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F7 exam (DEC 14) MCQ discussion

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › F7 exam (DEC 14) MCQ discussion

  • This topic has 63 replies, 7 voices, and was last updated 6 years ago by charlichickxx.
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  • December 6, 2014 at 6:23 pm #218959
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @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 $37Β·5 million
    C $36Β·8 million
    D $42 million

    Option C ( could be wrong though )

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

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

    December 6, 2014 at 6:28 pm #218960
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    @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 $37Β·5 million
    C $36Β·8 million
    D $42 million

    Option C ( could be wrong though )

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

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

    https://i.cubeupload.com/YdDLt1.jpg

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

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

    Here are my answers workings.

    I agree with your q14

    December 6, 2014 at 6:32 pm #218961
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @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 πŸ™‚

    December 6, 2014 at 6:35 pm #218963
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    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 πŸ™‚

    These are my exam answers.

    I’m fairly confident about the mathematical questions but not sure on the wordy ones.

    December 6, 2014 at 6:47 pm #218964
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @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

    December 6, 2014 at 6:53 pm #218967
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    Ah I see

    December 6, 2014 at 6:57 pm #218968
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @xlnc123 said:
    Ah I see

    Share your vision with me πŸ™‚

    What do you think. B or C

    December 6, 2014 at 7:00 pm #218969
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    Share your vision with me πŸ™‚

    What do you think. B or C

    I still think we are right lol.

    December 6, 2014 at 7:02 pm #218971
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

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

    Ameen

    December 6, 2014 at 7:08 pm #218972
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    Ameen

    IA we are right

    Any other answers that you didn’t agree with

    December 6, 2014 at 7:13 pm #218974
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @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

    December 6, 2014 at 7:15 pm #218975
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    Q7 is D as the finance company has full recourse this receivable should not be written off and must be shown as an Asset in B/S, and the sale proceed as deferred income. I chose B or C though πŸ™

    December 6, 2014 at 7:16 pm #218976
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    It’s definitely a. On the balance sheet date, it was revalued hence no depreciation would be charged.

    December 6, 2014 at 7:18 pm #218978
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @xlnc123 said:
    It’s definitely a. On the balance sheet date, it was revalued hence no depreciation would be charged.

    It’s not about revaluation. That’s the current price of the NEW plant that we have with us. A new and a 2 yr old plant cannot be of same value.

    December 6, 2014 at 7:22 pm #218981
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    Q7 is D as the finance company has full recourse this receivable should not be written off and must be shown as an Asset in B/S, and the sale proceed as deferred income. I chose B or C though πŸ™

    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

    December 6, 2014 at 7:23 pm #218982
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    It’s not about revaluation. That’s the current price of the NEW plant that we have with us. A new and a 2 yr old plant cannot be of same value.

    Fair point.

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

    December 6, 2014 at 7:26 pm #218985
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @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 πŸ™‚

    December 6, 2014 at 7:29 pm #218986
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    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 πŸ™‚

    So HCA is agreed but how do you get the other number? 384?

    December 6, 2014 at 7:33 pm #218987
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @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.

    December 6, 2014 at 7:36 pm #218988
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @xlnc123 said:
    So HCA is agreed but how do you get the other number? 384?

    SP 600000
    RV 60000 = (600000×0.10)
    Dep. 600000-60000/5 = 108000 x 2 = 216000

    600000 – 216000 = 384000

    December 6, 2014 at 7:37 pm #218989
    xlnc123
    Member
    • Topics: 2
    • Replies: 46
    • β˜†

    @riskyguy said:
    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.

    Hopefully we get more than 50% but question 1 killed me. Doesn’t make sense even after the exam lol

    December 6, 2014 at 7:42 pm #218991
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @xlnc123 said:
    Hopefully we get more than 50% but question 1 killed me. Doesn’t make sense even after the exam lol

    IA, oh yes, Q1 also had me in trouble. I wish the question was just to calculate the same ratios for another company, it would have been great πŸ™‚ But I think we will still get marks for valid points made in discussion even if our ratios were calculated wrong. I think I should have redrafted the P/L, it would have become easier then. But I tweaked only those things that had to be used in the ratios, which resulted in many mistakes.

    December 6, 2014 at 7:49 pm #218993
    Tatia
    Member
    • Topics: 0
    • Replies: 16
    • β˜†

    @riskyguy said:
    @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

    Dont you think that unwinding of discount increases a finance cost (PL) and have not be capitalised? I read it in chapter 2.(Tangible non current assets). different opinions, please share πŸ™‚

    December 6, 2014 at 7:59 pm #218994
    riskyguy
    Member
    • Topics: 6
    • Replies: 97
    • β˜†β˜†

    @tatiaaaaaaa said:
    Dont you think that unwinding of discount increases a finance cost (PL) and have not be capitalised? I read it in chapter 2.(Tangible non current assets). different opinions, please share πŸ™‚

    Searched a bit, B is the correct option for Q17 πŸ™

    (Post # 5)
    https://opentuition.com/topic/unwinding-of-discount/

    December 6, 2014 at 8:02 pm #218997
    Tatia
    Member
    • Topics: 0
    • Replies: 16
    • β˜†

    Also, Can you share your results about consolidation statements?

    MCQ-s and Q3 are my hopes for reaching 50 points. But I am not sure. Anyway, today I have started reading theory book of F7. For June exams πŸ˜€

    In addition, this was my first ACCA exam and I like the way you are sharing your experience and results. It is very useful πŸ™‚

    Thanks all πŸ™‚ πŸ™‚

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