*** P7 December 2012 Exam *** Instant Poll and comments***

1 part 🙂 FS Risks
IAS 2 Inventory Write off
IAS 36 Production line impairment
IAS 23 Borrowing costs non-capitalization
IAS 1 Going Concern

I did know that FX risk is there, but wasnt soo sure about the treatment so did not write on that.

on 2nd Part 🙂

Wrote about the ISA 580 Written representations, Some quality issues, FS risks.

good luck to everyone, let’s forget this exam it’s over now it’s past let’s concentrate on future;)

cheers

@ keyboard, yes i said that about the fx havin to be recorded at spot rate first translated as sofp date and gains/losses to the I/s, that was Q1 as i think i had that as a potential material mistatement ? i said that the profit on disposal of 2M shouldnt be netted of expenses but i didnt go so far as to say that that would have decreased reported profit when taken out, hopefully get some marks for mentioning it.. think that was Q2 not sure. i also said about the ppe that we did not know what type of property was disposed off as not enough evidence so couldnt determine whether it was accounted for correctly hence a material misstatement.
In Q1, I think i messed up here as i stated as a business risk the new production line had just started (now dec) to comply with regulations in march 2013 and the risk of not being ready or sufficient could waste the capital expenditure and incurr penalties, reducing profits, however, in the matterial misstatement part i spoke about development exp and borrowing costs being capitialised incorrectly, this was a mistake, i should have been talking about the loan as if the work has only started then the the magority capital expenditure not incurred yet, ie loan funds not used yet

In regards to the 25% reduced turnover in subsidiary, well maybe not a area for a great deal of thought, as some subsidiaries can have very little or no turnover at all, whereby their main source of income is from inter-group dividends. The question did not classify the significance of the subsidiary, the parent’s share holding, or it’s statement of comprehensive income, so I left it at that.
I did however note the non-amortised Goodwill amounts, and enquired to management if they saw the parents investments as having an indefinate life.

UGHHHH first of all i regretted reading your comments,made me doubt my answers!!! lol

Q2 was definitely the trickiest,i read you guys mentioning some of the problem identified with the 9 key points,but from what i remember they asked how is the key points adjustments going to affect the closing of the audit..correct me if im wrong..but just mentioning whats wrong with the key points doesnt really answer the question in my understanding ,i mean how is it gonna affect the audit closing or something aaaaaa n i couldnt….goshhh lisa!

Q1 had a lot of possible answers to it but I saw a lot of u guys mentioned gg concern as business risk?? i dont know it didnt really cross my mind as if they were having going concern problem,sure they’re adding debt but from what i remember current ratio was still more than 1 (1,1 if im not wrong) and they have enough cash to cover the interest.it didnt really strike me as they are having going concern,i mean revenue is just down by less than 10percent i think,seems to me its just like another company in the current crisis / financial weather having difficulties. i might be wrong but i didnt list out gg concern.

i still wish i hadnt read your comments,really doubting myself now lol 8feb come faster!! all the best guys!

Low cash balance, only one supplier, failure of production line, high borrowings, senior directors leaving = going concern issues

Hi guys,
any idea about marking scheme of Q1(A). i mentioned only 8 business risks. 0.5 marks for identification and 1.5 for explanation, was that right or i had to mention twelve to score full.

@vishal32 said:
Low cash balance, only one supplier, failure of production line, high borrowings, senior directors leaving = going concern issues

low cash balance but still able to cover current liabilities,saying one supplier is a gg concern issue is very absurd,sales decline doesnt mean failure production line,high debt equals gg concern is also very elaborate, directors leaving left on good terms with the company and immediately replaced – the very least is rmm since new directors might not have experience in the industry or experience preparing the fs of the company, saying its a gg concern issue again is very elaborate.

The questions were fairly easy but like you all rightly said, TIME was an issue and for paper P7,it will always be an issue. I salute the guy who said he had 5mins to spare. Thats totally a tall order for me personally. I however have concluded that this P7 is designed for NO ONE to finish. I dont exactly know what acca is testing with that.

Question 1 was ok but extremely loaded
Question 2 also. I barely answered the 18 marks parts cos of time but i knew it.
Had no clue as to question 5 so didnt bother.
I only pray for a pass. This paper has been a burden to me for over a year!!and this diet is sure my time. I remain positive. ]

Goodluck to those still writing exams!!!

2 days after exam….. Now I can speak about this exam being unprejudiced. First of all – time pressure was significant. I simply needed extra 30 minutes to complete Q2, but factually I only started it. I don’t understand logic of our examinator – does she want we answer all questions not thinking deep or she wants we answer well? It is not the first time for me to sit P7, so I dare say that I know well ALL topics of this exam as well as all related technical materials. The problem is that if you know more – you can write more while answering questions but it requires appropriate time. What is tested in P7 – our knowledge or speed of writing?! We are not mashinegunes or troubleshooters, just human beeing! Questions (part 1) are always tricky – of course, we need time to cope with them. I hope – knowledge only is tested. All of us are reading past exam papers while preparing ot the exam. Have a look at answers – lots of text which was written while not beeing under time pressure and all materials available. All normal human being consider official answers – as STANDARD of answer to pass the exam, but factually it is 100% impossible to write all this thext in your answer even if you are prepared well due to incompatibility of time available and question requirements. I don’t even say that for many of us English is not mother’s tongue. I think, that ACCA team has to perform analysis of fact that P7 has the lowest pass rate for decades! God bless all students!

@anjali18 said:
question 1 has indicators of going concern as losing key staff and had only 20 customers and had an overdraft and a liquid ration of 0.5 and a current of 1 if i remember very cleary. i think they were indicators of going concern. and also the mention of contingent fees that management were dicussing about. as a stakeholder you would raise question on going concern before investing in such a company .

Agreed – finally someone who understands where I am coming from.

Well you guys don’t forget here .. Those who talk about going concern ! The loan has a lot to do with risk of material misstatement and business risk
Listen revenue is declining .. Company is showing loss , loan is just negotiated and bank will not give loan with this health of the company. Yes current ratio is fine but loan of 30m give rise to significant finance cost !!! Take it in current liabilities what will be the impact ???? Liquidity ratio will dramatically decrease . Because currently inventory .. Receivable all in poor condition. Think broad guys !

1 – overseas supplier .. Supplying poor quality .. Evidence sales return due to poor quality material which comp purchased from foriegn supplier. Exchange and provisions !! Risk

2 – loan

They were the significant risks ..
Which leads to
3 – liquidity risk

In q1, I messed it up as I was talking about development expenditure and borrowing costs, but does anyone actually remember if the had secured the loan or was it still in negotiation?