*** F7 June 2015 Exam was.. Instant Poll and comments ***

Like James, still not sure where you get $14,400 for plant. The question says the provision has been accounted for properly. In other words, included in the $85m cost at 1.4.14 is the asset and capitalised provision. The double entry for the initial provision of this nature would be;

Dr TNCA
CR Provision

with the present value of future cash flows (in this case $4M).

Each year you then just charge depn on the asset and unwind the discount (thus increasing provision). Therefore, depn remains per my initial comment – 85k/5 = 17k. I didn’t split the asset pool as no need to do so. All info was for cash flow part of question later on in the “wordy” parts.

The question stated the provision had correctly been account for – in other words it was already incorporated in the 85m cost b/fwd. You’ve added another 4m on top – the only adjustment required was finance cost – you’ve doubled up on the 4m provision in my opinion. As you say, at max 1 mark dropped I’d suggest.

how did you all account for the investments through p&l ? 🙂

@alexanderrobert1989 said:
So basically instead of me taking the full value of 85k and dividing by 5.

I worked out each individual PPE for my workings.

Plant and Provision = 18000/5= 3600
Finance Lease = 8000/5= 1600
Remaining PPE = 63000/5= 12600

So the total I got was 17800. Based on what you have been saying James it looks like maybe the provision was included.

So our difference is 800. 17800 vs 17000

Hopefully it wont be too much of a problem but alot of past exams have never included the provision in PPE so went with my gut in the exam.

Actuallly, this is how I went about doing this.

I got the 3,600 and 1,600 as I also assumed the 14m was the cash cost for the purchase and the 4m we had to add so I got $18,000/5.

My problem was I did:

85,000 – 18,000 – 8,000 and for some reason did reducing balance on the last bit so only had a depreciation charge of 8,000 for remaining plant!

But I agree with 17,000 as Chris had got. Again, my prediction is 2 marks for Assets so I’d imagine Robert and myself would get 1.5/2 so not really an issue.

@alexanderrobert1989 said:
James, Yeah I agree you are probably right but you just don’t have time to second guess in this exam.

On another note,

How did you deal with the £5000 in the suspense account?

Can you remember how you dealt with the investments through the P&L/B.S

And finally did you expense the full 2k through PandL for Op. Lease and create a prepayment in CA?

Thanks,

Rob

With the suspense account, I credited suspense and Dr Loan Notes, reducing the loan.
In the exam I did:

B/Fwd Loan notes 20000
8% Interest 1600
Less Repayment (5000)

Dr of 2 x 800 to Finance Costs.

In the exam, I rushed this so I think it is partially wrong, but I again would imagine 1 out of 1.5 perhaps.

Just had a quick look at Q3, my predicted marks for each are:

Revenue 1/2 Mark
Cost of Sales 3
Admin 1/2
Distribution 1/2
Tax 1.5
Finance Costs 3

SOCIE:
S.Cap: 1m
S.Premium: 1m
R.Earnings: 1m

SFP:
Assets 2
Inventory 1/2
Payables 1/2
R’ables 1/2
Overdraft 1/2
Loan Notes 1.5
Enviromental provision 1.5
Leases 1.5
Deferred Tax 1/2
Operating Lease 1

There’s one mark in the balance sheet not allocated but I’d say that’s a rough guide you can use to calclulate marks for the question. I’ve got to around 18-20, even though I felt I made some really silly mistakes you can gain more marks than you think in my opinion.

@sis00 said:
Regarding investment through P/L.
Opening – 6000
Sold – 1400
Closing – 4600 but closing at FV 6500, thus surplus 1900 goes to P/L as well as income (300 dividends, 200 profit on sale)

Isn’t it just 500 to investment income, 6500 to NCA?

The sale information was for the cashflow I thought as it was a 200 gain with 300 dividends received, therefore investments have gone up 500.

I am with you right there Chris .

Hi Erin, i have sat it 3 times, and it doesn’t get any easier, its a joke!!! i think its one of the toughest papers on the course and at this stage I seem to have a mental block with it, so much is throw at you in the exam and as someone else said they just try and trick you instead of testing your knowledge, its so dishearting. I thought the paper in December was better and i got 47% so i’m not sure about this attempt and could gauge it better if i knew where i stood with the MCQ’s. This is my final paper having passed all my professional stage papers first attempt, you would think if i passed P2 that F7 would be easy but its not??? I would advice you to resit the paper in September but hopefully you will pass. I think its all about luck on the day of the exam and time is crutical. I really put in the effort this time having done the mock exam and QBR sessions and no amount of extra study would have made any bit of difference. I think this is a hard one to study at home yourself but if you have gone to evening lectures before i don’t think there is much point in paying for the course again, just do the revision and practise question after question. best of luck Erin and glad I’m not the only one struggling to pass this paper.

@michelleberry28 said:
Hi Erin, i have sat it 3 times, and it doesn’t get any easier, its a joke!!! i think its one of the toughest papers on the course and at this stage I seem to have a mental block with it, so much is throw at you in the exam and as someone else said they just try and trick you instead of testing your knowledge, its so dishearting. I thought the paper in December was better and i got 47% so i’m not sure about this attempt and could gauge it better if i knew where i stood with the MCQ’s. This is my final paper having passed all my professional stage papers first attempt, you would think if i passed P2 that F7 would be easy but its not??? I would advice you to resit the paper in September but hopefully you will pass. I think its all about luck on the day of the exam and time is crutical. I really put in the effort this time having done the mock exam and QBR sessions and no amount of extra study would have made any bit of difference. I think this is a hard one to study at home yourself but if you have gone to evening lectures before i don’t think there is much point in paying for the course again, just do the revision and practise question after question. best of luck Erin and glad I’m not the only one struggling to pass this paper.

Erin, Michelle

F7 is one of those papers which is a question based paper, like you’ve said it’s just question practice. For me, having sat the exam last week, I feel it is all about proforma layout and taking the easy marks where possible. Such as on the published accounts we’re told not to waste time adding up, working out gross profit or profit and I feel we had various other little tips which meant the exam wasn’t time pressured at all. Once the proforma is laid out, do the profit (make a figure of 10,000) retained earnings and the tax. The proforma and those take approximately 5-10 minutes and you have perhaps 7-8 marks there and have 40 mins+ to work on the other adjustments.

I study through Kaplan and to be fair I think they are superb with the in classroom teaching, if I pass that’ll be the reason.

If you need any tips, I’ll be happy to help with any queries, I can email if need be and best of look to you both!

@chris1975z said:
I agree with James on investment income. What happened in year is irrelevant in respect of closing balance as it’s simply $6.5M – given to us!! The movement in the year is for the cash flow part of the question only. It already tells us the movement on the $1.4m to $1.6M has been recorded in investment income too. In other words – nothing needs doing with it as it’s been recorded correctly.

But how could be explained the movement of investment from 6000 in TB to 6500 at FV? I see two options: of something have been purchased (can’t see indications of this in question or revalued). If revalued it should be in P/L.

@sis00 said:
But how could be explained the movement of investment from 6000 in TB to 6500 at FV? I see two options: of something have been purchased (can’t see indications of this in question or revalued). If revalued it should be in P/L.

The fair value changed. In other words an independent valuation stated investment was worth 500 more. Therefore Dr Investment, Cr P&L. Nice and simple one – just an increase in the value of the investment.

It was really Hard

i found the MCQ approachable while the section 2 started with another approach to Group, but i was able to tackle that.

i took look at Q3 and had a Mental Black-out, couldn’t recall how to even approach the Right issue question, panicked like a baby and scribbled all i could to present the P or L.

all in all, i need to prepare better