is) and a lack of comparability between other airlines amidst the recession due to subjective judgement entries.
Hope this helps!
Sorry for the spams – just gonna leave this here and see if there are any responses to the series of posts before I forgot everything tomorrow
For the active market one I said there was no active market for the government right sales – the Q had some required reference to IFRS13 Fair value measurement if I recall…
1. Only companies trade the rights and it was not frequent enough as stated in the Q
2. IFRS13 requires it to be an orderly transaction between buyers and sellers
3. Government mandates the price to be sold and not the market participants,
4. Hence FV is difficult to measure through the market approach and I mentioned something about it being an exit price onlyI can’t remember the details of the sale agreement and warranty but yes a warranty is a provision!
I think this question per total was quite hard..very confusing! Not felt like it was easy marks on the pick!
Question one some deffered tax, then NCI calculation using FV and Proport, Goodwill calcu.
Then an acquisition of a sub, + 10% more, so control to control transaction. Fair question
Question two -Ethics but a was something on sale and repurchase -sthing with option, and then sale and warranty+ ethic issues and actions.
Q3- Q4 cant remember very well but had cloud computing software if Lease or IA. And how to account for it.
Then something on development of synthetic fuel , with borrowing costs and government grants.
Plus APM’s and the usefulness of Profit before tax.Hi, All,
I am quite new – but were there different variants of SBR INT exam? I hardly recognize tasks you discuss here.
In my SRB INT:
1) Task 1 a long question with how to recognize facilities, division of sales and IA on consolidation with a goodwill calc wich was rated only for 4 points
2) Ethical task with role of Finance Director in a data breach episode
3) Task with share options for employees and loans to employees with a loss allowance calcualtion
4) Sustainability report and DEvelopment costs on a film production + impairment of goodwill on a gameI dont think tasks were too difficult but there is not enough time to answer all definetely. There were strange question on FV of contract assets with customers which were somehow calculated however those contracts need to be completed for further 11 month – how does this comprise in individual and consolidated FS? No clue.
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