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I read in my notes that examples of restructuring include:
“sale or termination of a line of business” and “close of business locations in a region”
So also sale of a separate line of business and closure of business locations also falls under the scope of IFRS 5 either as discontinued operations or as
available for sale?How can we distinguish in the exam, when we are given a case study, that the particular problem falls under either of these standards (as a restructuring in IAS 37’s case) or as something else in IFRS 5? There is an overlap here.
Also, for us to recognize expenses in restructuring, the following criteria is one of the requirements:
1. “necessarily entailed by a restructuring” what does this mean? Does it mean that the entity, by compulsion, has to incur these expenses in the restructuring?
Finally, I frequently read in the examiner’s report that “only a portion of the marks are available for knowledge” so my query to you is that in question 2 and 3 of the P2 exam, do we need to waste time in the exam writing out the knowledge parts of the standard. Can’t we just straight away apply to the scenario but sometimes, from my experience, I am confused because the question is seven or eight marks and the application is just one or two points so in that case maybe knowledge will boos the mark. What do you suggest? Should we regurgitate knowledge from the standard or is it a simple way of wasting time in the exam?
Thanks.
The examiner will say something like “As part of the restructuring plan, the directors have decided to close the UK operations”
If it were just an asset held for sale or discontinued operation, the examiner would say something like “During the year the directors closed a subsidiary ….”
“necessarily entailed by a restructuring” means that the expense has nothing to do with any other activity than the restructuring. We would not have incurred the expense had we not decided to reconstruct
Have you tried this exam already? When the examiner says that “only a portion of the marks are available for knowledge” he is saying that there are SOME marks for knowledge and some for explanation and application.
How on this Earth can you reach the conclusion that it is sensible to “waste time in the exam writing out the knowledge parts of the standard.” How can that be a waste of time?
“Can’t we just straight away apply to the scenario?” No! Read the suggested solutions to questions 2 and 3 from past exams. They “discuss” the problem and apply the IFRS / IAS requirements to the scenario, so how can that be a waste of time if you adopt the same approach?
And as you rightly point out, the application of a standard is often for only 2 or 3 marks out of the (say) 8 available.
“What do you suggest? Should we regurgitate knowledge from the standard or is it a simple way of wasting time in the exam?” Are you really a P level student? And moreover, have you read the examination technique articles on this site for both P2 in particular and ACCA exams in general?
Have you read the two articles by members of the P3 marking team (yes, P3) in Student Accountant from 2012 (?)
I wish you would because then I wouldn’t be faced with questions such as this.
The examiner says “only a portion of the marks are available for knowledge” – ok, you tell me exactly the extent of the “knowledge portion”! Is it 10%, 2%, 40%, 86.5%?
What the examiner is saying is that there are marks not just for the knowledge but also the application
OK?
Thank you Mike. I thought knowledge is irrelevant because we had talked before that reading the study text is a waste of time. How should I get the knowledge and be expected to write in it in the exam if I haven’t just read the study text? Because for past papers I’ve been neglecting the knowledge parts and just seen how the application is done. I thought that was what P papers are all about, application. But it seems they do need knowledge now. I’ll now also focus on knowledge.
Yes you are correct. I’ve haven’t bothered with any articles and for P3, I didn’t even know such articles exist. Thank for letting me know.
I will state knowledge and also apply in the P2 exam. Thanks!
By reading the suggested solutions to past exam questions you should build up sufficient knowledge as well as an appreciation of the depth and style of exam answers.
I cannot for one instant believe that you will be able to plough effectively and profitably through a 600+ study text and retain much (if any) knowledge.
The reason I suggest that you don’t waste your time is because I believe it to be an inefficient use of the scarce resource
There’s less than 15 weeks (102 days) until the exam. Time is already short and time spent reading a study text will not bear as much fruit as time spent skimming through the opentuition notes, listening to lectures, solving the OT problems and then getting heavily stuck into a revision kit.
Yes, if you want to, read the study text
Thanks Mike. I’ll just adopt the approach you suggested. Anyway, I do make sure that before the week ends I’ve done a couple of past exam questions so that I’m on schedule, as you can see every week I ask you a past exam question related entry and you are very helpful in answering all my queries. Thanks!!!
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