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*** P7 December 2014 Exam was.. Instant Poll and comments ***

Forums › ACCA Forums › ACCA AAA Advanced Audit and Assurance Forums › *** P7 December 2014 Exam was.. Instant Poll and comments ***

  • This topic has 54 replies, 28 voices, and was last updated 10 years ago by adman50.
Viewing 25 posts - 26 through 50 (of 55 total)
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  • December 1, 2014 at 7:27 pm #215395
    ifeoma
    Member
    • Topics: 4
    • Replies: 38
    • ☆

    Q2 did anyone notice that the natural disaster was after the year end. So I felt the carrying value didn’t need any adjustment. Therefore, the contingent asset should only be provided for only when it is certain. I was so time constrained….. Hoping for the best

    December 1, 2014 at 7:31 pm #215400
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 1
    • ☆

    For the goodwill part in Q2, in addition to impairment, I think there was something with the initial recognition of goodwill. It said the following things:

    Add, NCI share of net assets (20%) = $13,000
    Less, total net assets (i.e., 100%) = $61,000

    As the NCI share is not PROPORTIONAL to the total net assets, this means it has been accounted using the fair value method and so, the NCI share includes goodwill, which effectively amounts to $800 (13,000 – (61,000*20%)). Thus, goodwill is overstated by $800.

    I am not sure if this is correct, nor did I do this in the exam myself. But there should be a reason they gave all of that!

    December 1, 2014 at 7:38 pm #215403
    semreh
    Member
    • Topics: 0
    • Replies: 4
    • ☆

    @ifeyan said:
    Q2 did anyone notice that the natural disaster was after the year end. So I felt the carrying value didn’t need any adjustment. Therefore, the contingent asset should only be provided for only when it is certain. I was so time constrained….. Hoping for the best

    IAS 10

    The nature and estimate of the financial impact of material non-adjusting events shall be disclosed in the financial statements. –

    Examples of material non-adjusting events include:

    Major losses suffered as a result of a natural disaster occurring after the end of reporting period

    December 1, 2014 at 7:42 pm #215409
    Abdul
    Member
    • Topics: 5
    • Replies: 210
    • ☆☆☆

    I agree q2 was a stitch up – I hope there are marks for saying the usual impairment of GW, materiality calc and the evidence/procedures.

    I get the feeling seeing that most people where quite good with the rest of paper the will mark them stringently and hit people hard with q2 ( and no doubt maintain those suspiciously consistent low pass rate).

    Anyone (with a better memory than I) recall the questions and mark split for q1-4?

    December 1, 2014 at 7:43 pm #215410
    moiez89
    Participant
    • Topics: 0
    • Replies: 18
    • ☆

    its linked with RMM though.

    December 1, 2014 at 7:53 pm #215422
    nigs001
    Member
    • Topics: 1
    • Replies: 18
    • ☆

    Question 1–
    business risks mentioned above
    Risk of MM – Litigation claim, Revenue recognition of animal rev,Valuation of intangible assets – brand,research n dev,gdwil if any; Inventory – gels, tablet, cream etc- can’t remember the other
    Procedures – prior fin statements, bank depost, depreciation schedule,board minutes, due diligence report, sale cojtract etc
    Ethical – loan guarantee – self interest (pay off audit fees due – cahs flow probs, going concern increased gearing); reveiw of system – self review

    Q2
    a. goodwill-material – impairment test req.increase loss
    valuation – not material in sense of value but bcuz of acq. 50% ofold value
    Loan -vlauation of financial instruments- amortised value-interest in PL, balance on FS
    Also had to discuss audit evidence to find (i think-cant rem)
    b.Claim – virtually certain – premature recognition 9insurance comp investigate: look at ins policy, report for demo cost, report property unsafe, etc
    c. cant remembr quest -ethics??

    Q4
    tender – company briefing, quality control standards, personnel backgroud,management and auditor responsibilities, audit objectives n approach
    ii.Fee issues n ethics – new client – two yrs no audit, test of controls, one accountant – overworked? reliance on data n also limited assurance review , evaluate qualif of unrlated firm;owner wants 4 mnt report and low fees in short time frame, strategic advice – ethical issues – lowballing, self interest. Fees based on qualification and time to be spent, develop learning curve.

    c. Former partner as quality control – no- familiarity n self interest, mitigate risk , new partner.

    Q5
    Quality control n ethical
    New client, 20 locations, discussion wit finance dir. and no other info given (there was another issue-cant remembr) ethical issue – disc with fin – self interest

    b.share option -Ifrs 2 -material, provision – not comm b4 yr end, obsolete inv – due to market etc (not sure if it hard to be tied to part a but if it did the fig was not material)
    c. I thought adverse.

    Also a quest bout comp system – give rise to self review(cant remeber which part).

    Wheeww… I think/hope what I did is enough to muster 50%.

    December 1, 2014 at 8:13 pm #215454
    abdullahzafar
    Participant
    • Topics: 31
    • Replies: 65
    • ☆☆

    @nigs001 said:
    Question 1–
    business risks mentioned above
    Risk of MM – Litigation claim, Revenue recognition of animal rev,Valuation of intangible assets – brand,research n dev,gdwil if any; Inventory – gels, tablet, cream etc- can’t remember the other
    Procedures – prior fin statements, bank depost, depreciation schedule,board minutes, due diligence report, sale cojtract etc
    Ethical – loan guarantee – self interest (pay off audit fees due – cahs flow probs, going concern increased gearing); reveiw of system – self review

    Q2
    a. goodwill-material – impairment test req.increase loss
    valuation – not material in sense of value but bcuz of acq. 50% ofold value
    Loan -vlauation of financial instruments- amortised value-interest in PL, balance on FS
    Also had to discuss audit evidence to find (i think-cant rem)
    b.Claim – virtually certain – premature recognition 9insurance comp investigate: look at ins policy, report for demo cost, report property unsafe, etc
    c. cant remembr quest -ethics??

    Q4
    tender – company briefing, quality control standards, personnel backgroud,management and auditor responsibilities, audit objectives n approach
    ii.Fee issues n ethics – new client – two yrs no audit, test of controls, one accountant – overworked? reliance on data n also limited assurance review , evaluate qualif of unrlated firm;owner wants 4 mnt report and low fees in short time frame, strategic advice – ethical issues – lowballing, self interest. Fees based on qualification and time to be spent, develop learning curve.

    c. Former partner as quality control – no- familiarity n self interest, mitigate risk , new partner.

    Q5
    Quality control n ethical
    New client, 20 locations, discussion wit finance dir. and no other info given (there was another issue-cant remembr) ethical issue – disc with fin – self interest

    b.share option -Ifrs 2 -material, provision – not comm b4 yr end, obsolete inv – due to market etc (not sure if it hard to be tied to part a but if it did the fig was not material)
    c. I thought adverse.

    Also a quest bout comp system – give rise to self review(cant remeber which part).

    Wheeww… I think/hope what I did is enough to muster 50%.

    There were no financial instruments. In fact it was a borrowing cost under IAS 23.

    December 1, 2014 at 8:20 pm #215471
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 28
    • ☆

    What were the marks available for question five please???

    December 1, 2014 at 9:39 pm #215584
    Enda
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    Q2 did anyone notice that the natural disaster was after the year end. So I felt the carrying value didn’t need any adjustment. Therefore, the contingent asset should only be provided for only when it is certain. I was so time constrained….. Hoping for the best

    I did the same. That be the correct treatment to not recognise? Conditions didn’t exist at ye. Non adjusting event no?? Any thoughts?

    December 1, 2014 at 10:00 pm #215609
    emmamc
    Member
    • Topics: 0
    • Replies: 5
    • ☆

    q5 – think it was 3 marks for each accounting issue (3 x 3mrks) , 4 marks for the audit reoprt opinion and cant remember think part a was 7 marks regarding the long standing business relationship

    December 1, 2014 at 10:47 pm #215628
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 28
    • ☆

    Thanks emmamac.

    I thought the exam was ok.
    Time pressure got to me and I had to rush Q5.

    I found q2 very hard..
    Wasn’t sure about that one to be honest.

    December 1, 2014 at 11:11 pm #215634
    emmamc
    Member
    • Topics: 0
    • Replies: 5
    • ☆

    No probs at first glance I thought the paper was ok but no amount of practice can prepare you for the real thing I found. Found it hard to string answers together and was also rushed on q5 even though I left the recommended time for it. Also found some of the accounting statements hard to understand especially the one with the 300 revalue upwards was badly worded or maybe it was just me. Was more like an accounting paper than an auditing paper but saying that p2 was easier ! Onwards and upwards tax Friday

    December 2, 2014 at 7:31 am #215710
    atab
    Member
    • Topics: 82
    • Replies: 185
    • ☆☆☆

    @ifeyan said:
    Q2 did anyone notice that the natural disaster was after the year end. So I felt the carrying value didn’t need any adjustment. Therefore, the contingent asset should only be provided for only when it is certain. I was so time constrained….. Hoping for the best

    Yes I did the same…I said that it is a non-adjusting event but evidence required to confirm whether or not the insurance claim was probable or not…then I went on to say that if so disclosure of the contingent asset it required…

    December 2, 2014 at 7:37 am #215714
    abdullahzafar
    Participant
    • Topics: 31
    • Replies: 65
    • ☆☆

    @keyboard said:
    computerized accounting system was no MM..beacuse it had clearly writtern it did not cause any.. it was only there for ethical threat..

    can any body confirm GC issue in q2… it could have beenadjusting event because manufacturing site was hit

    There was a mm and business risk in implenting new system.

    There were no deficiencies in old system. But mm and business were there in implementing new system.

    Secondly, you are wrong GW was material as it was representing 3% of total assets. Total assets were in million. And GW was presented in ‘000 so we were required to calculate materiality carefully.

    Let me show you how it was given In question

    Suppose total assets were in question as 10million.

    Working:
    ‘000
    Fv of net assets. (40)
    GW. 35

    So we were required to calculate materiality by dividing 35/10000 or 35000/10000000.

    December 2, 2014 at 9:30 am #215789
    adman50
    Member
    • Topics: 2
    • Replies: 47
    • ☆

    For Q2 I had something like:

    a) Discussion of the Goodwill and the amortisation of it. Then discussed about the finance costs and how the 5m premium was treated, think I said something about discounting this 5m to the present value and then unwinding it but I think that is incorrect should have been amortised perhaps? For 12 marks had to be something more technical like this.

    b) was a non adjusting event as it was after year end, and should only have been disclosed (exact question was in Kaplan QBD) so it was wrong to add the contingent asset in (besides it has to be virtually certain of payout too)

    c) related party transaction made it material by nature and the removal of PURP on the inventory and inter company balances

    December 2, 2014 at 9:31 am #215790
    adman50
    Member
    • Topics: 2
    • Replies: 47
    • ☆

    @abdullahzafar said:
    There was a mm and business risk in implenting new system.

    There were no deficiencies in old system. But mm and business were there in implementing new system.

    Agree with this- I had it as a risk that there could be significant disruption to implementing a new system

    December 2, 2014 at 12:17 pm #215961
    Sachin
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    In question 1 b) Risk of Material Misstatement. I spoke about IFRS8 segmental reporting.

    Is that correct? They were a listed company??

    December 2, 2014 at 2:43 pm #216043
    tejal
    Member
    • Topics: 5
    • Replies: 18
    • ☆

    @keyboard said:
    and for going concern since manufacturing site had had a hit… it was a adjusting event too being a going concern event!…

    well, if you’re not sure about this, open up f7 kaplan book and read topic ‘going concern’ under IAS 10 chapter…

    good luck everybody..god bless

    It might be a going concern issue AFTER year end, however I was under the impression that because it doesn’t have to do with the current year end being reported on, it wouldn’t require an adjustment, only disclosure. There were no indications the site had any problems before year end…

    Adjusting event:
    An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of the enterprise is not appropriate.

    Not sure if that’s right though, just my thoughts..

    December 2, 2014 at 3:47 pm #216080
    abdullahzafar
    Participant
    • Topics: 31
    • Replies: 65
    • ☆☆

    @keyboard said:

    @abdullahzafar
    .. you’re right!

    but requirement was to evaluate not explain dear brother, in evaluation we put figures on risks.. figures were proovided..

    secondly for GW, iwas saying abt adjustment , if adjustement is immaterial we will not adjust it…. discussion of godwill materiality is irrelevant dear brother

    For GW part, whenever question says matters to be considered we are required to Consider the materiality. Also its important to review treatment of goodwill that whether it calculated according to IFRS 3.

    Secondly, fv of net assets should be considered that whether it was measured according IFRS 13. There was a risk that the fv wasn’t calculated as per IFRS 13.

    Thirdly, it should be considered that whether goodwill’s impairment conducted by management as there is a risk of misstatement of it.

    Many many more points like these.

    Second last or previous technical article cleared that how questions like these should be done.

    BTW just take a look at bpp’s solution of questions like the one which came in the exams .

    I hope you understand what I meant.

    December 2, 2014 at 4:06 pm #216090
    ali
    Member
    • Topics: 0
    • Replies: 11
    • ☆

    Paper was quite general no specific were really asked…

    December 2, 2014 at 4:10 pm #216093
    ali
    Member
    • Topics: 0
    • Replies: 11
    • ☆

    I did it as well and it was 15% of total revenue so clearly different segment in addition there was separate market and associated risks. So clearly it was Risk of MM.

    December 2, 2014 at 8:48 pm #216477
    demashi
    Member
    • Topics: 0
    • Replies: 23
    • ☆

    Hi All,

    Fair exam overall. However, when they asked about business risk does’t that mean discussing the risks faced by the business under the 5 main sub-headings of business risk i.e. Operational Risk, Financial Risk, Legal Risk etc?…

    December 3, 2014 at 5:16 am #216604
    vimis
    Member
    • Topics: 1
    • Replies: 14
    • ☆

    this was a hard exam especially q2

    December 3, 2014 at 3:06 pm #216858
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 28
    • ☆

    hey guys.. the question paper is up now:

    https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/int/p7int_2014_Dec-q.pdf

    December 3, 2014 at 3:06 pm #216859
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 28
    • ☆

    hey guys.. the question paper is up now:

    https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/int/p7int_2014_Dec-q.pdf

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