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Q89 BPP Practice & revision kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q89 BPP Practice & revision kit

  • This topic has 5 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
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  • April 9, 2015 at 4:11 pm #240673
    at800
    Member
    • Topics: 29
    • Replies: 32
    • β˜†β˜†

    Dear tutor,

    The Q89 of BPP Practice and revision kit clearly states:
    “$250 million of the investment will attract 25% per year capital allowances on a reducing balance basis available with a one year lag”

    I understand this as the tax relief should be accounted with a one year lag (i.e. in the next year).

    So, why the answer includes the tax relief in the same year?

    What could it be?

    A venial sin of decent market leader?

    Or, shame on me, my deep misunderstanding?

    Thank you in advance πŸ™‚

    April 10, 2015 at 7:00 pm #240805
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • β˜†β˜†β˜†β˜†β˜†

    I am really sorry but I do not have the latest edition of the BPP Revision Kit.

    However, if you tell me the name of the question then I will be able to find it (and then I will tell you if it is a venial sin of your deep misunderstanding πŸ™‚ )

    April 13, 2015 at 8:20 am #241080
    at800
    Member
    • Topics: 29
    • Replies: 32
    • β˜†β˜†

    The question name is “Sleepon” which is from December 2005 exam, though it’s amended.

    P.S. The question is not available at the ACCA site, but it’s good to work with it, as the examiner is new and we must be prepared to everything πŸ™‚

    April 14, 2015 at 6:21 am #241211
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • β˜†β˜†β˜†β˜†β˜†

    I know the question Sleepon well (and the examiner is not so new know – he has been the examiner for four years πŸ™‚ )

    There is a 1 year lag in the capital allowances. The answer assumes that both payments are made during the first year (half immediately and half in one years time) and therefore the allowance would be calculated at the end of the first year and the first saving therefore being one year later – i.e. time 2.

    April 14, 2015 at 8:24 am #241247
    at800
    Member
    • Topics: 29
    • Replies: 32
    • β˜†β˜†

    For four years? Really? Q1 December 2014 looks like as if the examiner is completely new πŸ™‚
    Thus, I have not seen the term “multiplier” in the BPP study text which is “content reviewed by ACCA’s examining team”. Perhaps, I missed it, though it’s difficult to find anyhow πŸ™‚
    Has he ever used this term before? I’ve never seen it in any questions πŸ™‚

    As for the question, I see the logic like as follows:
    – it’s not mentioned how income tax is witheld => the same year when the profit is generated;
    – it’s mentioned that capital allowance has a one year lag => we use the one year lag for it;
    It’s clear, thanks a lot.

    April 14, 2015 at 10:12 am #241265
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • β˜†β˜†β˜†β˜†β˜†

    He is definitely not new πŸ™‚

    To be fair to BPP, the word ‘multiple’ is not a technical term.
    If one figure is a multiple of two of another figure, then it means the first figure is two times the second figure.

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