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Hello Sir, for PYQ March / June 2017 Q1(a)(b)
1.is it recommended to write as examiner answer by combining part (a) and(b) together or separate it?
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“A breakdown of revenue month by month, to establish when sales of the Chico brand cease”2. Is it not already being told by the question that Chico brand ceases on Dec 2016? Why still need the breakdown of it?
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“Copies of any agreement with the bank so that terms can be verified, in particular the anticipated date of the receipt of the funds, and the impact on the financial statements and on analytical review procedures confirmed”
3. The impact on the FS refers to the non-disclosure and recognition of the loan? What the analytical review procedures confirmed refer to here?
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“It may also be that the company continues to hold the $5m in cash and this may be supported by the significant increase in current assets in the year”
4. Why have cash here?
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Thank you.
1. I, personally, wouldn’t have combined in the way suggested by the model answer. You will see in the model answer that the inclusion of additional information has been clearly sign-posted in the “combined” answers.
2. The scenario identifies December as the month in which the amount of the impairment ($30m) was determined – it doesn’t say that this was when the impairment arose or when the allegations were made or when the products were withdrawn from sale.
3. The preceding analysis of gearing considers the timing of the loan.
4. I don’t know what you are asking – the answer is considering where the $5m difference between development costs in the SoFP (25-10) and $20m loan taken out has gone.
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