Paper P2 Dec 2010 exam was

albax694: research expenses must be expensed, development expenses must be capitalized if there are met 6 criterias: PIRATE.

I think research and development is given to calculate the amortization cost of Intangible assets and adjust in Operating activities.

i classed the legal cost of 3a as contigent liability, not provision as measurement wasnt relaible, completely mucked up deferred tax treatment in cashflow.
sme threw me a bit and completely avoided it

I did the Cash Flow question quite nicely. Did Q2 & 3 in section B, didn’t even touch SME question 😛

All in all, it was a fair paper, and I hope to pass it in 50s, if not in 60s 🙁

@albax694 said:
did anyone else do Q2 and Q4? Q3 just looked like so much text to read!!
i had hoped pensions would come up so when i saw it in Q4 that made up my mind to do that one even though it was only for 5 or 6 marks.

Q4c What did you put about the R+D? I could only think to say that it should be expensed in the year it occurs. dont think that is right

For RnD SME are allowed to expense out in the year in which they occur, development cost are not required to be capitalized as per IFRS for SME.

althought i entered the exam hall wit no confidence.The paper seemed ok.Wish i get atleast 50

what was question 3 about???

where company had not significant influence and majority shareholders were director of the same company which also had 19.9% holding, there were transaction between co’s.. i defined it under IAS 24 as company were under common control of director who were also the directors of company which had 19.9%,,, iam lit bit sure that this question includes the discussion of ias 24 and ias 27 as well… not absolutely sure…..

POST COMMEnt over this question

Manair was definitely an Associate to be accounted for under IAS 28 as the board composition was 20% even though the voting powers were 19.9% in addition there were significant transactions between the two companies. The sale of computer software and also where consultants were sent over to advise Manair’s Board. This proves that there was significvant influence due to the fact that there was the power by the company to assist in the financial and operating policies of Manair.

How did you answer the last section of Q4, the 9 mark question?

Somebody asked about direct method; I think it is more useful in manufacturing industry as it is relevant to expenditure categorized by nature(labour, materials, etc) and not by function. I wrote that suppling natural recourses has not much to do with manufacturing, hence indirect method is more acceptable. Besides, I think sth as free cash flow, deriving from that method is often used as adjusted profit for more precise ROCE.On the other hand, indirect method is more flexible and subjective, giving more freedom in categorizing expenses. And as the scenario indicated the directors really needed” freedom of speech ” to show a loan as an income! And to cover all angles, I wrote that it seemed they saw the contract as an asset while its obligations and benefits are in balance. But then again, I may be complately wrong!

Open Tuition’s predictions for Q1 and Q4 were spot on! It was a fair paper but I think I should have been more prepared. hoping for a 50 at the least. Thank you Open Tuition!

Hi , I found Q.1 technical but try to cover all the points Q.2 was good everything on share based payments , Q.3 (b) and (C) was bit complicated . I think I done 50/50 let see .. Good luck P2 members