*** F7 June 2016 Exam was.. Instant Poll and comments ***

@accastudent1986 said:
Study text says that any decrease in deferred tax provision is presented in OCI and any increase reduces retained earnings

I think you mean deferred tax attributable to revaluation, then yes, but they said in exam not to think about it. So, disregard

@faizsaid said:
goodluck to you cocky cow. if u bet on this question you will just lose ur money.

Hahahaha so i proved u to be wrong. And be careful with your words. And dont close the case until u are sure about what u are writing

@accastudent1986 said:
It is the movement on deferred tax that will need to be accounted for:

Increase in deferred tax provision:

Dr Income tax expense/equity

X

I havent seen this in ias 1. The only deferred tax in oci is the one related to revaluation surplus

Cr Deferred tax (SFP)

X

Reduction in deferred tax provision:

Dr Deferred tax (SFP)

X

Cr Income tax expense/OCI

X

TBH i know i’ve cocked up bits and pieces but i’m hoping i’ve shown enough understanding of the method and given clear workings that i’ll tot up enough points to achieve a pass as i seriously do not want to sit this exam for a 3rd time!

@accastudent1986 said:
I disagree on that, i know that a revaluation gain creates a deferred tax asset which is also shown in OCI but so does an ordinary reduction in deferred tax provision.

Reduction in deferred provision just reduces your tax expdnse for the year, thats it

@accastudent1986 said:
My quote above was from the Kaplan F7 text book

But if you look through IAS1 presentation of financial statements, you will not be able to see deferred tax in oci,,only the one related to revaluation

@accastudent1986 said:
I’m looking through the taxation chapter and it does go on to agree with your point, although my quote above does contradict that :-S

I practiced many questions on ias 1 and the only time i saw deferred tax in oci was coming from revaluation

You agree that my quote above flies in the face of that though right?

Also just to clarify and help me understand where i went wrong with this contract asset do you believe that i should have added $15m to COS and increased revenue by $18.75m and statement the asset as $8.75m ($18.75m – $10m)?

ok i’ve corrected those elements on the SOFP but still have a variance any ideas?;

Statement of Financial Position:
Non-current assets:
Property, Plant & Equipment 104,400
Patent 3,400
107,800
Current assets:
Inventory 32,100
Trade receivables 38,500
Contract asset 8,750
79,350
Total Assets: 187,150

Equity:
Share capital 25,000
Retained earnings 51,444
Other equity 11,800
Equity option 2,430
Revaluation reserve 9,600
100,274
Non-current liabilities:
Loan note 28,276

Current liabilities:
Trade payables 46,400
Income tax 11,400
Deferred tax 3,700
Bank Overdraft 2,700
64,200
Total equity & liabilities 192,750

Reconciling difference 5,600

U also missed current and non current deferred income

I added the 350 impairment expense to P&L and came up with profit for year of 43,844 amended reserve & ret earnings as i’d marked transfer the wrong way round so revaluation reserve should be 8,800 and earnings of 52,244 but still have 5,600 variance

@accastudent1986 said:
I added the 350 impairment expense to P&L and came up with profit for year of 43,844 amended reserve & ret earnings as i’d marked transfer the wrong way round so revaluation reserve should be 8,800 and earnings of 52,244 but still have 5,600 variance

But u should recognized deferred income.

8800 will be recorded in sfp, but in pl it will be recorded as 9200