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

Q2 didnt say if the revenue, costs, profits etc were included in revenue and cos. when it came to PUP in q 1 i couldnt figure if the 1.5m cost was based on the 9m or the older cost. time apportionment in consolidation i did included and also the retained earnings at acquisition. it was a struggle against time!

@Frank I am probably going to kick myself and hopefully the answers someone gives will give me a “Graham you are an idiot moment’, so I worked out my goodwill based on the shares (SC $6000/50P = 12000 shares, 75% 9000 shares X £1.35 then added my contigent consideration [mistake?] deducted my share capital, and my fair value movement my pre aq I worked it out this way I can’t recall the specifics

R/E as per BS it was definately a positive figure, I deducted by PNL which was -£4600 deducted that off my RE @ Y/E to get my opening R/E then said Opening Retain Earnings + (-$4,600/12×6)

Have got a negative goodwill of $3400.
Pup $900
Added contingent consideration in current liabilities

Can any1 confirm these answers?

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

@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]

was it 1.50 or 1.35 cash per share?

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

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).

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.

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

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

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 :/.