F7 exam (DEC 14) MCQ discussion

@Tatia

What do you think about Q14. I chose option C ( as shown in the solution below) But now I think it may as well be option A.

Did we not have to depreciate the property from 1 April to 30 September?

14 As at 30 September 2013 Dune’s property in its statement of financial position was:
Property at cost (useful life 15 years) $45 million
Accumulated depreciation $6 million

On 1 April 2014, Dune decided to sell the property. The property is being marketed by a property agent at a price of $42 million, which was considered a reasonably achievable price at that date. The expected costs to sell have been agreed at $1 million. Recent market transactions suggest that actual selling prices achieved for this type of property
in the current market conditions are 10% less than the price at which they are marketed.

At 30 September 2014 the property has not been sold.
At what amount should the property be reported in Dune’s statement of financial position as at 30 September
2014?

A $36 million
B $37·5 million
C $36·8 million
D $42 million

Option C ( could be wrong though )

Dep to 1 April 2014= 45000/15=3000×6/12=1500
45000 – 3000 acc dep – 1500 = 40500 CV

37800 = 42000*0.90
(1000) = cost to sell
36800

@xlnc123 said:
https://i.cubeupload.com/YdDLt1.jpg

https://i.cubeupload.com/MqozKz.jpg

https://i.cubeupload.com/5jesUz.jpg

Here are my answers with workings

Hmm, are these your answers NOW or did you actually choose the same ones in the exam? We’ve got a lot of matches, and most of them which I got wrong, I think you have them right, you’re going to get a lot of marks from this section.

Anyway, Q20 isn’t C I think, It’s got to be D.

And I am glad you also got C for 14, if I assume this answer to be right, I will get a minimum of 20 marks, thats ok, but still want more 🙂

@Xlnc

Great job!

Anyway, below is the solution someone provided in another thread for MCQ 17. What do you think about it. Just like you I got the C option though.

seabed restoration: 250X10000
dismantling: 30000000X0.68X1.08 (8% is the increase of the provision for the year)
the two of them together is answer B

Another solution for option B

so we have the restorative cost of $2,500,000
then we need to add the dismantling provision value at 30 Sept 2013 – 0.68*30 mln=20,400,000
however, since we’re interested at the provision amount one year later – ie Sept 30 2014, we need to unwind the discount for 1 year -> 0.08*20,400,000=1,632,000.
when we add these three together -> we get answer B

@xlnc123 said:
Ah I see

Share your vision with me 🙂

What do you think. B or C

@xlnc123 said:
I still think we are right lol.

Ameen

@xlnc123 said:
IA we are right

Any other answers that you didn’t agree with

Yes, I don’t really remember my option for MCQ 3, chose A or B maybe. But I think B is the right option. Accumulated depriciaton would have to be deducted from the plant. A new plant and a two year old plant both cannot cost 600,000

@xlnc123 said:
Fair point.

I read current price as fair value. Current price would dictate replacement cost.

Exactly, I don’t remember my answer though, so not counting marks from this mcq, prudence concept :). But I hope i got it right, I thought abt it a lot in the exam 🙂

@xlnc123 said:
I didn’t choose D as receivables are already an asset.

A is def wrong.

So my process of elimination was B or C

c could be wrong because it’s deferred liability. (Never understood why) but it offsets expenses

Option D, how I understand it now is, the examiner is asking us, the receivables were sold to a finance company, but the finance company has full recourse, so should they be (still) recognized as an Asset.

Yes, as the finance company has full recourse they should still be recognized as an Asset, common adjustment in Final accounts question. But well I maybe wrong on this one. I remember choosing one from B or C. A was definitely wrong.