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@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.
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@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 BSthe $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
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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.
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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!!!
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
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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 :/
My cashflow in Q3 was highly positive (7000 or so?). But the bank balance went from plus 200 or so to an overdraft of 200 or so… so cashflow must have been extremely negative. Can someone comment on that? I must have made some major mistake in Q3.
@frank that’s exactly what I said for q5.
But for q4ii because they were asking for YE Sept 13, and the sale of the property occurs on 1 oct 13 with a profit on disposal of $1.5m does this not mean an adjusting event and events after reporting period? Restate so next year no profit occurs and then deal with the sale next year. Not a sale and re purchase as they are making a profit and also that it is available on the open market if they reject to buy it after 5 years.
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none of mine balanced. i tried many papers before bt this was just the longest. i failed knowing the answers.
Cash and cash equips on cash flow statement
Net cash outflow for the year (500)
Cash and cash equivs at start of year 300
Cash and cash equivs at end of year (200)That was hard, note nought time.
Q1, took the bargain price off profit and did not put the consideration on the balance sheet in liabilities even though I noted it.. Pup 600 tricky way of putting the question on pup and took of cos and revenue the intercompany sales. I did time apportion months of profit and loss, but I know I made load of mistakes Needed more time to think about it.
Q2, not too bad, insurance I reversed the allocation of the insurance cost posted to the provision and put the 250 to admin costs and left the provision at 400k. Leases was ok worked out current and long term liability
Spent so long on q1 And q2 I only had an hour left for q3/4/5 my writing got messing as I rushed through, q3 was ok, q4 substance over form, sale and repurchase and factoring company, my answer was so messy, not sure I will get any points, q5 did not answer. Overall allot to think about if you 4 hours the paper would have been more achievable, hope it passed.@anuj428 do you remember what caused net cash flow to be negative? What were the major outflows?
I remember one property that was purchased, but another one was sold for about the same price.
Some money must have been raised by selling shares (since ordinary shares went up).
I don’t see any huge outflows. But obviously I must have missed some…
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My cash flow didnt balance by $100 . Otherwise…briefly there were equity dividends paid of 2800.
Acquisition of ppe 3500
Acquisition of inv property 1400
Issue of shares 2200Plz sm1 explain on the accrued interest from 50 to 100
@cosmic89 now i know why my cash flow did not balance it was due to the equity dividends, where was that info given??? we also had to add back 700 on fair value valuation as it was a non cash transaction.
for the interest we needed to create a T- account
When can we get to see the December 2013 paper online? Do they put it online after a couple months or will it be in the coming weeks?
@acca a couple of days
I think the accrued interest was to do with the finance costs so b/f accrued + finance costs – c/f accrued = paid in year
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This Paper was hard…time pressured.. Well, its done now…we can only cross fingers and hope for a miracle! lol Am moving to my next paper…and, hopefully its gonna be much better 🙂 Goodluck guys xx
I didn’t spot the equity dividends either but mine didn’t balance by exactly that amount so hopefully just that one error in my CF. I kept forgetting dividends in all practise questions, I have written all over my notes in capitals “don’t forget to look for dividends” & I still forgot!
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