FR*** F7 December 2013 Exam was.. Post your comments ***

Shit - school boy error.....

I got my goodwill at -3700. Did anyone get that figure? I just hope for a 50 for this paper. Aiks.

Bugger you are totally right, surely that'll only be 2 marks for getting the Goodwill wrong when everything else balanced?

@simona121: You mixed up Q3 and Q4. Q3 was about cashflows whereas Q4 was about qualitative characteristics and leases. Q4, a: there are 2 fundamental characteristics: relevance and faithful representation. There are 4 enhancing qualitative characteristics: comparability, verifiability, timeliness and understandability. I didn't answer what the difference between fundamental and enhancing characteristics is, but I just checked my book and it says that the enhancing characteristics are implied by faithful representation. Q4, b, i) as you point out, this was a secured loan. I believe Q4, b, ii was an operational lease since the risk was transferred and there was no obligation to buy back the property and no incentive to do so (i.e. they would have to buy it at fair value). Q5 was not about EPS... :) It was... again about leases. There was an operational lease. a) required you to explain how to account for it (in words) [4 points] and b) asked you to state quantitatively the impact on the financial statements [6 points]

@ grahamdchild, I may be wrong but i think we had to add the PNL of $4600 to the R/E as per BS to get R/E b/f in the goodwill calc. my reasoning was, 1. to get the R/E per BS at year end the PNL must have been deducted from the R/E b/f to arrive at that figure. so to get the R/E b/f i had to add it back on. then i also time apportioned the Loss for the year to get that pre acq loss on date of acquision. i may be wrong but it made though i had something like FV of SNA @DOA share......................................................................6000 fv adjst. .....................................................................2000 ret.earns b/f................................................................xxxx .....( dont remember figure but R/E per BS - PNL of 4600) ret earns/Lossfor 6months ...............4600/2......(3200) something like that

was it 1.50 or 1.35 cash per share?

Pup plz in q1?? And the intra group sales to be eliminated?

Frank you are totally right, it was such small oversight at my end.... so even though I balanced - I balanced with an error hopefully I won't forfeit to many marks

Cosmic, I got my Pup to £600, and I think I removed 9K or 8K from Revenue and Cos, can't remember

More on Q5: it was an operational lease for 20 years started 12 years ago. The tennent made substantial improvements for 7 million. And there will be costs in the future (in 8 years) to convert it back. The present value is 5 million. The questions asked how to treat the lease, the building works and the costs to convert back. In my opinion, the solution is to add 7 and 5 together (12) and charge deprecation over the remaining 8 years, i.e. 12/8 = 1.5 m per year. Then you also had to pay the operational lease (400k per year or so). Statement of financial position: assets: 12 - 1.5 depreciation = 10.5 I'm not sure if this is correct though... One thing that's not clear to me whether the discount on the 5 m has to be unwound. I'm also not sure if capitalising the 5m was correct, although I believe it is. Or should it have been charged as a provision to liabilities. Hmm, yeah, maybe. I guess the 5m should have been a provision and it should have been increased every year by unwinding the discount. But only the 8% interest figure was given, so figuring out the discount isn't that easy (definitely possible tho).

Frank...to confirm... Pre acq = $14,300 Post acq losses $2300 and had to be adjusted for the add dep and pup

This paper was relatively easy compared to other pass papers i have seen as this mainly calculation less commentory once you know what to go where you should pass it. with that said however i can say i completely failed this one! contigent asset many would say was the trick but i believe i was correct in using the 1.5 instead of the 1.8. there was a loss on the retained earnings for the year so between it and the negative goodwill i dont know. then the negative goodwill should be canceled from retained earnings the only example i did with negative good will it was deducted from operating expenses in the P& L so what did i do with it. just made a note. how does the negative good will affect the value of the NCI. i failed this paper miserably. i didnt time aporation the post acq ret ears. didnt share good will. if i get Q2 - so i know a bit about construction contract but how much did i do on the paper - (not muc) Income tax - it was a struggle while i was studying it but then i thought i finally got it then the examiner comes and gives it in a different way ok so maybe i could have calculated the reval surplus first then deduct the $24m i dont know or should i just say 25% of the 24m will is tax base (SEE MY PROBLEM) Q3 - so every question i have practiced had a increase in rec, inv and maybe payables and an increase in reval of ppe now this exam they had to come with a reduction in all areas! (HUH) i wont even mention 4 and 5 they are basically lease questions if you had time left from doing the three killers then you could work on those.

If anyone looked at technical articles, there were a few articles on leases!

yea but that only 1 or 2 marks m8 so you can still pass, i dont remember my sofp balancing though, i think i was out by about 3570 so i left it hanging for the marker to do his/her job, got pissed... @Cosmic89 i think i got PuP of 600 my profit % was 40% Gross so 1.5 x 40% also had to add back the difference in the contigent consideration to P's earnings when working out cons R/E

Thanks frank..i think got my pup wrong then since the majority saying 600 :-( Have added the decrease in the calculation for consolidated RE

In q5 it said that the lease was an operating lease, but looking at the question to me it sounded more like a finance lease, so I said that the lease needs to be reclassified and depreciated like a finance lease

I'm not sure but I thought the restoration costs in Q5 met the definition of a liability so put in NCL and unwound 1 years discount, added it on to the liability and charged the unwound discount to SPL. I found the exam quite hard, especially time wise. Like someone else said there seemed barely any time to think but I answered all questions apart from most of the rising prices bit in Q3 so lost 5 or 6 marks there. Nothing balanced but I still think (hope!) that I've done enough to pass.

worst paper ever, guys. i could not find anything related to sale and purchase back of that laidwood (whatever) in books. i was totally blank on q5 couldnt even understand what to do, just mentioned expense the expenses thats all. :/. a negative goodwill, up till now it was only tested in P2 and examiner gave us in F7, totally screwed that part of mine. Q2. damn, where the hell did the examiner get that from :/.

I didnt even attempt Q4 and Q5... Wasted a lot of time on Q2

@tron, yeah, it looked like a financial lease to me too since it was until the end of the life of the property. But I dealt with it as an operational lease since the word "operational" was bold. Maybe that was a stupid assumption to make... but I would have felt weird saying "no, not an operational lease" when the question has "operational" in bold. In any case, I agree that it looked like a financial lease to me.

@tbm13 Omg I must be losing my mind! Now that you said what Q5 was about I remembered I did attempt it... I did the same thing. I said the asset was leased by the company for 12 years and the contract had 8 more years of lease so in effect the lessee would use the asset for the remainder of its useful economic life. Also they made enhancements which made the asset specific for them and therefore the lessor could not rent it to someone else (also specified by the term of the contract to reinstate the asset to it's original condition in order to be returned to the lessor at the end of the contract. Because of all the above I said this is in fact a finance lease agreement, the company should record the asset and start to depreciate in over 8 years. Then record the finance liability for the lease payments. I unwound the figure to be spend at the end of the lease if the item is to be returned to it's lessor but i added it as a provision and not to the value of the asset. I actually wanted to add it as contingent liability - the company will probably choose not to return it anyway as they would be spending money for something that brings them no benefit.... Part 2 with the recognition was more notes than an extract as I ran out of time.... thanks loads tbm13, this does give me a bit of hope now, although I'm still more inclined to think I will fail --- poor time management would be the key reason coupled with lack of practise which makes me slow...

It was hard paper, I managed to complete all questions, Q1 and Q2 were a little tricky, Q3 was very straightforward and easy, Q4 was I found too hard, and Question 5 was out of the world, can't even understood it due to discounting but still I wrote what I understood

@cosmic89 i cant remember exact figure. Qn 5. this is what i thought. i capitalised the $7m expenditure on the manufacturing procees (because its not par of the lease but an investment into the manufacturing process) and amortised it straight line. - amortisation to P&L - capitalised value to BS the $5m cost was provided for under provision, contigent liabilites and so on........ so put that in the BS and added the unrolling of 400 since its a year now..so $5400 in BS under LT liabs. provided for the operational lease in the normal way, annual rental charged to P$L, no need to depreciate it. i hope am correct here, but that was my logic

Q1 and 2 were awful. The acquisition was confusing and the whole insurance thing in number 2 was impossible. Was much harder than a lot of the past papers. Unfair. I managed to finish every last bit of the paper though because I didn't waste any time on being stuck on any one point.

this was very unfair. this paper needed like 4hrs. income statement and statement of financial position on q1 and q2 and a full cashflow on 3. huh im very disappointed. i didnt even get time to answer 4 and 5. i am very sad!!!

@tron @tbm13 damn ryt, i did the same first commented it to be a finance lease but saw operational bold converted my answer to dat

was rele time pressure so much calculations since it was 5 statements u had to produce consol SOFP&SOI, normal SOFP&SOI plus cash flow was too much calculations i expected more writing definitely not a good balance cus as i cud remeber only finance lease and IAS 37 was asked

question 2 had a trick in it, the retained earnings decreased but they made a profit for the year the the share capital increase but no information was given about either anyone noticed that

i ddnt attempt 4 and 5 too. i wasted time on 1

Do you mean the cashflow one in q3? I noticed the share capital but not the RE in that one, mine didn't balance so maybe thats why :/