*** F7 June 2012 Exam was… Comments and Instant Poll ***

I mean the working No 2, goodwill. The cost of investments in subsidiary was 24000 + 6400 (if I am correct), deferred consideration, in total it’s 30400.
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@saiflalani said:
On the balance sheet P recognized investment at cost as $24000. That is 8000 $1 shares and $2 share premium. the qt said that It had already recognized share cost but not deferred consideration. Any one else feel free to step in.

the consideration consisted of two elements, the share exchange which was already accounted for and the deferred consideration. To get the share exchange amount you just had to look at Investments in Sq as goodp said. The hardest part was discounting the cash element which the question stated was NOT accounted for. You should have got a goodwill of around 30.4mil.

I initially also go a negative goodwill but then did a sense check and thought “nah, this is compeltely stupid”. anyway, good luck with the results!

@jm84 said:
I just wonder why many people get a negative goodwill (I get a shock), the question is now out in the ACCA website. So we can take a look and see whether negative goodwill exists.
Exact same calculation Jm84 for me. Can you point out where on the ACCA web the paper is? I cannot find it. Thanks,

This is what I did:
Net assets at acquisition:
Equity: 10000
Retained Earning: 18000 – 1000 = 17000 (Adjusted for unrecorded deferred tax liability: Dr Retained earning Cr Deferred tax)
Adjustment for:
Plant: 3000

Total net assets: $30000

Controlling Interest:
Share exchange: $24000 (given in question)
Deferred Consideration: $8000 x 0.88/1.1 =$6400
Total Controlling interest: 24000 + 6400 = $30400

Non-controlling interest: $2000 x 3.5 = $7000

Goodwill = 30400 + 7000 – 30000 = $7400

Although my calculation may not be correct, but very obvious bargain purchase is IMPOSSIBLE as the only reason to explain is forget to add the deferred consideration.

Please feel free to correct me if I am wrong.

i got bargain purchase also, 8000+7040 i think i put for total cost. forgot to take off cost of capital

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f7/exampapers/int/F7INT_2012_jun_q.pdf

does anyone know how ACCA scripts are marked? Will I loose for instance all the marks available for goodwill calculation if one figure would be wrong in the calculation of goodwill(e.g. forgot to account for NCI in goodwill calculation)?

@petrochina said:
does anyone know how ACCA scripts are marked? Will I loose for instance all the marks available for goodwill calculation if one figure would be wrong in the calculation of goodwill(e.g. forgot to account for NCI in goodwill calculation)?

ACCA adopts step marking, they penalise you once only for the steps you got wrong. But if your goodwill got wrong, it depends on what mistake you have done.

Can anybody advise if there is a chance to pass if I have missed question 5(haven’t noticed unfortunately)??

Thank you for reply jm84. I knew, if any question is not attempted, it means failure.

Hi I have tried to work out Question 1 and Question 2 again, and I manage to get the same answer as what i did during the exam. I manage to balance both questions but I am not sure whether I get it right. the link are as follows:

https://issuu.com/jiaminglow/docs/question_1_and_question_2?mode=window&viewMode=doublePage

@saiflalani said:
All my workings were identlcal except that I depreciated leased plant in 2nd qt over 4 years. Hence Depreciation of 6.25 million versus your 5 million. I considered both options in the exam, but it was not very clear to me whether it should be based on the lease term or based on other plant depreciation methods. Now that I read it again without the adrenaline surge I think you might be right. In any case you would be hard pressed to get less than 46 in those 2 qts out of 50. Good luck.

I also have problems in figuring out the lease terms. Initially I consider it as to have 4 years life, but there are total 5 payments, so cannot be 4 years right? Not very sure about it. hope i get it right.

The EPS thing I feel very not confident. I do not manage to get any number because I do the EPS 5 minutes before exam. so only manage to figure the weighted average number of shares then the invigilator announce stop writing. Very poor thing for me, at least 2 marks gone in EPS that part.

This is the first time I manage to balance question 1, 2 and 3 (Because when I do many mock exams only the Console Question i manage to balance). Balance doesn’t mean correct, but based on the feel that I experience, I should be able to pass this paper. (although not be able to score any decent marks). Wish me good luck 🙂

@saiflalani said:
Well Good Luck JM8! I dont know how you define decent marks, but looks like you should score at least 46 in the first 2 qts. At least 20 in number 3 if your cash flow balanced (cash flow is almost impossible to do wrong and balance) and I am sure you would get full 4 for the ratios. Your qt 4 is fully correct (I just did not read the blow up part of 500,000…damn..hopefully should lose only 1 mark on that) and you would be hard pressed to get less than 7 in qt 5. That adds up to at least 86. I don’t know about you but I would be quite happy with that and most on this board would too.

Hi saiflalani
Thank you very much for your encouragement. I am a little bit dissapointed with myself after finishing F7 because I am highly time pressurised to work with question 3 part (b) and Question 2 EPS. I will only want a 70++ because I want to do my OBU degree and getting 1st class if possible. After reading your comment, I really feel better, Thanks a lot.

I think you score quite well also based on your comments. The 500,000 will only cost 1 mark and the rest of the marks will still be given (ACCA adopts steps marking, so no worries).Good luck to you too 🙂

@saiflalani said:
Thanks JM84. How many exams did you take this time? I took F7 and P3.

I took F4, F7 and F9. Wow, you can take P papers now 🙂 I still in my F levels, clearing F6 and F8 in the next sitting.