SBR*** P2 June 2012 Exam was … Comments and Instant Poll ***

@mafazkhan said:
close enough.. i did at 300..:D,.... and was the goodwill 6 or 9?

Definitely 9. The results of the PPE valuation of second sub. were not to be included.
The depreciation instead should've been charged to P&L and the final value of 2.7m taken to SOFP

@mafazkhan

I got 6 for GW

@junaid72724

because the FV adjustment existed at the date of acquisition and was pending the final sign off it should have been included as part of the fair value of the net assets at acquisition giving you 6 goodwill.

i too got 9 but people were saying that u had to do something with the fairvalue increase of 3 m.. I wasnt sure about it...

what did people do with the joint venture???

i completely messed up the paper back again in dec i think :(

@jwarrick6 said:
@junaid72724

because the FV adjustment existed at the date of acquisition and was pending the final sign off it should have been included as part of the fair value of the net assets at acquisition giving you 6 goodwill.

Lol nope. There's a question in the BPP kit with the same adjustment. You may wish to pick it up and see for yourself.

P2 June 2012

I think it was a fair exam.... I have dealt with much worse exercises during my handmade revision stage.

Q1 a nice balance sheet with two subs, the second one becoming sub half way. There was a PPI revalued first and impaired the year later, some trade receivables being franchised to a bank and some adjustment to a joint venture participation. What else? the sale of a FA bought back immediately after year end (i.e not a real sale then). No goodwill impairment, no PUP, just some FVA. All pretty easy. Part B focused on the de recognition of a financial asset (i.e trade receivables) and discussion of the sale of the land to cover up some liquidity troubles.

Part B Q4 was about provision and contingencies - recognition and measurement and and the other was... God, my brain is going blank!! I am too exhausted, sigh!

Q2Treatments for Employ benefits, share payments...

Again no much about deferred tax apart from Q3 which indeed I found quite challenging and skipped almost immediately. No cash flow as hoped either but no foreign currency sub either as afraid.

I expect to see a higher pass rate in this session. In my hall there were a lot of students who looked around and who I think gave up before starting. I have sat a couple of exams two or three times (such as F7 and F8) not really because I did not the answers but because I was too scared to READ it!! my best advice: do your best, write as much as you know and do the calculations that you know as far as you can because even a simple sum across a group can earn marks!!

Good luck you all!!
Barbara

i also included the 3m in the fair value of net asets at acquisition as there is a past exam q with this adjustment in it and was treated in this manner so i went with that!!!

@mafazkhan said:
close enough.. i did at 300..:D,.... and was the goodwill 6 or 9?

GW was 6
Balance 305.9

@junaid72724

thank you. which question was it that you saw with this adjustment?

The rationale is that if the fair value of the assets at acquisition were understated then the fair value of the net assets would be understated as well, i.e. dr PPE, cr revaluation reserve and therefore increase FVNA.

I got it to balance at 315 i think it was

But dont worry - we will get marks for our method

I didnt do one of the adjustments though

December 2009 Q1 Grange its on pg 3 yea i would be in agreement its more or less the same as grange and they adjusted for it so i dont see why it would be any different!!

tough paper i think a pass may be a miracle made silly mistakes :(

When i was getting the cost of the investment for the second sub
I took 5% at FV which i thought was 5m
plus 55% consideration.
plus value for NCI at fair value.

I then got the profit of the disposal of the 5% by taking 5m less 2 million cost in 09.
oh feck i made a mess of this. I then brought financial asset up to 5m fv and then took it off the equity financial assets on the sopf and put the profit to the consol reserves.

i made a mess didnt i.

with the dividends i also not sure, i didnt think they should go through OCI, never seen this, so i took out of OCI and put into Ret earnging on consolodated reserves.

i didnt think it was a bad question but i thought it could have been worded better!
RAGING!!!! as i was hopeing for a simple or complex group :(

you would have gotten marks for the 5m consideration plus NCI at FV plus consideration for the 55%. i wouldnt worry about the other bit, you wont get marked down for it but i dont think the financial assets should have been adjusted as the cost of the investments were held separately.

the dividends were an intergroup transaction and so it needed to be removed completely. my reversal was dr OCE cr Cash.

guys

q3 - was this all basically deferred tax?

i was in a rush and had to read the question quickly before i could answer.

and part b of this was holding the financial instruments thru fair value - i mentioned about holding via amortised cost and considered hedging to offset interest rate risk?

and part c i thought was again deferred tax about the sub paying dividend - all about timing differences? creating a DT liability?

Q4. i did not have much time!!!!!
so i just wrote 1 page outlining main points of provision of contingent liabilities!!!!
and for (b) i just outlined the proposed changes by E.D that was use of expected value, Obligation for service related that was to include profit margin and onerous contrrac will be accounted for as current ias 37......
missed the last easy 7 marks!!! hope to PASS

any suggestions pleaseee????

q3 was difficult otherwise was quite easy. i will get through

I spent too much time on Q1, so was in a real hurry to do Q2 and Q4. Although skipped part b in both Q2 and Q4.

It seemed strange for me that 80% subsidiary was held at FV through OCI, haven' t seen such measurement. So I put it back at cost of 50 and also deducted 2 from dividends. Not sure if it was correct, but at the same time don' t think it should have stayed at FVtOCI.
Anyone had same doubts?

also part d Q2 was that a contingent liability?

10m lawyer costs but company thought only 4?

i said put 10m down as contigent and discount it

Questions 2,3,4 were complex, I am totally relying on Q1 to pass....

q3a was a range of issues, from the properties not being held at the correct fair value. there was an active market to obtain a fair value from in accordance with IFRS13.
goodwill was being impaired because of events after acquisition which is incorrect as they were not related to the carrying value of the of the investment, and it was also valued using the incorrevt FVNA as this was based on the DCF model rather than the IFRS13 basis.
this had a knock-on effect on deferred tax because the carrying value was incorrect meaning the temporary diff was wrong and so the deferred tax.
there was also a going concern issue which means IFRS 5 may have to be adopted for preparation of the FS.

@jwarrick6 said:
you would have gotten marks for the 5m consideration plus NCI at FV plus consideration for the 55%. i wouldnt worry about the other bit, you wont get marked down for it but i dont think the financial assets should have been adjusted as the cost of the investments were held separately.

the dividends were an intergroup transaction and so it needed to be removed completely. my reversal was dr OCE cr Cash.

dividends intro group, of course.... dam!!!!!
i also got the sbp payments mixed up, i showed the cost over vesting period posting only movement in 2nd year 2010 2011, but the third year i should have stopped and it was only the deferred tax implication in 2012 as DT ocurrs until the options are excersised and cf occurs so i should have used the last share price to compare to the year before to say that thats what the dt implication would be on, copped when i left the exam hall. made total mess. :(

@jwarrick6 said:
q3a was a range of issues, from the properties not being held at the correct fair value. there was an active market to obtain a fair value from in accordance with IFRS13.
goodwill was being impaired because of events after acquisition which is incorrect as they were not related to the carrying value of the of the investment, and it was also valued using the incorrevt FVNA as this was based on the DCF model rather than the IFRS13 basis.
this had a knock-on effect on deferred tax because the carrying value was incorrect meaning the temporary diff was wrong and so the deferred tax.
there was also a going concern issue which means IFRS 5 may have to be adopted for preparation of the FS.

sounds right in hindsight - i mentioned about not allowed to carry fwd tax losses unless you can offset against future taxable profits. i also stated that the reval of properties cause dt liabilites and assets and that a DTL would be a debit to goodwill?

for the finance instruments one i was kind of going on about defered tax again ( dont know why) but also mentioned that loans should be held at amortised cost and to use hedging to offset against interest rate moves.

did not mentioneanything re ifrs 5, or fvtpl

last part it was a sub paying a dividend i think - i put down defered tax issue ( again!) and how the timing of payment was crucial in order to avoid a defered tax liability.

i sofp was about 260 i think.

q 2 wasnt so bad - how did everyone treat the amendment in employee benefit plan?

@gwen2000ie said:
dividends intro group, of course.... dam!!!!!
i also got the sbp payments mixed up, i showed the cost over vesting period posting only movement in 2nd year 2010 2011, but the third year i should have stopped and it was only the deferred tax implication in 2012 as DT ocurrs until the options are excersised and cf occurs so i should have used the last share price to compare to the year before to say that thats what the dt implication would be on, copped when i left the exam hall. made total mess. :(

yeh i mentioned the DT Asset at the end of 2012 - hopefully that gets me a couple of marks for workings

#praying

lol

actuarial gains and losses are recognised in OCI and should be recognised immediately with no deferral allowed. that's what i put anyway.

@annasrei said:
I spent too much time on Q1, so was in a real hurry to do Q2 and Q4. Although skipped part b in both Q2 and Q4.

It seemed strange for me that 80% subsidiary was held at FV through OCI, haven' t seen such measurement. So I put it back at cost of 50 and also deducted 2 from dividends. Not sure if it was correct, but at the same time don' t think it should have stayed at FVtOCI.
Anyone had same doubts?

yes i did, it shouldnt have been but, i wrote no on the question paper and then forgot about it..sigh

an investment in an equity instrument can be held at FV through OCI if the irrevocable election is made under IFRS 9, so its correct.
although investments in subsidiaries are not shown as a separate asset in a business combination.

@jwarrick6 said:
actuarial gains and losses are recognised in OCI and should be recognised immediately with no deferral allowed. that's what i put anyway.

yup me too ( with the new ias 19 rule)

investment sfp 55 commprising cash 50m

Exam was reasonable. For my first try I was expecting it to be bombarded with information but at the end, a very fair paper.