ACCA 历年真题f5_2010_dec_q

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ACCA F5 2010年12月真题答案

Actual volume
750 650
Sales price Variance
$ 15,000 A
6,500 A ––––––– 21,500 A –––––––
Sales volume contribution variance = (actual sales volume – budgeted sales volume) x standard margin
Cost of sales Cost of sales has decreased by 19·2% in 2010. This must be considered in relation to the decrease in turnover as well. In 2009, cost of sales represented 72·3% of turnover and in 2010 this figure was 63·7%. This is quite a substantial decrease. The reasons for it can be ascertained by, firstly, looking at the freelance staff costs.
It can also be seen from the non-financial performance indicators that 20% of students in 2010 are students who have transferred over from alternative training providers. It is likely that they have transferred over because they have heard about the improved service that AT Co is providing. Hence, they are most likely the reason for the increased market share that AT Co has managed to secure in 2010.

p2int_2010_dec_q

P a p e r P 2 ( I N T )Section A – This ONE question is compulsory and MUST be attempted1The following draft group financial statements relate to Jocatt, a public limited company:Jocatt Group: Statement of financial position as at 30 November20102009$m$m AssetsNon-current assetsProperty, plant and equipment327254 Investment property86 Goodwill4868 Intangible assets8572 Investment in associate54–Available-for-sale financial assets9490–––––––––––616490–––––––––––Current assetsInventories105128 T rade receivables62113 Cash and cash equivalents232143–––––––––––399384–––––––––––T otal assets1,015874–––––––––––Equity and LiabilitiesEquity attributable to the owners of the parent:Share capital290275 Retained earnings351324 Other components of equity1520–––––––––––656619–––––––––––Non-controlling interest5536–––––––––––T otal equity711655–––––––––––Non-current liabilities:Long-term borrowings6771 Deferred tax3541 Long-term provisions-pension liability2522–––––––––––T otal non-current liabilities127134–––––––––––Current liabilities:T rade payables14455 Current tax payable3330–––––––––––T otal current liabilities17785–––––––––––T otal liabilities304219–––––––––––T otal equity and liabilities1,015874–––––––––––2Jocatt Group: Statement of comprehensive income for the year ended 30 November 2010$mRevenue432Cost of sales(317)–––––––Gross profit115Other income25Distribution costs(55·5) Administrative expenses(36)Finance costs paid (6)Gains on property10·5Share of profit of associate6–––––––Profit before tax59Income tax expense(11)–––––––Profit for the year48––––––––––––––Other comprehensive income after tax:Gain on available for sale financial assets (AFS)2Losses on property revaluation(7)Actuarial losses on defined benefit plan(6)–––––––Other comprehensive income for the year, net of tax(11)–––––––T otal comprehensive income for the year37––––––––––––––Profit attributable to:Owners of the parent38Non-controlling interest10–––––––48–––––––T otal comprehensive income attributable to:$mOwners of the parent27Non-controlling interest10–––––––37–––––––Jocatt Group: Statement of changes in equity for the year ended 30 November 2010Share Retained AFS Revaluation Total Non-Totalg equityCapital Earning s financial Surplus controllinassets(PPE)Interest$m$m$m$m$m$m$m Balance at 1 December 200927532441661936655 Share capital issued 151515 Dividends(5)(5)(13)(18) Rights issue22 Acquisitions2020 T otal comprehensive income for the year322(7)271037––––––––––––––––––––––––––––Balance at 30 November 20102903516965655711––––––––––––––––––––––––––––3[P.T.O.The following information relates to the financial statements of Jocatt:(i)On 1 December 2008, Jocatt acquired 8% of the ordinary shares of Tigret. Jocatt had treated this investmentas available-for-sale in the financial statements to 30 November 2009. On 1 December 2009, Jocatt acquireda further 52% of the ordinary shares of Tigret and gained control of the company. The consideration for theacquisitions was as follows:Holding Consideration$m1 December 20088%41 December 200952%30–––––––––60%34–––––––––At 1 December 2009, the fair value of the 8% holding in Tigret held by Jocatt at the time of the business combination was $5 million and the fair value of the non-controlling interest in Tigret was $20 million. No gain or loss on the 8% holding in Tigret had been reported in the financial statements at 1 December 2009. The purchase consideration at 1 December 2009 comprised cash of $15 million and shares of $15 million.The fair value of the identifiable net assets of Tigret, excluding deferred tax assets and liabilities, at the date of acquisition comprised the following:$mProperty, plant and equipment15Intangible assets18T rade receivables5Cash7The tax base of the identifiable net assets of Tigret was $40 million at 1 December 2009. The tax rate of Tigret is 30%.(ii)On 30 November 2010,Tigret made a rights issue on a 1 for 4 basis. The issue was fully subscribed and raised $5 million in cash.(iii)Jocatt purchased a research project from a third party including certain patents on 1 December 2009 for $8 million and recognised it as an intangible asset. During the year, Jocatt incurred further costs, which included $2 million on completing the research phase, $4 million in developing the product for sale and $1 million for the initial marketing costs. There were no other additions to intangible assets in the period other than those on the acquisition of Tigret.(iv)Jocatt operates a defined benefit scheme. The current service costs for the year ended 30 November 2010 are $10 million. Jocatt enhanced the benefits on 1 December 2009 however, these do not vest until 30 November 2012. The total cost of the enhancement is $6 million. The expected return on plan assets was $8 million for the year and Jocatt recognises actuarial gains and losses within other comprehensive income as they arise. (v)Jocatt owns an investment property. During the year, part of the heating system of the property, which had a carrying value of $0·5 million, was replaced by a new system, which cost $1 million. Jocatt uses the fair value model for measuring investment property.(vi)Jocatt had exchanged surplus land with a carrying value of $10 million for cash of $15 million and plant valued at $4 million. The transaction has commercial substance. Depreciation for the period for property, plant and equipment was $27 million.(vii)Goodwill relating to all subsidiaries had been impairment tested in the year to 30 November 2010 and any impairment accounted for. The goodwill impairment related to those subsidiaries which were 100% owned. (viii)Deferred tax of $1 million arose on the gains on available-for-sale investments in the year.(ix)The associate did not pay any dividends in the year.4Required:(a)Prepare a consolidated statement of cash flows for the Jocatt Group using the indirect method under IAS 7‘Statement of Cash Flows’.Note: Ignore deferred taxation other than where it is mentioned in the question.(35 marks)(b)Jocatt operates in the energy industry and undertakes complex natural gas trading arrangements, which involveexchanges in resources with other companies in the industry. Jocatt is entering into a long-term contract for the supply of gas and is raising a loan on the strength of this contract. The proceeds of the loan are to be received over the year to 30 November 2011 and are to be repaid over four years to 30 November 2015. Jocatt wishes to report the proceeds as operating cash flow because it is related to a long-term purchase contract. The directors of Jocatt receive extra income if the operating cash flow exceeds a predetermined target for the year and feel that the indirect method is more useful and informative to users of financial statements than the direct method.(i)Comment on the directors’ view that the indirect method of preparing statements of cash flow is moreuseful and informative to users than the direct method.(7 marks) (ii)Discuss the reasons why the directors may wish to report the loan proceeds as an operating cash flow rather than a financing cash flow and whether there are any ethical implications of adopting this treatment.(6 marks) Professional marks will be awarded in part (b) for the clarity and quality of discussion.(2 marks)(50 marks)5[P.T.O.Section B – TWO questions ONLY to be attempted2Margie, a public limited company, has entered into several share related transactions during the period and wishes to obtain advice on how to account for the transactions.(a)Margie has entered into a contract with a producer to purchase 350 tonnes of wheat. The purchase price will besettled in cash at an amount equal to the value of 2,500 of Margie’s shares. Margie may settle the contract at any time by paying the producer an amount equal to the current market value of 2,500 of Margie shares, less the market value of 350 tonnes of wheat. Margie has entered into the contract as part of its hedging strategy and has no intention of taking physical delivery of the wheat. Margie wishes to treat this transaction as a share based payment transaction under IFRS 2 ‘Share-based Payment’.(7 marks)(b)Margie has acquired 100% of the share capital of Antalya in a business combination on 1 December 2009.Antalya had previously granted a share-based payment to its employees with a four-year vesting period. Its employees have rendered the required service for the award at the acquisition date but have not yet exercised their options. The fair value of the award at 1 December 2009 is $20 million and Margie is obliged to replace the share-based payment awards of Antalya with awards of its own.Margie issues a replacement award that does not require post-combination services. The fair value of the replacement award at the acquisition date is $22 million. Margie does not know how to account for the award on the acquisition of Antalya.(6 marks)(c)Margie issued shares during the financial year. Some of those shares were subscribed for by employees who wereexisting shareholders, and some were issued to an entity, Grief, which owned 5% of Margie’s share capital.Before the shares were issued, Margie offered to buy a building from Grief and agreed that the purchase price would be settled by the issue of shares. Margie wondered whether these transactions should be accounted for under IFRS 2.(4 marks)(d)Margie granted 100 options to each of its 4,000 employees at a fair value of $10 each on 1 December 2007.The options vest upon the company’s share price reaching $15, provided the employee has remained in the company’s service until that time. The terms and conditions of the options are that the market condition can be met in either year 3, 4 or 5 of the employee’s service.At the grant date, Margie estimated that the expected vesting period would be four years which is consistent with the assumptions used in estimating the fair value of the options granted. The company’s share price reached $15 on 30 November 2010.(6 marks) Required:Discuss, with suitable computations where applicable, how the above transactions would be dealt with in the financial statements of Margie for the year ending 30 November 2010.Professional marks will be awarded in question 2 for the clarity and quality of discussion.(2 marks)(25 marks)63(a)Greenie, a public limited company, builds, develops and operates airports. During the financial year to30 November 2010, a section of an airport collapsed and as a result several people were hurt. The accidentresulted in the closure of the terminal and legal action against Greenie. When the financial statements for the year ended 30 November 2010 were being prepared, the investigation into the accident and the reconstruction of the section of the airport damaged were still in progress and no legal action had yet been brought in connection with the accident. The expert report that was to be presented to the civil courts in order to determine the cause of the accident and to assess the respective responsibilities of the various parties involved, was expected in 2011.Financial damages arising related to the additional costs and operating losses relating to the unavailability of the building. The nature and extent of the damages, and the details of any compensation payments had yet to be established. The directors of Greenie felt that at present, there was no requirement to record the impact of the accident in the financial statements.Compensation agreements had been arranged with the victims, and these claims were all covered by Greenie’s insurance policy. In each case, compensation paid by the insurance company was subject to a waiver of any judicial proceedings against Greenie and its insurers. If any compensation is eventually payable to third parties, this is expected to be covered by the insurance policies.The directors of Greenie felt that the conditions for recognising a provision or disclosing a contingent liability had not been met. Therefore, Greenie did not recognise a provision in respect of the accident nor did it disclose any related contingent liability or a note setting out the nature of the accident and potential claims in its financial statements for the year ended 30 November 2010. (6 marks)(b)Greenie was one of three shareholders in a regional airport Manair. As at 30 N ovember 2010, the majorityshareholder held 60·1% of voting shares, the second shareholder held 20% of voting shares and Greenie held 19·9% of the voting shares. The board of directors consisted of ten members. The majority shareholder was represented by six of the board members, while Greenie and the other shareholder were represented by two members each. A shareholders’ agreement stated that certain board and shareholder resolutions required either unanimous or majority decision. There is no indication that the majority shareholder and the other shareholders act together in a common way. During the financial year, Greenie had provided Manair with maintenance and technical services and had sold the entity a software licence for $5 million. Additionally, Greenie had sent a team of management experts to give business advice to the board of Manair. Greenie did not account for its investment in Manair as an associate, because of a lack of significant influence over the entity. Greenie felt that the majority owner of Manair used its influence as the parent to control and govern its subsidiary.(10 marks)(c)Greenie has issued 1 million shares of $1 nominal value for the acquisition of franchise rights at a local airport.Similar franchise rights are sold in cash transactions on a regular basis and Greenie has been offered a similar franchise right at another airport for $2·3 million. This price is consistent with other prices given the market conditions. The share price of Greenie was $2·50 at the date of the transaction. Greenie wishes to record the transaction at the nominal value of the shares issued.Greenie also showed irredeemable preference shares as equity instruments in its statement of financial position.The terms of issue of the instruments give the holders a contractual right to an annual fixed cash dividend and the entitlement to a participating dividend based on any dividends paid on ordinary shares. Greenie felt that the presentation of the preference shares with a liability component in compliance with IAS 32 ‘Financial instruments: Presentation’ would be so misleading in the circumstances that it would conflict with the objective of financial statements set out in the IASB’s ‘Framework for the Preparation and Presentation of Financial Statements’. The reason given by Greenie for this presentation was that the shares participated in future profits and thus had the characteristics of permanent capital because of the profit participation element of the shares.(7 marks)Required:Discuss how the above financial transactions should be dealt with in the financial statements of Greenie for the year ended 30 November 2010.Professional marks will be awarded in question 3 for the clarity and quality of discussion.(2 marks)(25 marks)7[P.T.O.4(a)The principal aim when developing accounting standards for small to medium-sized enterprises (SMEs) is to provide a framework that generates relevant, reliable, and useful information which should provide a high quality and understandable set of accounting standards suitable for SMEs. There is no universally agreed definition of an SME and it is difficult for a single definition to capture all the dimensions of a small or medium-sized business.The main argument for separate SME accounting standards is the undue cost burden of reporting, which is proportionately heavier for smaller firms.Required:(i)Comment on the different approaches which could have been taken by the International AccountingStandards Board (IASB) in developing the ‘IFRS for Small and Medium-sized Entities’ (IFRS for SMEs),explaining the approach finally taken by the IASB.(6 marks) (ii)Discuss the main differences and modifications to IFRS which the IASB made to reduce the burden of reporting for SME’s, giving specific examples where possible and include in your discussion how theBoard has dealt with the problem of defining an SME. (8 marks) Professional marks will be awarded in part (a) for clarity and quality of discussion.(2 marks)(b)Whitebirk has met the definition of a SME in its jurisdiction and wishes to comply with the ‘IFRS for Small andMedium-sized Entities’. The entity wishes to seek advice on how it will deal with the following accounting issues in its financial statements for the year ended 30 N ovember 2010.The entity already prepares its financial statements under full IFRS.(i)Defined benefit obligation30 November2009 ($m)2010 ($m)Present value of defined benefit obligation 1·52·0Fair value of plan assets1·21·65Unrecognised actuarial losses0·190·21Average working lives of employees 12 yearsThe entity currently uses the ‘corridor approach’ to recognise actuarial gains and losses.(ii)Whitebirk purchased 90% of Close, a SME, on 1 December 2009. The purchase consideration was $5·7 million and the value of Close’s identifiable assets was $6 million. The value of the non-controllinginterest at 1 December 2009 was estimated at $0·7 million. Whitebirk has used the full goodwill methodto account for business combinations and the estimated life of goodwill cannot be estimated with anyaccuracy. Whitebirk wishes to know how to account for goodwill under the IFRS for SMEs.(iii)Whitebirk has incurred $1 million of research expenditure to develop a new product in the year to30 N ovember 2010. Additionally, it incurred $500,000 of development expenditure to bring anotherproduct to a stage where it is ready to be marketed and sold.Required:Discuss how the above transactions should be dealt with in the financial statements of Whitebirk, with reference to the ‘IFRS for Small and Medium-sized Entities’.(9 marks)(25 marks)End of Question Paper8。

ACCA份考试真题(P1)

考试真题（P1）Section A - This ONE question is compulsory and MUST be attempted1 In the 2009 results presentation to analysts,the chief executive of ZPT,a global internet communications company,announced an excellent set of results to the waiting audience.Chief executive Clive Xu announced that, compared to 2008,sales had increased by 50%,profi ts by 100% and total assets by 80%.The dividend was to be doubled from the previous year.He also announced that based on their outstanding performance,the executive directors would be paid large bonuses in line with their contracts.His own bonus as chief executive would be $20 million.When one of the analysts asked if the bonus was excessive,Mr Xu reminded the audience that the share price had risen 45% over the course of the year because of his efforts in skilfully guiding the company.He said that he expected the share price to rise further on the results announcement,which it duly did. Because the results exceeded market expectation,the share price rose another 25% to $52.Three months later,Clive Xu called a press conference to announce a restatement of the 2009 results.This was necessary,he said,because of some 'regrettable accounting errors'.This followed a meeting between ZPT and the legal authorities who were investigating a possible fraud at ZPT.He disclosed that in fact the fi gures for 2009 were increases of 10% for sales,20% for profi ts and 15% for total assets which were all signifi cantly below market expectations.The proposed dividend would now only be a modest 10% more than last year.He said that he expected a market reaction to the restatement but hoped that it would only be a short-term effect.The first questioner from the audience asked why the auditors had not spotted and corrected the fundamental accounting errors and the second questioner asked whether such a disparity between initial and restated results was due to fraud rather than'accounting errors'.When a journalist asked Clive Xu if he intended to pay back the $20 million bonus that had been based on the previous results,Mr Xu said he did not.The share price fell dramatically upon the restatement announcement and,because ZPT was such a large company,it made headlines in the business pages in many countries.Later that month,the company announced that following an internal investigation,there would be further restatements,all dramatically downwards,for the years 2006 and 2007.This caused another mass selling of ZPT shares resulting in a fi nal share value the following day of $1.This represented a loss of shareholder value of $12 billion from the peak share price.Clive Xu resigned and the government regulator for businessordered an investigation into what had happened at ZPT.The shares were suspended by the stock exchange.A month later, having failed to gain protection from its creditors in the courts,ZPT was declared bankrupt. Nothing was paid out to shareholders whilst suppliers received a fraction of the amounts due to them. Some non-current assets were acquired by competitors but all of ZPT‘s 54,000 employees lost their jobs,mostly with little or no termination payment.Because the ZPT employees’ pension fund was not protected from creditors,the value of that was also severely reduced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.ced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.ced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.ced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.The government investigation found that ZPT had been maintaining false accounting records for several years. This was done by developing an overly-complicated company structure that contained a network of international branches and a business model that was diffi cult to understand.Whereas ZPT had begun as a simple telecommunications company,Clive Xu had increased the complexity of the company so that he could 'hide' losses and mis-report profi ts. In the company‘s reporting,he also substantially overestimated the value of future customer supply contracts.The investigation also found a number of signifi cant internal control defi ciencies including no effective management oversight of the external reporting process and a disregard of the relevant accounting standards.In addition to Mr Xu,several other directors were complicit in the activities although Shazia Lo,a senior qualifi ed accountant working for the fi nancial director,had been unhappy about the situation for some time.She had approached the fi nance director with her concerns but having failed to get the answers she felt she needed,had threatened to tell the press that future customer supply contract values had been intentionally and materially overstated（the change in fair value would have had a profi t impact）。

ACCA历年考题之f9_2007_dec_q

Formulae Sheet, Present Value and Annuity Tables are on pages 6, 7 and 8.
Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor.
Paper F9
Fundamentals Level – Skills Module
Financial Management
Thursday 6 December 2007
Time allowed
Reading and planning: 15 minutes
Writing:
3 hours
ALL FOUR questions are compulsory and MUST be attempted.
This question paper must not be removed from the examination hall.
The Association of Chartered Certified Accountants
ALL FOUR questions are compulsory and MUST be attempted
12
Interest
3
–––
Profit before tax
9
Income tax expense

ACCA201012份考试真题(P1)

acca考试题目

acca考试题目ACCA（英国特许公认会计师协会）是全球最大的专业会计师协会，其资格认证被广泛认可。

ACCA考试是许多会计专业人士追求的目标。

本文将对ACCA考试的题目进行分析和讨论，为想要参加ACCA考试的人士提供一些有益的参考。

第一部分：ACCA考试概述ACCA考试分为四个模块，即基本阶段、应用阶段、专业阶段和完全专业阶段。

每个阶段都包含多个考试科目，考察不同的知识和技能。

通过ACCA考试，考生将获得ACCA会员资格，并有机会在全球范围内从事会计、审计和财务等领域的工作。

第二部分：基本阶段考试题目在基本阶段，考试科目包括《管理会计与财务管理》、《审计与保证》等。

这些科目涵盖了会计和财务管理的基本理论和实践。

根据ACCA考试的特点，考题一般分为两种类型：选择题和主观题。

选择题包括单选题和多选题，主观题要求考生进行论述和分析。

第三部分：应用阶段考试题目应用阶段的考试科目更加深入和综合，其中包括《财务报告与会计基准》、《企业税务》等。

这些科目考察了考生在实际工作中应用会计知识和技能的能力。

考题内容更加具体和复杂，要求考生能够分析和解决实际的会计和财务问题。

第四部分：专业阶段考试题目专业阶段考试科目包括《公司法与企业结构》、《高级财务管理》等。

这些科目是ACCA考试的重点，考察了考生在不同领域的专业知识和技能。

考题一般更加复杂和综合，要求考生能够在实际情况下进行决策和分析。

第五部分：完全专业阶段考试题目完全专业阶段的考试科目包括《企业战略与风险管理》、《高级审计与控制》等。

这些科目是ACCA考试的最高级别，要求考生具备深入的专业知识和高级的技能。

考题一般更加开放和综合，要求考生能够独立思考和解决复杂的会计和财务问题。

第六部分：ACCA考试备考建议1.充分了解考试科目的内容和要求，做好考前的准备和规划。

2.多做题，熟悉考试形式和题型。

可以通过参加模拟考试来提高答题技巧和时间管理能力。

3.注重理论与实践相结合，掌握实际案例的解决方法和技巧。

ACCA 历年真题f7int_2010_dec_ans

AnswersFundamentals Level – Skills Module, Paper F7 (INT)Financial Reporting (International) December 2010 Answers 1 (a)PremierConsolidated statement of comprehensive income for the year ended 30 September 2010$’000 Revenue (92,500 + (45,000 x 4/12) – 4,000 intra-group sales) 103,500Cost of sales (w (i)) (78,850 )––––––––proﬁt 24,650GrossDistribution costs (2,500 + (1,200 x 4/12)) (2,900 )Administrative expenses (5,500 + (2,400 x 4/12)) (6,300 )costs (100 )Finance––––––––Proﬁttax 15,350 beforeIncome tax expense (3,900 + (1,500 x 4/12)) (4,400 )––––––––Proﬁ t for the year 10,950––––––––income:OthercomprehensiveGain on available-for-sale investments 300Gain on revaluation of property 500––––––––T otal other comprehensive income for the year 800––––––––income 11,750 comprehensiveT otal––––––––Proﬁ t for year attributable to:Equity holders of the parent 10,760Non-controlling interest ((1,300 see below – 400 URP + 50 reduced depreciation) x 20%) 190––––––––10,950––––––––T otal comprehensive income attributable to:Equity holders of the parent (10,760 + 300 + 500) 11,560interest 190Non-controlling––––––––11,750––––––––Sanford’s proﬁ ts for the year ended 30 September 2010 of $3·9 million are $2·6 million (3,900 x 8/12) pre-acquisition and $1·3 million (3,900 x 4/12) post-acquisition.(b)Consolidated statement of ﬁ nancial position as at 30 September 2010.$’000AssetsassetsNon-currentProperty, plant and equipment (w (ii)) 38,250Goodwill (w (iii)) 9,300Available-for-sale investments (1,800 – 800 consideration + 300 gain) 1,300–––––––48,850 Current assets (w (iv)) 14,150–––––––assets 63,000T otal–––––––liabilitiesandEquityEquity attributable to owners of the parentEquity shares of $1 each ((12,000 + 2,400) w (iii)) 14,400Share premium (w (iii)) 9,600reserve 2,000LandrevaluationOther equity reserve (500 + 300) 800Retained earnings (w (v)) 13,060–––––––39,860 Non-controlling interest (w (vi)) 3,690–––––––equity 43,550T otalliabilitiesNon-current6% loan notes 3,000Current liabilities (10,000 + 6,800 – 350 intra group balance) 16,450–––––––T otal equity and liabilities 63,000–––––––Workings in $’000sales(i) CostofPremier 70,5004/12) 12,000Sanfordx(36,000)purchases (4,000Intra-groupinventory 400URPinReduction of depreciation charge (50 )–––––––78,850–––––––The unrealised proﬁ t (URP) in inventory is calculated as $2 million x 25/125 = $400,000.assetsNon-current(ii)Premier 25,500Sanford 13,900Fair value reduction at acquisition (1,200 )depreciation 50Reduced–––––––38,250–––––––inSanfordGoodwill(iii)costInvestmentatShares (5,000 x 80% x 3/5 x $5) 12,0006% loan notes (5,000 x 80% x 100/500) 800Non-controlling interest (5,000 x 20% x $3·50) 3,500–––––––16,300Net assets (equity) of Sanford at 30 September 2010 (9,500 )Less: post-acquisition proﬁ ts (see above) 1,300Less: fair value adjustment for property 1,200––––––Net assets at date of acquisition (7,000 )–––––––Goodwill 9,300–––––––The 2·4 million shares (5,000 x 80% x 3/5) issued by Premier at $5 each would be recorded as share capital of$2·4 million and share premium of $9·6 million.Currentassets(iv)Premier 12,500Sanford 2,400)inventory (400inURP)Intra-groupbalance (350–––––––14,150–––––––earnings(v)RetainedPremier 12,300proﬁtSanford’sadjustedpost-acquisition((1,300 – 400 URP + 50 reduced depreciation) x 80%) 760–––––––13,060–––––––(vi) Non-controlling interest in statement of ﬁ nancial positionacquisition 3,500ofAtdatePost-acquisition proﬁ t from income statement 190–––––––3,690–––––––2 (a) Cavern – Statement of comprehensive income for the year ended 30 September 2010$’000 Revenue 182,500 Cost of sales (w (i)) (137,400 )––––––––– Gross proﬁ t 45,100 Distribution costs (8,500 ) Administrative expenses (25,000 – 18,500 dividends (w (iii))) (6,500 ) Investment income 700 Finance costs (300 + 400 (w (ii)) + 3,060 (w (iv))) (3,760 ) ––––––––– Proﬁ t before tax 27,040 Income tax expense (5,600 + 900 – 250 (w (v))) (6,250 ) ––––––––– Proﬁ t for the year 20,790 ––––––––– Other comprehensive income Loss on available-for-sale investments (15,800 – 13,500) (2,300 ) Gain on revaluation of land and buildings (w (ii)) 800 ––––––––– T otal other comprehensive losses for the year (1,500 )––––––––– T otal comprehensive income 19,290 –––––––––(b) Craven – Statement of changes in equity for the year ended 30 September 2010Share Share Other equity Revaluation Retained Totalcapital premium reserve reserve earnin gs equity$’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 October 2009 40,000 nil 3,000 7,000 12,100 62,100 Rights issue (w (iii)) 10,000 11,000 21,000Dividends (w (iii)) (18,500 ) (18,500 ) Comprehensive income (2,300 ) 800 20,790 19,290––––––– ––––––– –––––– –––––– ––––––– ––––––– Balance at 30 September 2010 50,000 11,000 700 7,800 14,390 83,890 ––––––– ––––––– –––––– –––––– ––––––– –––––––(c) Cavern – Statement of ﬁ nancial position as at 30 September 2010Assets$’000 $’000Non-current assets Property, plant and equipment (41,800 + 51,100 (w (ii))) 92,900Available-for-sale investments 13,500 ––––––––106,400Current assets Inventory 19,800T rade receivables 29,000 48,800 ––––––– ––––––––T otal assets 155,200 ––––––––Equity and liabilities Equity (see (b) above) Equity shares of 20 cents each 50,000Share premium 11,000Other equity reserve 700 Revaluation reserve 7,800Retained earnings 14,390 33,890 ––––––– ––––––––83,890 Non-current liabilities Provision for decontamination costs (4,000 + 400 (w (ii))) 4,400 8% loan note (w (iv)) 31,260 Deferred tax (w (v)) 3,750 39,410–––––––Current liabilities T rade payables 21,700 Bank overdraft 4,600Current tax payable 5,600 31,900 ––––––– ––––––––T otal equity and liabilities 155,200––––––––Workings (monetary ﬁ gures in brackets in $’000)salesof(i) Costbalance 128,500PertrialDepreciation of building (36,000/18 years) 2,000Depreciation of new plant (14,000/10 years) 1,400Depreciation of existing plant and equipment ((67,400 – 10,000 – 13,400) x 12·5%) 5,500––––––––137,400––––––––(ii) Property, plant and equipmentThe new plant of $10 million should be grossed up by the provision for the present value of the estimated futuredecontamination costs of $4 million to give a gross cost of $14 million. The ‘unwinding’ of the provision will give rise toa ﬁ nance cost in the current year of $400,000 (4,000 x 10%) to give a closing provision of $4·4 million.The gain on revaluation and carrying amount of the land and building will be:Valuation – 30 September 2009 43,000)(i)) (2,000(wdepreciationBuilding–––––––revaluation 41,000beforeamountCarryingRevaluation – 30 September 2010 41,800–––––––revaluation 800onGain–––––––The carrying amount of the plant and equipment will be:New plant (14,000 – 1,400) 12,600Existing plant and equipment (67,400 – 10,000 – 13,400 – 5,500) 38,500–––––––51,100–––––––paidissue/dividends(iii)RightsBased on 250 million (50 million x 5 – as shares are 20 cents each) shares in issue at 30 September 2010, a rightsissue of 1 for 4 on 1 April 2010 would have resulted in the issue of 50 million new shares (250 million – (250 millionx 4/5)). This would be recorded as share capital of $10 million (50,000 x 20 cents) and share premium of $11 million(50,000 x (42 cents – 20 cents)).The dividend of 3 cents per share paid on 30 November 2009 would have been based on 200 million shares andbeen $6 million. The dividend of 5 cents per share paid on 31 May 2010 would have been based on 250 millionshares and been $12·5 million. Therefore the total dividends paid, incorrectly included in administrative expenses, were$18·5 million.note(iv)LoanThe ﬁnance cost of the loan note, at the effective rate of 10% applied to the carrying amount of the loan note of$30·6 million, is $3·06 million. The interest actually paid is $2·4 million. The difference between these amounts of$660,000 (3,060 – 2,400) is added to the carrying amount of the loan note to give $31·26 million (30,600 + 660)for inclusion as a non-current liability in the statement of ﬁ nancial position.tax(v)DeferredProvision required at 30 September 2010 (15,000 x 25%) 3,750Provision at 1 October 2009 (4,000 )––––––Credit (reduction in provision) to income statement 250––––––3Note: references to 2009 and 2010 should be taken as being to the years ended 30 September 2009 and 2010 respectively.Proﬁ tability:Income statement performance:Hardy’s income statement results dramatically show the effects of the downturn in the global economy; revenues are down by 18% (6,500/36,000 x 100), gross proﬁ t has fallen by 60% and a healthy after tax proﬁ t of $3·5 million has reversed to a loss of $2·1 million. These are reﬂ ected in the proﬁ t (loss) margin ratios shown in the appendix (the ‘as reported’ ﬁ gures for 2010). This in turn has led to a 15·2% return on equity being reversed to a negative return of 11·9%. However, a closer analysis shows that the results are not quite as bad as they seem. The downturn has directly caused several additional costs in 2010: employee severance, property impairments and losses on investments (as quantiﬁed in the appendix). These are probably all non-recurring costs and could therefore justiﬁ ably be excluded from the 2010 results to assess the company’s ‘underlying’ performance. If this is done the results of Hardy for 2010 appear to be much better than on ﬁ rst sight, although still not as good as those reported for 2009. A gross margin of 27·8% in 2009 has fallen to only 23·1% (rather than the reported margin of 13·6%) and the proﬁ t for period has fallen from $3·5 million (9·7%) to only $2·3 million (7·8%). It should also be noted that as well as the fall in the value of the investments, the related investment income has also shown a sharp decline which has contributed to lower proﬁ ts in 2010.Given the economic climate in 2010 these are probably reasonably good results and may justify the Chairman’s comments. It should be noted that the cost saving measures which have helped to mitigate the impact of the downturn could have some unwelcomeeffects should trading conditions improve; it may not be easy to re-hire employees and a lack of advertising may cause a loss of market share.Statement of ﬁ nancial position:Perhaps the most obvious aspect of the statement of ﬁ nancial position is the fall in value ($8·5 million) of the non-current assets, most of which is accounted for by losses of $6 million and $1·6 million respectively on the properties and investments. Ironically, because these falls are reﬂ ected in equity, this has mitigated the fall in the return of the equity (from 15·2% to 13·1% underlying) and contributed to a perhaps unexpected improvement in asset turnover from 1·6 times to 1·7 times.Liquidity:Despite the downturn, Hardy’s liquidity ratios now seem at acceptable levels (though they should be compared to manufacturing industry norms) compared to the low ratios in 2009. The bank balance has improved by $1·1 million. This has been helped by a successful rights issue (this is in itself a sign of shareholder support and conﬁ dence in the future) raising $2 million and keeping customer’s credit period under control. Some of the proceeds of the rights issue appear to have been used to reduce the bank loan which is sensible as its ﬁ nancing costs have increased considerably in 2010. Looking at the movement on retained earnings (6,500 – 2,100 – 3,600) it can be seen that the company paid a dividend of $800,000 during 2010. Although this is only half the dividend per share paid in 2009, it may seem unwise given the losses and the need for the rights issue. A counter view is that the payment of the dividend may be seen as a sign of conﬁ dence of a future recovery. It should also be mentioned that the worst of the costs caused by the downturn (speciﬁ cally the property and investments losses) are not cash costs and have therefore not affected liquidity.The increase in the inventory and work-in-progress holding period and the trade receivables collection period being almost unchanged appear to contradict the declining sales activity and should be investigated. Although there is insufﬁ cient information to calculate the trade payables credit period as there is no analysis of the cost of sales ﬁ gures, it appears that Hardy has received extended credit which, unless it had been agreed with the suppliers, has the potential to lead to problems obtaining future supplies of goods on credit.Gearing:On the reported ﬁ gures debt to equity shows a modest increase due to income statement losses and the reduction of the revaluation reserve, but this has been mitigated by the repayment of part of the loan and the rights issue.Conclusion:Although Hardy’s results have been adversely affected by the global economic situation, its underlying performance is not as bad as ﬁ rst impressions might suggest and supports the Chairman’s comments. The company still retains a relatively strong statement of ﬁ nancial position and liquidity position which will help signiﬁ cantly should market conditions improve. Indeed the impairment of property and investments may well reverse in future. It would be a useful exercise to compare Hardy’s performance during this difﬁ cult time to that of its competitors – it may well be that its 2010 results were relatively very good by comparison.Appendix:An important aspect of assessing the performance of Hardy for 2010 (especially in comparison with 2009) is to identify the impact that several ‘one off’ charges have had on the results of 2010. These charges are $1·3 million redundancy costs and a $1·5 million (6,000 – 4,500 previous surplus) property impairment, both included in cost of sales and a $1·6 million loss on the market value of investments, included in administrative expenses. Thus in calculating the ‘underlying’ ﬁ gures for 2010 (below) the adjusted cost of sales is $22·7 million (25,500 – 1,300 – 1,500) and the administrative expenses are $3·3 million (4,900 – 1,600). These adjustments feed through to give an underlying gross proﬁ t of $6·8 million (4,000 + 1,300 + 1,500) and an underlying proﬁ t for the year of $2·3 million (–2,100 + 1,300 + 1,500 + 1,600).Note: it is not appropriate to revise Hardy’s equity (upwards) for the one-off losses when calculating equity based underlying ﬁ gures, as the losses will be a continuing part of equity (unless they reverse) even if/when future earnings recover.2010 2009underlying as reportedGross proﬁ t % (6,800/29,500 x 100) 23·1% 13·6% 27·8%Proﬁ t (loss) for period % (2,300/29,500 x 100) 7·8% (7·1)% 9·7%Return on equity (2,300/17,600 x 100) 13·1% (11·9)% 15·2%Net asset (taken as equity) turnover (29,500/17,600) 1·7 times same 1·6 timesDebt to equity (4,000/17,600) 22·7% same 21·7% Current ratio (6,200:3,400) 1·8:1 same 1·0:1Quick ratio (4,000:3,400) 1·2:1 same 0·6:1 Receivables collection (in days) (2,200/29,500 x 365) 27 days same 28 days Inventory and work-in-progress holding period (2,200/22,700 x 365) 35 days 31 days 27 daysNote: the ﬁ gures for the calculation of the 2010 ‘underlying’ ratios have been given; those of 2010 ‘as reported’ and 2009 are based on equivalent ﬁ gures from the summarised ﬁ nancial statements provided.Alternative ratios/calculations are acceptable, for example net asset turnover could be calculated using total assets less current liabilities.4 (a)Management’s choices of which accounting policies they may adopt are not as wide as generally thought. Where an InternationalAccounting Standard, IAS or IFRS (or an Interpretation) speciﬁcally applies to a transaction or event the accounting policy used must be as prescribed in that Standard (taking in to account any Implementation Guidance within the Standard). In the absence of a Standard, or where a Standard contains a choice of policies, management must use its judgement in applying accounting policies that result in information that is relevant and reliable given the circumstances of the transactions and events. In making such judgements, management should refer to guidance in the Standards related to similar issues and the deﬁnitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the IASB’s Framework for the preparation and presentation of ﬁ nancial statements. Management may also consider pronouncements of other standard-setting bodies that use a similar conceptual framework to the IASB.A change in an accounting policy usually relates to a change of principle, basis or rule being applied by an entity. Accountingestimates are used to measure the carrying amounts of assets and liabilities, or related expenses and income. A change in an accounting estimate is a reassessment of the expected future beneﬁ ts and obligations associated with an asset or a liability.Thus, for example, a change from non-depreciation of a building to depreciating it over its estimated useful life would be a change of accounting policy. T o change the estimate of its useful life would be a change in an accounting estimate.(b) (i)The main issue here is the estimate of the useful life of a non-current asset. Such estimates form an important part ofthe accounting estimate of the depreciation charge. Like most estimates, an annual review of their appropriateness isrequired and it is not unusual, as in this case, to revise the estimate of the remaining useful life of plant. It appears,from the information in the question, that the increase in the estimated remaining useful life of the plant is based on agenuine reassessment by the production manager. This appears to be an acceptable reason for a revision of the plant’slife, whereas it would be unacceptable to increase the estimate simply to improve the company’s reported proﬁ t. Thatsaid, the assistant accountant’s calculation of the ﬁnancial effect of the revised life is incorrect. Where there is anincrease (or decrease) in the estimated remaining life of a non-current asset, its carrying amount (at the time of therevision) is allocated over the new remaining life (after allowing for any estimated residual value). The carrying amount at1 October 2009 is $12 million ($20 million – $8 million accumulated depreciation) and this should be written off overthe estimated remaining life of six years (eight years in total less two already elapsed). Thus a charge for depreciationof $2 million would be required in the year ended 30 September 2010 leaving a carrying amount of $10 million($12 million – $2 million) in the statement of ﬁ nancial position at that date. A depreciation charge for the current yearcannot be avoided and there will be no credit to the income statement as suggested by the assistant accountant. It shouldbe noted that the incremental effect of the revision to the estimated life of the plant would be to improve the reportedproﬁt by $2 million being the difference between the depreciation based on the old life ($4 million) and the new life($2 million).(ii)The appropriateness of the proposed change to the method of valuing inventory is more dubious than the previous example. Whilst both methods (FIFO and AVCO) are acceptable methods of valuing inventory under IAS 2 Inventories,changing an accounting policy to be consistent with that of competitors is not a convincing reason. Generally changesin accounting policies should be avoided unless a change is required by a new or revised accounting standard or thenew policy provides more reliable and relevant information regarding the entity’s position. In any event the assistantaccountant’s calculations are again incorrect and would not meet the intention of improving reported proﬁt. Themost obvious error is that changing from FIFO to AVCO will cause a reduction in the value of the closing inventory at30 September 2010 effectively reducing, rather than increasing, both the valuation of inventory and reported proﬁt.A change in accounting policy must be accounted for as if the new policy had always been in place (retrospectiveapplication). In this case, for the year ended 30 September 2010, both the opening and closing inventories would needto be measured at AVCO which would reduce reported proﬁ t by $400,000 (($20 million – $18 million) – ($15 million –$13·4 million) – i.e. the movement in the values of the opening and closing inventories). The other effect of the changewill be on the retained earnings brought forward at 1 October 2009. These will be restated (reduced) by the effect of thereduced inventory value at 30 September 2009 i.e. $1·6 million ($15 million – $13·4 million). This adjustment wouldbe shown in the statement of changes in equity.5From the information in the question, the closure of the furniture making operation is a restructuring as deﬁ ned in IAS 37 Provisions, contingent liabilities and contingent assets and, due to the timing of the decision, a provision for the closure costs will be required in the year ended 30 September 2010. Although the Standard says that a Board of directors’ decision to close an operation is alone not sufﬁ cient to trigger a provision the other actions of the management, informing employees, customers and a press announcement indicate that this is an irreversible decision and that therefore there is an obligating event.Commenting on each element in turn for both years:(i) Factory and plantAt 30 September 2010 – these assets cannot be classed as ‘held-for-sale’ as they are still in use (i.e. generating revenue) and therefore are not available for sale. Both assets will therefore continue to be depreciated.Despite this, it does appear that the plant is impaired. Based on its carrying amount of $2·8 million an impairment charge of $2·3 million ($2·8 million – $0·5 million) would be required (subject to any further depreciation for the three months from July to September 2010). The expected gain on the sale of the factory cannot be recognised or used to offset the impairment charge on the plant. The impairment charge is not part of the restructuring provision, but should be reported with the depreciation charge for the year.At 30 September 2011 – the realised proﬁ t on the disposal of the factory and any further loss on the disposal of the plant will both be reported in the income statement.(ii) Redundancy and retraining costsAt 30 September 2010 – a provision for the redundancy costs of $750,000 should be made, but the retraining costs relate to the ongoing actives of Manco and cannot be provided for.At 30 September 2011 – the redundancy costs incurred during the year will be offset against the provision created last year.Any under- or over-provision will be reported in the income statement. The retraining costs will be written off as they are incurred.losses(iii)T radingThe losses to 30 September 2010 will be reported as part of the results for the year ended 30 September 2010. The expected losses from 1 October 2010 to the closure on 31 January 2011 cannot be provided in the year ended 30 September 2010 as they relate to ongoing activities and will therefore be reported as part of the results for the year ended 30 September 2011 as they are incurred.It should also be considered whether the closure fulﬁls the deﬁnition of a discontinued operation in accordance with IFRS 5 Non-current assets held for sale and discontinued operations. As there is a co-ordinated plan to dispose of a separate major line of business (the furniture making operation is treated as an operating segment) this probably is a discontinued operation. However, the timing of the closure means that it is not a discontinued operation in the year ended 30 September 2010; rather it is likely that it will be such in the year ended 30 September 2011. Some commentators believe that this creates an anomalous situation in that most of the closure costs are reported in the year ended 30 September 2010 (as described above), but the closure itself is only identiﬁ ed and reported as a discontinued operation in the year ended 30 September 2011 (although the comparative ﬁ gures for 2010 would then restate this as a discontinued operation).Fundamentals Level – Skills Module, Paper F7 (INT)Financial Reporting (International) December 2010 Marking SchemeThis marking scheme is given as a guide in the context of the suggested answers. Scope is given to markers to award marks for alternative approaches to a question, including relevant comment, and where well-reasoned conclusions are provided. This is particularly the case for written answers where there may be more than one acceptable solution.Marks1 (a)statement of comprehensive income:revenue 1½sales 3costofcosts ½distributionexpenses ½administrativecosts ½ﬁnancetax ½incomeother comprehensive income – gain on investments ½other comprehensive income – gain on property ½non-controlling interest – proﬁ t for year 1split of total comprehensive income ½9(b)statement of ﬁ nancial position:property, plant and equipment 2goodwill 3½investments 1available-for-saleassets 1½currentshares 1equitysharepremium 1reserve ½revaluationreserve 1equityotherearnings 1½retainedinterest 1½non-controllingnotes ½6%loanliabilities 1current16Total for question 25Marks2 (a)statement of comprehensive incomerevenue ½sales 3 ofcostcosts ½ distributionexpenses 1 administrativeincome ½ investmentcosts 2½ ﬁnanceexpense 2 incometaxloss on available-for-sale investments ½gain on revaluation of land and buildings ½11(b)statement of changes in equityb/f 1 balancesrightsissue 1dividends 1loss on available-for-sale investments ½revaluationgain ½proﬁ t for year 15(c)statement of ﬁ nancial positionproperty, plant and equipment 2½investments ½ available-for-saleinventory ½receivables ½ tradeprovision 1 contaminationnote 1 8%loantax 1 deferredpayables ½ tradeoverdraft ½ bankpayable 1 taxcurrent9Total for question 253comments – 1 mark per valid point, up to 15a good answer must consider the effects of the ‘one off’ costsratios – up to 10Total for question 254 (a) 1 mark per valid point 5(b) (i)recognise as a change in accounting estimate 1appears an acceptable basis for change 1correct method is to allocate carrying amount over new remaining life 1depreciation for current year should be $2 million 1carrying amount at 30 September 2010 is $10 million 15 (ii)proposed change is probably not for a valid reason 1 change would cause a decrease (not an increase) in proﬁ t 1changes in policy should be applied retrospectively 1decrease in year to 30 September 2010 is $400,000 1retained earnings restated by $1.6 million 15Total for question 15。

ACCA历年真题及答案P7(INT)-2013-dec-question-answer

P a p e r P 7 ( I N T )2Disposal of Broadway CoOn 1 September 2013, the Group disposed of its wholly-owned subsidiary, Broadway Co, for proceeds of $180 million. Broadway Co operated a distribution centre in this country. The Group’s statement of profit or loss includes a profit of $25 million in respect of the disposal.Broadway Co was acquired by a retail organisation, the Cornwall Group, which wished to bring its distribution operations in house in order to save costs. Compton & Co resigned as auditor to Broadway Co on 15 September 2013 to be replaced by the principal auditor of the Cornwall Group.Zennor Co –Internal audit teamThe internal audit team was established several years ago and is headed up by a qualified accountant, Jo Evesham, who has a lot of experience in designing systems and controls. Jo and her team monitor the effectiveness of operating and financial reporting controls, and report to the board of directors. Zennor Co does not have an audit committee as corporate governance rules in Farland do not require an internal audit function or an audit committee to be established.During the year, the internal audit team performed several value for money exercises such as reviewing the terms negotiated with suppliers.Required:Respond to the instructions in the partner’s email.(31 marks) Note: The mark allocation is shown against each of the instructions in the partner’s email above.Professional marks will be awarded for the structure and presentation of the briefing notes and for the clarity of explanations.(4 marks)(35 marks)3[P.T.O.2You are a manager in the business advisory department of Goleen & Co. Your firm has been approached to provide assurance to Baltimore Co, a company which is not an audit client of your firm, on a potential acquisition. You have just had a conversation with Mark Clear, Baltimore Co’s managing director, who made the following comments:‘Baltimore Co is a book publisher specialising in publishing textbooks and academic journals. In the last few years the market has changed significantly, with the majority of customers purchasing books from online sellers. This has led to a reduction in profits, and we recognise that we need to diversify our product range in order to survive. As a result of this, we decided to offer a subscription-based website to customers, which would provide the customer with access to our full range of textbooks and journals online.‘On investigating how to set up this website, we found that we lack sufficient knowledge and resources to develop it ourselves and began to look for another company which has the necessary skills, with a view to acquiring the company. We have identified Mizzen Co as a potential acquisition, and we have approached the bank for a loan which will be used to finance the acquisition if it goes ahead.‘Baltimore Co has not previously acquired another company. We would like to engage your firm to provide guidance regarding the acquisition. I understand that a due diligence review would be advisable prior to deciding on whether to go ahead with the acquisition, but the other directors are not sure that this is required, and they don’t understand what the review would involve. They are also unsure about the type of conclusion that would be issued and whether it would be similar to the opinion in an audit report.‘T o help me brief the other directors and using the information I have provided, I would like you to:(a)Discuss THREE benefits to Baltimore Co of a due diligence review being performed on Mizzen Co.(6 marks)(b)Identify and explain the matters which you would focus on in your due diligence review and recommend theadditional information which you will need to perform your work.(16 marks)(c)Describe the type of conclusion which would be issued for a due diligence report and compare this to an auditreport.’(3 marks) Mark Clear has sent you the following information about Mizzen Co:Company backgroundMizzen Co was established four years ago by two university graduates, Vic Sandhu and Lou Lien, who secured funds from a venture capitalist company, BizGrow, to set up the company. Vic and Lou created a new type of website interface which has proven extremely popular, and which led to the company growing rapidly and building a good reputation. They continue to innovate and have won awards for website design. Vic and Lou have a minority shareholding in Mizzen Co.Mizzen Co employs 50 people and operates from premises owned by BizGrow, for which a nominal rent of $1,000 is paid annually. The company uses few assets other than computer equipment and fixtures and fittings. The biggest expense is wages and salaries and due to increased demand for website development, freelance specialists have been used in the last six months. According to the most recent audited financial statements, Mizzen Co has a bank balance of $500,000.The company has three revenue streams:1.Developing and maintaining websites for corporate customers. Mizzen Co charges a one-off fee to its customersfor the initial development of a website and for maintaining the website for two years. The amount of this fee depends on the size and complexity of the website and averages at $10,000 per website. The customer can then choose to pay another one-off fee, averaging $2,000, for Mizzen Co to provide maintenance for a further five years.2.Mizzen Co has also developed a subscription-based website on which it provides access to technical material forcomputer specialists. Customers pay an annual fee of $250 which gives them unlimited access to the website.This accounts for approximately 30% of Mizzen Co’s total revenue.3.The company has built up several customer databases which are made available, for a fee, to other companiesfor marketing purposes. This is the smallest revenue stream, accounting for approximately 20% of Mizzen Co’s total revenue.4Extracts from audited financial statementsStatement of profit or loss and other comprehensive incomeYear ended Year ended Year ended Year ended30 September 30 September 30 September 30 September2013201220112010$’000$’000$’000$’000Revenue4,2683,4502,150500Operating expenses(2,118)(2,010)(1,290)(1,000)––––––––––––––––––––––––Operating profit/(loss)2,1501,440860(500)Finance costs(250)(250)(250)–––––––––––––––––––––––––Profit/(loss) before tax1,9001,190610(500)T ax expense(475)(300)(140)–––––––––––––––––––––––––Profit/(loss) for the year1,425890470(500)––––––––––––––––––––––––There were no items of other comprehensive income recognised in any year.Required:Respond to the request from Mark Clear.Note: The mark allocation is shown against each of the instructions from Mark Clear above.(25 marks)5[P.T.O.Section B – TWO questions ONLY to be attempted3Dasset Co operates in the coal mining industry. The company owns ten mines across the country from which coal is extracted before being sold onto customers who are energy providers. Coal mining companies operate under licence from the National Coal Mining Authority, an organisation which monitors the environmental impact of coal mining operations, and requires coal mines to be operated in compliance with strict health and safety regulations.You are an audit manager in Burton & Co, responsible for the audit of Dasset Co and you are reviewing the audit working papers for the year ended 31 August 2013. The draft financial statements recognise profit before tax of $18 million and total assets of $175 million. The audit senior has left a note for your attention:Accident at the Ledge Hill MineOn 15 August 2013, there was an accident at the Ledge Hill Mine, where several of the tunnels in the mine collapsed, causing other tunnels to become flooded. This has resulted in one-third of the mine becoming inaccessible and for safety reasons, the tunnels will be permanently closed. However, Dasset Co’s management thinks that the rest of the mine can remain operational, as long as improvements are made to ensure that the mine meets health and safety regulations.Luckily no one was injured in the accident. However, the collapse caused subsidence which has damaged several residential properties in a village located above the mine. A surveyor has been commissioned to report on whether the properties need to be demolished or whether they can be safely repaired. A group of 20 residents has been relocated to rental properties in the local area and Dasset Co is meeting all expenses in relation to this.The Ledge Hill Mine was acquired several years ago and is recognised in the draft statement of financial position at $10 million. As no employees were injured in the accident, Dasset Co’s management has decided not to report the accident to the National Coal Mining Authority.Required:In respect of the accident at the Ledge Hill Mine:(a)(i)Comment on the matters which you should consider; and(ii)Describe the audit evidence which you should expect to find,in undertaking your review of the audit working papers and financial statements of Dasset Co.Note: The total marks will be split equally between each part.(14 marks)(b In relation to management’s decision not to report the accident to the National Coal Mining Authority, discussBurton & Co’s responsibilities and recommend the actions which should be taken by the firm.(6 marks)(20 marks)64You are an audit manager in Chester & Co, and you are reviewing three situations which have recently arisen with respect to potential and existing audit clients of your firm.T etbury Co’s managing director, Juan Stanton, has approached Chester & Co to invite the firm to tender for its audit.T etbury Co is a small, owner-managed company providing financial services such as arranging mortgages and advising on pension plans. The company’s previous auditors recently resigned. Juan Stanton states that this was due to ‘a disagreement on the accounting treatment of commission earned, and because they thought our controls were not very good.’ You are aware that T etbury Co has been investigated by the financial services authority for alleged non-compliance with its regulations. As well as performing the audit, Juan would like Chester & Co to give business development advice.The audit of Stratford Co’s financial statements for the year ended 30 November 2013 will commence shortly. You are aware that the company is in financial difficulties. Stratford Co’s managing director, Colin Charlecote, has requested that the audit engagement partner accompanies him to a meeting with the bank where a new loan will be discussed, and the draft financial statements reviewed. Colin has hinted that if the partner does not accompany him to the meeting, he will put the audit out to tender. In addition, an invoice relating to interim audit work performed in August 2013 has not yet been paid.Banbury Co is a listed entity, and its audit committee has asked Chester & Co to perform an actuarial valuation on the company’s defined benefit pension plan. One of the audit partners is a qualified actuary and has the necessary skills and expertise to perform the service. Banbury Co has a year ending 28 February 2014, and the audit planning is due to commence next week. Its financial statements for the year ended 28 February 2013, in respect of which the audit report was unmodified, included total assets of $35 million and a pension liability of $105,000.Required:Identify and discuss the ethical and other professional issues raised, and recommend any actions that should be taken in respect of:(a)Tetbury Co;(8 marks)(b)Stratford Co; and(6 marks)(c)Banbury Co.(6 marks)(20 marks)7[P.T.O.5(a)You are the manager responsible for the audit of Burford Co, a company which designs and manufactures engine parts. The audit of the financial statements for the year ended 31 July 2013 is nearing completion and you are reviewing the working papers of the going concern section of the audit file. The draft financial statements recognise a loss of $500,000 (2012 – profit of $760,000), and total assets of $13·8 million (2012 –$14·4 million).The audit senior has left the following note for your attention:‘I have performed analytical review on Burford Co’s year-end financial statements. The current ratio is 0·8 (2012– 1·2), the quick ratio is 0·5 (2012 – 1·6). The latest management accounts show that ratios have deteriorated further since the year end, and the company now has a cash balance of only $25,000. Burford Co has a long-term loan outstanding of $80,000 with a covenant attached, which states that if the current ratio falls below 0·75, the loan can be immediately recalled by the lender.’You are also aware that one of Burford Co’s best-selling products, the QuickFire, has become technically obsolete during 2013 as customers now prefer more environmentally friendly engine parts. Historically, the QuickFire has generated 45% of the company’s revenue. In response to customers’ preference, $1·3 million has been spent on designing a new product, the GreenFire, due for launch in February 2014, which will be marketed as an environmentally friendly product.A cash flow forecast has been prepared for the year to 31 July 2014, indicating that based on certainassumptions, the company’s cash balance is predicted to increase to $220,000 by the end of the forecast period.Assumptions include:1.The successful launch of the GreenFire product,2.The sale of plant and machinery which was used to manufacture the QuickFire, generating cash proceedsof $50,000, forecast to take place in January 2014,3. A reduction in payroll costs of 15%, caused by redundancies in the QuickFire manufacturing plant, and4.The receipt of a grant of $30,000 from a government department which encourages innovation inenvironmentally friendly products, scheduled to be received in February 2014.Required:(i)Identify and explain the matters which cast doubt on the going concern status of Burford Co.(6 marks)(ii)Explain the audit evidence you should expect to find in your file review in respect of the cash flow forecast.(8 marks)(b)H aving completed the file review, you have concluded that the use of the going concern assumption isappropriate, but that there is significant doubt over Burford Co’s ability to continue as a going concern. You have advised the company’s audit committee that a note is required in the financial statements to describe the significant doubt over going concern. The audit committee is reluctant to include a detailed note to the financial statements due to fears that the note will highlight the company’s problems and cause further financial difficulties, but have agreed that a brief note will be included.Required:In respect of the note on going concern to be included in Burford Co’s financial statements, discuss the implications for the audit report and outline any further actions to be taken by the auditor. (6 marks)(20 marks)End of Question Paper8Professional Level – Options Module, Paper P7 (INT)Advanced Audit and Assurance (International)December 2013 Answers 1Briefing notesTo: Audit PartnerFrom: Audit ManagerSubject: Planning issues for the Stow Group, year ending 31 December 2013IntroductionThese briefing notes contain an explanation of the risks of material misstatement to be considered in planning the audit of the Stow Group. The risks which have been explained focus on a restructuring of the Group which has taken place during the year.Materiality has been considered where information permits, and further information which would be useful in planning the audit has also been identified. The briefing notes also contain recommended audit procedures to be performed in respect of the disposal of Broadway Co. In addition, the Group finance director’s suggestion that our firm makes use of the new subsidiary’s internal audit team when performing our audit has been discussed, along with the ethical implication of the suggestion.(a)(i)and(ii)Zennor CoMateriality of Zennor CoT o evaluate the materiality of Zennor Co to the Group, its profit and assets need to be retranslated into $. At the statedexchange rate of 4 Dingu = $1, its projected profit for the year is $22·5 million (90 million Dingu/4) and its projectedtotal assets are $200 million (800 million Dingu/4).Zennor Co’s profit represents 11·3% of Group projected profit for the year (22·5/200), and its assets represent 8% ofGroup total assets (200/2,500). Zennor Co is therefore material to the Group and may be considered to be a significantcomponent of it. A significant component is one which is identified by the auditor as being of individual financialsignificance to the group. Zenner Co is likely to be considered a significant component due to its risk profile and thechange in group structure which has occurred in the year.The goodwill arising on the acquisition of Zennor Co amounts to 2·4% (60/2,500) of Group assets and is material.Because the balances above, including goodwill, are based on a foreign currency, they will need to be retranslated atthe year end using the closing exchange rate to determine and conclude on materiality as at the year end.Materiality needs to be assessed based on the new, enlarged group structure. Materiality for the group financialstatements as a whole will be determined when establishing the overall group audit strategy. The addition of Zennor Coto the group during the year is likely to cause materiality to be different from previous years, possibly affecting auditstrategy and the extent of testing in some areas.Risks of material misstatementRetranslation of Zennor Co’s financial statementsAccording to IAS 21 The Effects of Changes in Foreign Exchange Rates, the assets and liabilities of Zennor Co shouldbe retranslated using the closing exchange rate. Its income and expenses should be retranslated at the exchange ratesat the dates of the transactions.The risk is that incorrect exchange rates are used for the retranslations. This could result in over/understatement of theassets, liabilities, income and expenses that are consolidated, including goodwill. It would also mean that the exchangegains and losses arising on retranslation and to be included in Group other comprehensive income are incorrectlydetermined.Measurement and recognition of exchange gains and lossesThe calculation of exchange gains and losses can be complex, and there is a risk that it is not calculated correctly, orthat some elements are omitted, for example, the exchange gain or loss on goodwill may be missed out of thecalculation.IAS 21 states that exchange gains and losses arising as a result of the restranslation of the subsidiary’s balances arerecognised in other comprehensive income. The risk is incorrect classification, for example, the gain or loss could berecognised incorrectly as part of profit for the yearInitial measurement of goodwillIn order for goodwill to be calculated, the assets and liabilities of Zennor Co must have been identified and measuredat fair value at the date of acquisition. Risks of material misstatement arise because the various components of goodwilleach have specific risks attached, for example:–Not all assets and liabilities may have been identified, for example, contingent liabilities and contingent assets may be omitted–Fair value is subjective and based on assumptions which may not be valid.There is also a risk that the cost of investment is not stated correctly, for example, that any contingent consideration hasnot been included in the calculation.11Subsequent measurement of goodwillAccording to IFRS 3 Business Combinations, goodwill should be subject to an impairment review on an annual basis. The risk is that a review has not taken place, and so goodwill is overstated and Group operating expenses understated if impairment losses have not been recognised.Consolidation of income and expensesZennor Co was acquired on 1 February 2013 and its income and expenses should have been consolidated from that date. There is a risk that the full year’s income and expenses have been consolidated, leading to a risk of overstated Group profit.DisclosureExtensive disclosures are required by IFRS 3 to be included in the notes to the Group financial statements, for example, to include the acquisition date, reason for the acquisition and a description of the factors which make up the goodwill acquired. The risk is that disclosures are incomplete or not understandable.Intra-group transactionsThere will be a significant volume of intra-group transactions as the Group is supplying Zennor Co with inventory. There is a risk that intra-group sales, purchases, payables and receivables are not eliminated, leading to overstated revenue, cost of sales, payables and receivables in the Group financial statements.There is also a risk that intercompany transactions are not identified in either/both companies’ accounting systems.The intra-group transactions are by definition related party transactions according to IAS 24 Related Party Disclosures, because Zennor Co is under the control of the Group. No disclosure of the transactions is required in the Group financial statements in respect of intra-group transactions because they are eliminated on consolidation. H owever, both the individual financial statements of the Group company supplying Zennor Co and the financial statements of Zennor Co must contain notes disclosing details of the intra-group transactions. There is a risk that this disclosure is not provided.In addition, the cars may be supplied including a profit margin or mark up, in which case a provision for unrealised profit should be recognised in the Group financial statements. If this is not accounted for, Group inventory will be overstated, and operating profit will be overstated.Completeness of inventoryThere is a risk that cars which are in transit to Zennor Co at the year end may be omitted from inventory. The cars spend a significant amount of time in transit and awaiting delivery to Zennor Co, and without a good system of controls in place, it is likely that items of inventory will be missing from the Group’s current assets as they may have been recorded as despatched from the seller but not yet as received by Zennor Co.The inventory in transit to Zennor Co represents 2·3% of Group total assets (58/2,500) and is therefore material to the consolidated financial statements.Tutorial note:Credit will also be awarded where answers discuss the issue of whether the arrangement is a consignment inventory arrangement, and the relevant risks of material misstatement.Further information in relation to Zennor Co:–Prior years’ financial statements and auditor’s reports–Minutes of meetings where the acquisition was discussed–Business background, e.g. from the company’s website or trade journals–Copies of systems documentation from the internal audit team–Confirmation from Zennor Co’s previous auditors of any matters which they wish to bring to our attention–Projected financial statements for the year to 31 December 2013– A copy of the due diligence report–Copies of prior year tax computationsTutorial note:Credit will also be awarded for discussions of risks of material misstatement and relevant audit procedures relating to the initial audit of Zennor Co by Compton & Co, e.g. increased risk of misstatement of opening balances and comparatives.Broadway CoMaterialityThe profit made on the disposal of Broadway Co represents 12·5% of Group profit for the year (25/200) and the transaction is therefore material to the Group financial statements.Given that the subsidiary was sold for $180 million and that a profit on disposal of $25 million was recognised, the Group’s financial statements must have derecognised net assets of $155 million on the disposal. This amounts to 6·2% of the Group’s assets and is material. This is assuming that the profit on disposal has been correctly calculated, which is a risk factor discussed below.Risk of material misstatementDerecognition of assets and liabilitiesOn the disposal of Broadway Co, all of its assets and liabilities which had been recognised in the Group financial statements should have been derecognised at their carrying value, including any goodwill in respect of the company.There is therefore a risk that not all assets, liabilities and goodwill have been derecognised leading to overstatement of those balances and an incorrect profit on disposal being calculated and included in Group profit for the year.Profit consolidated prior to disposalThere is a risk that Broadway Co’s income for the year has been incorrectly consolidated. It should have been included in Group profit up to the date that control passed and any profit included after that point would mean overstatement of Group profit for the year.Calculation of profit on disposalThere is a risk that the profit on disposal has not been accurately calculated, e.g. that the proceeds received have not been measured at fair value as required by IFRS 10 Consolidated Financial Statements, or that elements of the calculation are missing.Classification and disclosure of profit on disposalIAS 1 Presentation of Financial Statements requires separate disclosure on the face of the financial statements of material items to enhance the understanding of performance during the year. The profit of $25 million is material, so separate disclosure is necessary. The risk is that the profit is not separately disclosed, e.g. is netted from operating expenses, leading to material misstatement.Extensive disclosure requirements exist in relation to subsidiaries disposed of, e.g. IAS 7 Statement of Cash Flows requires a note which analyses the assets and liabilities of the subsidiary at the date of disposal. There is a risk that not all necessary notes to the financial statements are provided.Tutorial note:It is possible that Broadway Co represents a disposal group and a discontinued operation, and credit will be awarded for discussion of relevant risks of material misstatement and audit procedures in respect of these issues.Treatment of the disposal in parent company individual financial statementsThe parent company’s financial statements should derecognise the original cost of investment and recognise a profit on disposal based on the difference between the proceeds of $180 million and the cost of investment. Risk arises if the investment has not been derecognised or the profit has been incorrectly calculated.Tax on disposalThere should be an accrual in both the parent company and the Group financial statements for the tax due on the disposal. This should be calculated based on the profit recognised in the parent company. There is a risk that the tax is not accrued for, leading to overstated profit and understated liabilities. There is also a risk that the tax calculation is not accurate.Tutorial note:As Compton & Co is no longer the auditor of Broadway Co, there is no need for any further information in relation to audit planning, other than that needed to perform the audit procedures listed below.(b)Procedures to be performed on the disposal of Broadway Co–Obtain the statement of financial position of Broadway Co as at 1 September 2013 to confirm the value of assets and liabilities which have been derecognised from the Group.–Review prior year Group financial statements and audit working papers to confirm the amount of goodwill that exists in respect of Broadway Co and trace to confirm it is derecognised from the Group on disposal.–Confirm that the Stow Group is no longer listed as a shareholder of the company.–Obtain legal documentation in relation to the disposal to confirm the date of the disposal and confirm that Broadway Co’s profit has been consolidated up to this date only.–Agree or reconcile the profit recognised in the Group financial statements to Broadway Co’s individual accounts as at1 September 2013.–Perform substantive analytical procedures to gain assurance that the amount of profit consolidated from 1 January to1 September 2013 appears reasonable and in line with expectations based on prior year profit.–Reperform management’s calculation of profit on disposal in the Group financial statements.–Agree the proceeds received of $180 million to legal documentation, and to cash book/bank statements.–Confirm that $180 million is the fair value of proceeds on disposal and that no deferred or contingent consideration is receivable in the future.–Review the Group statement of profit or loss and other comprehensive income to confirm that the profit on disposal is correctly disclosed as part of profit for the year (not in other comprehensive income) on a separate line.–Using a disclosure checklist, confirm that all necessary information has been provided in the notes to the Group financial statements.–Obtain the parent company’s statement of financial position to confirm that the cost of investment is derecognised.–Using prior year financial statements and audit working papers, agree the cost of investment derecognised to prior year’s figure.–Reperform the calculation of profit on disposal in the parent company’s financial statements.–Reconcile the profit on disposal recognised in the parent company’s financial statements to the profit recognised in the Group financial statements.–Obtain management’s estimate of the tax due on disposal, reperform the calculation and confirm the amount is properly accrued at parent company and at Group level.–Review any correspondence with tax authorities regarding the tax due.–Possibly the tax will be paid in the subsequent events period, in which case the payment can be agreed to cash book and bank statement.。

2010年12月份ACCA(国际注册会计师)考试真题(F4)

2010年12月份ACCA(国际注册会计师)考试真题(F4)ALL TEN questions are pulsory and MUST be attempted1 In relation to the Civil Procedure Law of China:(a)explain the term exclusive jurisdiction; (2 marks)(b)state the major legal characteristics of exclusive jurisdiction,in terms of:(i)the basis of exclusive jurisdiction; and (4 marks)(ii)the effect of the rule of exclusive jurisdiction. (4 marks)(10 marks)2 In relation to the Property Law of China:(a)explain the term right of lien; (4 marks)(b)state THREE conditions to be met for a party to claim the right of lien.(6 marks)(10 marks)3 In relation to the Labour Contract Law of China:(a) state the various powers of the labour administration in exercising its supervisory and examining functions;(2 marks)(b) state any FOUR kinds of situations under which the labour administration may issue administrative orders to an employer for violations of Labour Contract Law. (8 marks)(10 marks)4 In relation to the Contract Law of China:(a)explain the term termination of contract; (2 marks)(b)explain and distinguish between termination of contract and dissolution o f contract. (8 marks)(10 marks)5 In relation to the pany Law of China:(a)state the basic rules regarding the shareholders of:(i)a general limited liability pany; (2 marks)(ii)a soleperson limited liability pany and a wholly stateowned pany; and (2 marks)(b)state the requirements for capital of:(i)a general limited liability pany; (2 marks)(ii)a soleperson limited liability pany; and (2 marks)(iii)a pany with exclusive stateownership. (2 marks)(10 marks)6 In relation to the Enterprises Bankruptcy Law of China,state the legal effec t of the acceptance of an application for bankruptcy by the court:(a)in terms of the preservative measures against the assets of the debtor;(4 marks)(b)in terms of the enforcement procedure against the relevant debtor; (4 mar ks)(c)in terms of pending legal actions against a debtor. (2 marks)(10 marks)7 In relation to the Securities Law of China:(a)explain the term sponsor in underwriting securities; (2 marks)(b)state the objective of the legislation to set up the system of sponsorshi p in underwriting securities;(2 marks)(c)state the various legal liabilities of a sponsor,in providing professiona l services,for his wrong doings or failure to perform his functions. (6 marks)(10 marks)8 In 2009 Mr Lee and the villager mittee entered into a contract for the man agement of land,under which he obtained the right to manage the contracted piece of land in a small mountain for 30 years.The contract was duly registered with t he relevant government authority in light of the Property Law.One day when Mr Lee was planting trees on the mountain,he accidentally found a small coal mine in the mountain. Having discovered this information many villa gers rushed to the mountain to exploit coal for sale. Mr Lee demanded the villag ers stop the exploitation of coal,on the ground that he has been a legitimate ho lder of the right of management of land. Therefore，he should be a lawful holder of right to the coal mine under the land. On the other hand,the villagers refuse d to accept Mr Lee‘s position and insisted that Mr Lee’s right to management o f land would not extend to natural resources under the land.They held that the c oal mine should be the mon property of the villagers as a whole and they were en titled to dig coal.Since Mr Lee and the villagers could not reach a settlement themselves,they filed a lawsuit against each other before the court for the determination of rig ht.Required:Answer the following questions in accordance with the relevant provisions of the Property Law of China,and give reasons for your answer:(a)describe what kind of property right Mr Lee has held regarding the mounta in; (2 marks)(b)describe who should hold the ownership of the coal mine in the mountain;(4 marks)(c)state how the court should deal with the claim brought by Mr Lee for dama ges against villagers because some of the trees in the land were destroyed by vi llagers in digging coal. (4 marks)(10 marks)9 Natural Gas pany(Gas pany)and Yaowa Glass pany(Yaowa pany)entered into a s upply contract.The major terms and conditions of the contract were that Gas pany would provide a minimum 4,000 m3 of natural gas daily for a period of five years at a fixed price;it should give a written notice five days in advance where it r educes the quantity of supply;Yaowa pany would provide a sum of RMB 100,000 yuan as a deposit for the performance of the contract. Yaowa pany paid the deposit pu rsuant to the supply contract upon the conclusion of the contract. Gas pany has been in decline since the beginning of 2010. In order to achieve extra profit,Ga s pany sold more natural gas to other customers at a higher price by reducing th e quantity of supply to Yaowa pany.One day Gas pany suddenly stopped providing n atural gas to Yaowa pany without a notice in advance,which resulted in serious d amage to the equipment of the latter.Due to unsuccessful negotiation between the two parties,Yaowa pany intended to seek the assistance from the people‘s court.Required:Answer the following questions in accordance with the relevant provisions of the Contract Law of China,and give your reasons for your answer:(a)explain the legal nature of the deposit under the contract law,and state whether a claim for a refund of twice the amount of the deposit should be suppor ted by the court; (4 marks)(b)state whether a claim requiring specific performance of contract by Gas p any should be supported by the court where the Yaowa pany has already requested a refund of twice the amount of the deposit.(6 marks)(10 marks)10 Kingmart Joint Stock pany(Kingmart pany)was a listed joint stock pany lis ting in Shanghai Securities Exchange,with total assets of RMB 500 million yuan; while Dahua Limited Liability pany’s(Dahua pany)registered capital was RMB 160million yuan.At the end of 2009 the board of directors of Kingmart pany adopted a special board of directors‘ resolution to merge with Dahua pany in a form of merger by absorption. after the pletion of the merger plan Dahua pany would be d issolved. For the purpose of carrying forward the merger plan,Kingmart pany and Dahua pany should take some procedural steps before the merger plan could be imp lemented and settle the credit and/or debt of these two panies with other partie s.Required:Answer the following questions in accordance with the relevant provisions of the pany Law， and give reasons for your answer:(a)state the relevant voting requirement by the general shareholders' meetin g; (3 marks)(b)state the relevant rules with respect to public notice; (3 marks)(c)state how to deal with Dahua p any‘s debts of RMB 500,000 yuan owed to a local electricity plant.(4 marks)(10 marks)332617611。

ACCA 历年真题f5_2012_dec_a

Fundamentals Level – Skills Module, Paper F5Performance Management December 2012 Answers 1Hair Co(a)Weighted average contribution to sales ratio (WA C/S ratio) = total contribution/total sales revenue.Per unit:C S D$$$Selling price110160120Material 1(12)(28)(16)Material 2(8)(22)(26)Skilled labour(16)(34)(22)Unskilled labour(14)(20)(28)–––––––––Contribution 605628–––––––––Sales units20,00022,00026,000T otal sales revenue$2,200,000$3,520,000$3,120,000T otal contribution $1,200,000$1,232,000$728,000WA C/S ratio = $1,200,000 + $1,232,000 + $728,000/$2,200,000 + $3,520,000 + $3,120,000= $3,160,000/$8,840,000 = 35·75%(b)Break-even sales revenue = fixed costs/C/S ratioTherefore break-even sales revenue = $640,000/35·75% = $1,790,209·70.(c)PV chartCalculate the individual C/S ratio for each product then rank them according to the highest one first.Per unit:C S D$$$Contribution 605628Selling price110160120C/S ratio0·550·350·23Ranking123Product Revenue Cumulative Revenue Profit Cumulative Profit(x axis co-ordinate)(y axis co-ordinate)$$$$000(640,000)(640,000)Make C2,200,0002,200,0001,200,000560,000Make S3,520,0005,720,0001,232,0001,792,000Make D3,120,0008,840,000728,0002,520,000(d)From the chart above it can be seen that, if the products are sold in order of the highest ranking first, break even will take place at a point just under $1,200,000 of sales revenue. The exact figure can be worked out by taking the fixed costs of $640,000 and dividing them by Product C’s C/S ratio of 0·55, i.e. the exact BEP is $1,163,636. This is substantially earlier than the break-even point which occurs if the products are all sold in a constant mix, which is $1,790,209, as calculated in (b) above.The reason for this is obviously because the more profitable product, C, contributes more per unit to fixed costs when being sold on its own, than when a mix of products C, S and D are sold. The weighted average C/S ratio of all three products is only 35·75%, compared to C’s C/S ratio of 55%. Obviously, then, break even will occur earlier if C is sold in priority.In reality, however, the mix of sales will vary throughout the year and Hair Co can neither assume that the products are sold in a constant mix, nor that the most profitable can be sold first.2Truffle Co (a)Basic variancesStandard cost of labour per hour = $6/0·5 = $12 per hour.Labour rate variance = (actual hours paid x actual rate) – (actual hours paid x std rate)Actual hours paid x std rate = $136,800/·95 = $144,000. Therefore rate variance = $144,000 –$136,800 = $7,200 FLabour efficiency variance =(actual production in std hours – actual hours worked) x std rate[(20,500 x 0·5) – 12,000] x $12 = $21,000 A.(b)Planning and operational variancesLabour rate planning variance(Revised rate –std rate) x actual hours paid = [$12 – ($12 x 0·95)] x 12,000 = $7,200 F .Labour rate operational varianceThere is no labour rate operational variance.(Revised rate – actual rate) x actual hours paid = $11·40 –$11·40 x 12,000 = 0Most p r ofitable fi r st Co n sta n t m ix2,0004,0006,0008,00010,000–1,000–50005001,0001,5002,0002,5003,000Sales revenue $’000P r o f i t $’000CSDLabour efficiency planning variance(Standard hours for actual production –revised hours for actual production) x std rate[10,250 –(20,500 x 0·5 x 1·2)] x $12 = $24,600 A.Labour efficiency operational variance(Revised hours for actual production – actual hours for actual production) x std rate(12,300 – 12,000) x $12 = $3,600 F.(c)DiscussionWhen looking at the total variances alone, it looks like the production manager has been extremely poor at controlling his staff’s efficiency, since the labour efficiency variance is $21,000 adverse. It also looks, at a glance, like he has managed to secure labour at a lower rate.In order to assess the production manager’s performance fairly, however, only the operational variances should be taken into account. This is because planning variances reflect differences that arise because of factors that are outside the control of the production manager. The operational variance for the labour rate was $0, which means that the labour force were paid exactly what was agreed at the end of October: their reduced rate of $11·40 per hour. The manager clearly did not have to pay anyone for overtime, for example, which would have been expected to push this rate up. The rate reduction was secured by the company and was not within the control of the production manager, so he cannot take credit for the favourable rate planning variance of $7,200. The company is the source of this improvement.As regards labour efficiency, the planning and operational variances give us more information about the total efficiency variance of $21,000A. When this is broken down into its two parts, it becomes clear that the operational variance, for which the manager does have control, is actually $3,600 favourable. This is because, when the recipe is changed as it has been in November, the chocolates usually take 20% longer to make in the first month whilst the workers are getting used to handling the new ingredient mix. When this is taken into account, it can therefore be seen that workers took less than the 20% extra time that they were expected to take, hence the positive operational variance. The planning variance, on the other hand, is $24,600 adverse. This is because the standard labour time per batch was not updated in November to reflect the fact that it would take longer to produce the truffles. The manager cannot be held responsible for this.Overall, then, the manager has performed well, given the change in the recipe.3Web CoWeb Co has made three changes and introduced two incentives in an attempt to increase sales. Using the performance indicators given in the question, it is possible to assess whether these attempts have been successful.Total sales revenueThis has increased from $2·2 million to $2·75m, an increase of 25% (W1). This is a substantial increase, especially considering the fact that a $10 discount has been given to all customers spending $100 or more at any one time. However, because a number of changes and incentives have been introduced, it is not possible to assess how effective each of the individual changes/incentives has been in increasing sales revenue without considering the other performance indicators.Net profit margin (NPM)This has decreased from 25% to 16·7%. In $ terms this means that net profit was $550,000 in quarter 1 and $459,250 in quarter 2 (W2). If the 25% NPM had been maintained in quarter 2, the net profit would have been $687,500 for quarter 2. It is therefore $228,250 lower than it would have been. This is mainly because of the $200,000 paid out for advertising and the $20,000 paid to the consultant for the search engine work. The remaining $8,250 difference could be a result of the cost of the $10 discounts given to customers who spent more than $100, depending on how these are accounted for. Alternatively, it could be due to the costs of providing the Fast T rack service. More information would be required on how the discounts are accounted for (whether they are netted off sales revenue or instead included in cost of sales) and also on the cost of providing the Fast T rack service.Whilst it is not clear how long the advert is going to run for in the fashion magazine, $200,000 does seem to be a very large cost.This expense is largely responsible for the fall in NPM. This is discussed further under ‘number of visits to website’.Number of visits to websiteThese have increased dramatically from 101,589 to 141,714, an increase of 40,125 visits (39·5% W3). The reason for this isa combination of visitors coming through the fashion magazine’s website (28,201 visitors W5), with the remainder of the increasemost probably being due to the search engine consultants’ work. Both of these changes can therefore be said to have been effective in improving the number of people who at least visit Web Co’s online store. However, given that the search engine consultant only charged a fee of $20,000 compared to the $200,000 paid for magazine advertising, in relative terms, the consultant’s work provided value for money. Web Co’s sales are not really high enough to withstand a hit of $200,000 against profit, hence the fall in NPM.Number of orders/customers spending more than $100The number of orders received from customers has increased from 40,636 to 49,600, an increase of 22% (W4). This shows that, whilst most of the 25% sales revenue increase is due to a higher number of orders, 3% of it is due to orders being of a higher purchase value. This is also reflected in the fact that the number of customers spending more than $100 per visit has increasedfrom 4,650 to 6,390, an increase of 1,740 orders. So, for example, If each of these 1,740 customers spent exactly $100 rather than the $50 they might normally spend, it would easily explain the 3% increase in sales that is not due to increased order numbers. It depends partly on how the sales discounts of $10 each are accounted for. As stated above, further information is required on these.An increase in the number of orders would also be expected, given that the number of visitors to the site has increased substantially.This leads on to the next point.Conversion rate – visitor to purchaserThe conversion rate of visitors to purchasers has gone down from 40% to 35%. This is not surprising, given the advertising on the fashion magazine’s website. Readers of the magazine may well have clicked on the link out of curiosity and may come back and purchase something at a later date. It may be useful to have a breakdown of the visitor to purchaser rate, showing one statistic for visitors who have come from the online magazine and one for those who have not. This would help clarify the position.Website availabilityRather than improving after the work completed by Web Co’s IT department, the website’s availability has stayed the same. This means that the IT department’s changes to the website have not corrected the problem. Lack of availability is not good for business, although its exact impact is difficult to ascertain. It may be that visitors have been part of the way through making a purchase only to find that the website then becomes unavailable. More information would need to be available about aborted purchases, for example, before any further conclusions could be drawn.Subscribers to online newsletterThese have increased by a massive 159%. It is not clear what impact this has had on the business as we do not know whether the level of repeat customers has increased. This information is needed. Surprisingly, it seems that there has not been an increased cost associated with providing Fast T rack delivery, as the whole fall in net profit has been accounted for, so one can only assume that Web Co managed to offer this service without incurring any additional cost itself.ConclusionWith the exception of the work carried out to make the system more available, all of the other measures seem to have increased sales or, in the case of Incentive 1, increased subscribers. More information is needed in relation to a couple of areas, as noted above. The business has therefore been responsive to changes made and incentives implemented but the cost of the advertising was so high that, overall, profits have declined substantially. This expenditure seems too high in relation to the corresponding increase in sales volumes.Workings1.Increase in sales revenue $2·75m –$2·2m/$2·2m = 25% increase.2. NPM: 25% x $2·2m = $550,000 profit in quarter 1. 16·7% x $2·75m = $459,250 profit in quarter 2.3.No. of visits to website: increase = 141,714 –101,589/101,589 = 39·5%.4.Increase in orders = 49,600 –40,636/40,636 = 22%.5.Customers accessing website through magazine line = 141,714 x 19·9% = 28,201.6.Increase in subscribers to newsletter = 11,900 –4,600/4,600 = 159%.4Designit(a)ExplanationThe rolling budget outlined for Designit would be a budget covering a 12-month period and would be updated monthly.However, instead of the 12-month period remaining static, it would always roll forward by one month. This means that, as soon as one month has elapsed, a budget is prepared for the corresponding month one year later. For example, Designit would begin by preparing a budget for the 12 months from 1 December 2012 to 30 November 2013, to correspond with its year end. Then, at the end of December 2012, a budget would be prepared for the month December 2013, so that the unexpired period covered by the budget is always 12 months.When the budget is initially prepared for the year ending 30 November 2013, the first month is prepared in detail, with much less detail being given to later months, where there is a greater uncertainty about the future. Then, when this first month has elapsed and the budget for the month of December 2013 is prepared, it is also necessary to revisit and revise the budget for January 2013, which will now be done in more detail.Note:This answer gives more level of detail than would be required to gain full marks.(b)ProblemsDesignit only has one part-qualified accountant. H e is already overworked and probably has neither the time nor the experience to prepare rolling budgets every month. One would only expect to see monthly rolling budgets of this nature in businesses which face rapid change. There is no evidence that this is the case for Designit. If it did decide to introduce rolling budgets, it would probably be sufficient if they were updated on a quarterly rather than a monthly basis. If this monthly rolling budget is going to be introduced, it is going to require a lot of input from many of the staff, meaning that they will have less time to dedicate to other things.The sales managers may react badly to the new budgeting and incentive system. They are used to having been set targets that are easily achievable. With the new system, they will have to work hard all year round. They are also likely to become frustrated with the fact that they do not know the target for the whole year in advance. Once they have hit their target for themonth, they may then also be tempted to hold back further work and let it run into the next month, so that they increase the chances of meeting next month’s target. This would not be good for the business.(c)Alternative incentive schemeThe issue with the current bonus scheme is that the reward system is stepped, rather than being a percentage of sales. The first $1·5 million fee income target is too easy to reach and the second $1·5 million target is too hard to reach. Therefore, managers are not motivated to earn additional fees once the initial $1·5 million target has been reached.A series of constantly rising bonus rates ranging over a narrower rate of sales could be used. For example, every $500,000of fee income could be rewarded with an additional bonus equivalent to 5% of salary. Alternatively, the bonus could be replaced by commission, giving the managers a reward as a percentage of the fee income rather than a percentage of salary.Currently, the company is paying out $30,000 in bonus to each of its managers each year. This is 2% of $1·5 million.Therefore, the bonus could be that each manager earns 2% commission on all sales.(d)Using spreadsheetsIf spreadsheets are used for budgeting, the part-qualified accountant could be rekeying large amounts of data taken from the company’s systems. It would be very easy for him to make a mistake when he is entering his data, especially without someone else to check his work.Similarly, if there is any error in any of the formulae, all the numbers in the budget will be wrong. Whilst this risk already exists because fixed budgets are being prepared on spreadsheets, the rolling budgets will be far more complex, which increases the risk of error in the design of the model or any of the formulae.A model can become easily corrupted simply by putting a number in the wrong cell. The accountant is unlikely to spot thisdue to his lack of experience and the time pressure on him.When spreadsheets are used, there is no audit trail that can be followed in order to check the numbers.5Wash Co(a)Transfer price using machine hoursT otal overhead costs = $877,620T otal machine hours = (3,200 x 2) + (5,450) x 1 = 11,850Overhead absorption rate = $877,620/11,850 = $74·06Overhead cost for S = 2 x $74·06 = $148·12 and for R = 1 x $74·06 = $74·06.Product S Product R$$Materials cost11795Labour cost (at $12 per hour)69Overhead costs148·1274·06––––––––––––T otal cost271·12178·0610% mark-up27·11 17·81––––––––––––T ransfer price using machine hours298·23195·87––––––––––––(b)Transfer price using ABCMachine set up costs:driver = number of production runs.30 + 12 = 42.Therefore cost per set up = $306,435/42 = $7,296·07Machine maintenance costs:driver = machine hours: 11,850 (S= 6,400; R=5,450)$415,105/11,850 = $35·03Ordering costs:driver = number of purchase orders82 + 64 = 146.Therefore cost per order = $11,680/146 = $80Delivery costs:driver = number of deliveries.64 + 80 = 144.Therefore cost per delivery = $144,400/144 = $1,002·78Allocation of overheads to each product:Product S Product R Total$$$ Machine set-up costs218,88287,553306,435Machine maintenance costs224,192190,913415,106Ordering costs6,5605,12011,680Delivery costs64,178 80,222144,400––––––––––––––––––––––––T otal overheads allocated513,812363,808877,620––––––––––––––––––––––––Number of units produced3,2005,4508,650$$Overhead cost per unit160·5766·75T ransfer price per unit:Materials cost11795Labour cost69Overhead costs160·5766·75––––––––––––––T otal cost283·57170·75Add10% mark up28·3617·08––––––––––––––T ransfer price under ABC311·93187·83––––––––––––––(c)(i)ABC monthly profitUsing ABC transfer price from part (b):Assembly division Product S Product R TotalProduction and sales3,2005,450$$10% mark up28·3617·08––––––––––––––––––––Profit90,75293,086183,838––––––––––––––––––––––––––––Retail division Product S Product R TotalProduction and sales3,2005,450$$Selling price320260Cost price(311·93)(187·83)–––––––––––––––––––––Profit per unit8·0772·17–––––––––––––––––––––T otal profit25,824393,327419,151–––––––––––––––––––––––––––––(ii)DiscussionFrom the various profit figures for the three bases of allocating overheads, various observations can be made.–There is obviously very little difference between the TOTAL profits of each division whichever method is used, except for differences arising from rounding. In each case, the total profit made by the assembly division isapproximately $183,000 and $419,000 for the retail division. It is the reallocation of profits from R to S or S toR that is the important factor in this situation, given that the retail division wants to reduce prices but increase salesvolumes for R.–As regards the assembly division, when labour hours are used to allocate overheads, there is a big difference between the profits that each of the two products makes. When machine hours or ABC are used, this differencebecomes much smaller.–As regards the retail division, when labour hours are used, product S generates 76% of the profit. When this method of allocation is then changed so that either machine hours are used or ABC is used, the main share of theprofit then moves to product R. In the case of ABC, the profit moves so much to R that S only generates a profitper unit of $8·07 for the retail division, which is very low for a selling price of $320.–From the assembly division manager’s point of view, any change that results in increased sales of either R or S to the retail division would be a good thing for the assembly division, given that both products are profitable. However,the assembly division’s manager would probably oppose the implementation of ABC to achieve this end resultbecause firstly, it is complex and secondly, it is unnecessary here. The aim of this exercise is to set more accuratetransfer prices for R and S, which should mean a reduction in R’s transfer price and an increase in S’s, accordingto the information given. This would then have the effect of enabling the retail division to lower its price for R andincrease sales volumes. This goal is achieved simply by changing the basis of overhead absorption from labourhours to machine hours, without the need for activity based costing.–The retail manager’s view is likely to be exactly the same. If the basis of absorption is changed so that a lower transfer price is charged, the retail division could potentially reduce their selling price for R, provided that the increased sales volumes more than make up for the reduced margin. There is no need to get into the complexities of ABC when the results it produces are not that different.Fundamentals Level – Skills Module, Paper F5Performance Management December 2012Marks1Hair Co(a)Weighted average C/S ratioIndividual contributions3T otal sales revenue1T otal contribution1Ratio1–––6–––(b)Break-even revenue2–––(c)PV chartIndividual CS ratios1·5Ranking1Workings for chart2Chart:Labelling 0·5Plotting each of six points4–––9–––(d)DiscussionGeneral comments re assumptions of CVP (max. 2 marks)1Each valid point re BEP1–––3–––Total20––––––2Truffle Co(a)Rate and efficiency variancesRate variance2Efficiency variance2–––4–––(b)Planning and operational variancesLabour rate planning variance2Labour rate operational variance2Labour efficiency planning variance2Labour efficiency operational variance2–––8–––(c)DiscussionOnly operational variances controllable1No labour rate operating variance 1Planning variance down to company, not manager2Labour efficiency total variance looks bad2Manager has performed well as regards efficiency2Standard for labour time was to blame2Conclusion2–––Maximum marks8–––Total20––––––Marks 3Web CoCalculations4 Missing info3 Discussion and further analysis (2–3 marks per point)18 Conclusion2–––Total20––––––4Designit(a)ExplanationUpdated after one month elapsed1 Always 12 months1 Example given1 First month in detail1 Later month less detail1 Need to revisit earlier months1–––Maximum4–––(b)ProblemsMore time1 Lack of experience1 T oo regular2 Managers’ resistance2 Work harder1 Holding back work2–––Maximum6–––(c)Simpler incentive schemeCurrent target too easy1 Second target too hard1 Other valid point re current scheme1 New scheme outlined3–––6–––(d)Using spreadsheetsErrors entering data1 Rolling budgets more complex1 Formulae may be wrong1 Corruption of model1 No audit trail1–––Maximum4–––Total20––––––Marks 5Wash Co(a)T ransfer price using machine hoursCalculating OAR1 New TP for S1 New TP for R1–––3–––(b)T ransfer price using ABCIdentify cost drivers1 Cost driver rates2 T otal overheads allocated2 Overhead cost per unit1 T otal cost per unit1 T ransfer price per unit1–––8–––(c)ABC profit and discussion(i)Profit calculation3–––(ii)Each valid comment 2–––Maximum marks6–––Total20––––––21。

干货分享 ACCA F5的5大历史真题详解

干货分享 | ACCA F5的5大历史真题详解ACCA F5 全球统考将近, 楷博财经资深讲师将从F5中的重点通过历史真题加以解析，希望对同学们有所帮助。

Example 1: Gadget Co (DEC 2010)The Gadget Co produces three products,A, B and C, all made from the same mat erial. Until now, it has used traditionalabsorption costing to allocate overheads t o its products. The company is nowconsidering an activity based costing system i n the hope that it will improveprofitability. Information for the three products for the last year is asfollows:The price for raw materials remainedconstant throughout the year at $1.2 per kg.Similarly, the direct labor costfor the whole workforce was $14.8 per hour. The a nnual overhead costs:(a) Calculatethe full cost per unit for products A, B and C under traditional absor ptioncosting,using direct labor hours as the basis for apportionment. (5'')(b)Calculate the full cost per unit of each product using activity based costing.(9 ' ')这种题型，有很大的概率出现. 需要注意的地方:1. ABC 和 AC 目的一致 (Howto apportion total overheads into cost unit), 但方式不同;2. ABC方法明显要繁琐一些, 但是它更加适用于Overhead costs 占总成本比例高的环境;3. 上题有short cut 方式，以此解题快一点。

ACCA考试F5模拟测试题目答案

AnswersFundamentals Level – Skills Module, Paper F5Performance Management December 2010 Answers1 (a) (i) Sales price variance and sales volume varianceSales price variance = (actual price – standard price) x actual volumeActual Standard Difference Actual Salesprice price volume priceVariance$ $ $ $Plasma TVs 330 350 –20 750 15,000 ALCD TVs 290 300 –10 650 6,500 A–––––––21,500 A–––––––Sales volume contribution variance = (actual sales volume – budgeted sales volume) x standard margin Actual Budgeted Difference Standard Salessales sales margin volumevolume volume variance$ $Plasma TVs 750 590 160 190 30,400 FLCD TVs 650 590 60 180 10,800 F–––––––––––––––––––1,400 1,180 41,200 F–––––––––––––––––––(ii) Material price planning and purchasing operational variancesMaterial planning variance = (original target price – general market price at time of purchase) x quantity purchased($60 – $85) x 1,400 = $35,000 A.Material price operational variance = (general market price at time of purchase – actual price paid) x quantity purchased.($85 – $80) x 1,400 = $7,000 F.(iii) Labour rate and labour efficiency variancesLabour rate variance = (standard labour rate per hour – actual labour rate per hour) x actual hours worked.Actual hours worked by temporary workers:Total hours needed if staff were fully efficient = (750 x 2) + (650 x 1·5) = 2,475.Permanent staff provide 2,200 hours therefore excess = 2,475 – 2,200 = 275.However, temporary workers take twice as long, therefore hours worked = 275 x 2 = 550Labour rate variance relates solely to temporary workers, therefore ignore permanent staff in the calculation.Labour rate variance = ($14 – $18) x 550 = $2,200 A.Labour efficiency variance = (standard labour hours for actual production – actual labour hours worked) xstandard rate.(275 – 550) x $14 = $3,850 A.(b) Explanation of planning and operational variancesBefore the material price planning and operational variances were calculated, the only information available as regardsmaterial purchasing was that there was an adverse material price variance of $28,000. The purchasing department will beassessed on the basis of this variance, yet, on its own, it is not a reliable indicator of the purchasing department’s efficiency.The reason it is not a reliable indicator is because market conditions can change, leading to an increase in price, and thischange in market conditions is not within the control of the purchasing department.By analysing the materials price variance further and breaking it down into its two components – planning and operational –the variance actually becomes a more useful assessment tool. The planning variance represents the uncontrollable elementand the operational variance represents the controllable element.The planning variance is a really useful for providing feedback on just how skilled management are in estimating future prices.This can be very easy in some businesses and very difficult in others.The operational variance is more meaningful in that it mea sures the purchasing department’s efficiency given the marketconditions that prevailed at the time. It therefore ignores factors that the purchasing department cannot control, which in turn,stops staff from becoming demotivated.112 TurnoverTurnover has decreased from $72·025 million in 2009 to $66·028 million in 2010, a fall of 8·3%. However, this must beassessed by taking into account the change in market conditions, since there has been a 20% decline in demand for accountancytraining. Given this 20% decline in the market place, AT Co’s turnover would have been expected to fall to $57·62m if it had keptin line with market conditions. Comparing AT Co’s actual turnover to this, it’s actual turnover is 14·6% higher than expected. Assuch, AT Co has performed fairly well, given market conditions.It can also be seen from the non-financial performance indicators that 20% of students in 2010 are students who have transferredover from alternative training providers. It is likely that they have transferred over because they have heard about the improvedservice that AT Co is providing. Hence, they are most likely the reason for the increased market share that AT Co has managed tosecure in 2010.Cost of salesCost of sales has decreased by 19·2% in 2010. This must be considered in relation to the decrease in turnover as well. In 2009,cost of sales represented 72·3% of turnover and in 2010 this figure was 63·7%. This is quite a substantial decrease. The reasonsfor it can be ascertained by, firstly, looking at the freelance staff costs.In 2009, the freelance costs were $14·582m. Given that a minimum 10% reduction in fees had been requested to freelancelecturers and the number of courses run by them was the same year on year, the expected cost for freelance lecturers in 2010 was$13·124m. The actual costs were $12·394m. These show that a fee reduction of 15% was actually achieved. This can be seenas a successful reduction in costs.The expected cost of sales for 2010 before any cost cuts, was $47·738m assuming a consistent ratio of cost of sales to turnover.The actual cost of sales was only $42·056m, $5·682m lower. Since freelance lecturer costs fell by $2·188m, this means thatother costs of sale fell by the remaining $3·494m. Staff costs are a substantial amount of this balance but since there was a payfreeze and the average number of employees hardly changed from year to year, the decreased costs are unlikely to be related tostaff costs. The decrease is therefore most probably attributable to the introduction of online marking. AT Co expected the onlinemarking system to cut costs by $4m, but it is probable that the online marking did not save as much as possible, hence the$3·494m fall. Alternatively, the saved marking costs may have been partially counteracted by an increase in some other costincluded in cost of sales.Gross profitAs a result of the above, the gross profit margin has increased in 2010 from 27·7% to 36·3%. This is a big increase and reflectsvery well on management.Indirect expenses– Marketing costs: These have increased by 42·1% in 2010. Although this is quite significant, given all the improvements thatAT Co has made to the service it is providing, it is very important that potential students are made aware of exactly what thecompany now offers. The increase in marketing costs has been rewarded with higher student numbers relative to thecompetition in 2010 and these will hopefully continue increasing next year, since many of the benefits of marketing won’t befelt until the next year anyway. The increase should therefore be viewed as essential expenditure rather than a cost that needsto be reduced.– Property costs: These have largely stayed the same in both years.– Staff training: These costs have increased dramatically by over $2 million, a 163·9% increase. However, AT Co had identifiedthat it had a problem with staff retention, which was leading to a lower quality service being provided to students. Also, dueto the introduction of the interactive website, the electronic enrolment system and the online marking system, staff wouldhave needed training on these areas. If AT Co had not spent this money on essential training, the quality of service wouldhave deteriorated further and more staff would have left as they became increasingly dissatisfied with their jobs. Again,therefore, this should be seen as essential expenditure.Given that the number of student complaints has fallen dramatically in 2010 to 84 from 315, the staff training appears tohave improved the quality of service being provided to students.– Interactive website and the student helpline: These costs are all new this year and result from an attempt to improve thequality of service being provided and, presumably, improve pass rates. Therefore, given the increase in the pass rate for firsttime passes from 48% to 66% it can be said that these developments have probably contributed to this. Also, they haveprobably played a part in attracting new students, hence improving turnover.– Enrolment costs have fallen dramatically by 80·9%. This huge reduction is a result of the new electronic system beingintroduced. This system can certainly be seen as a success, as not only has it dramatically reduced costs but it has alsoreduced the number of late enrolments from 297 to 106.Net operating profitThis has fallen from $3·635m to $2·106m. On the face of it, this looks disappointing but it has to be remembered that AT Co hasbeen operating in a difficult market in 2010. It could easily have been looking at a large loss. Going forward, staff training costswill hopefully decrease. Also, market share may increase further as word of mouth spreads about improved results and service atAT Co. This may, in turn, lead to a need for less advertising and therefore lower marketing costs.12It is also apparent that AT Co has provided the student website free of charge when really, it should have been charging a fee forthis. The costs of running it are too high for the service to be provided free of charge and this has had a negative impact on netoperating profit.Note: Students would not have been expected to write all this in the time available.Workings (Note: All workings are in $'000)1. TurnoverDecrease in turnover = $72,025 – $66,028/$72,025 = 8·3%Expected 2010 turnover given 20% decline in market = $72,025 x 80% = $57,620Actual 2010 turnover CF expected = $66,028 – $57,620/$57,620 = 14·6% higher2. Cost of salesDecrease in cost of sales = $42,056 – $52,078/$52,078 = 19·2%Cost of sales as percentage of turnover: 2009 = $52,078/$72,025 = 72·3%2010 = $42,056/$66,028 = 63·7%Freelance staff costs: in 2009 = $41,663 x 35% = $14,582Expected cost for 2010 = $14,582 x 90% = $13,124Actual 2010 cost = $12,394$12,394 – $14,582 = $2,188 decrease$2,188/$14,582 = 15% decrease in freelancer costsExpected cost of sales for 2010, before costs cuts, = $66,028 x 72·3% = $47,738.Actual cost of sales = $42,056.Difference = $5,682, of which $2,188 relates to freelancer savings and $3,494 relates to other savings.3. Gross profit margin2009: $19,947/$72,025 = 27·7%2010: $23,972/$66,028 = 36·3%4. Increase in marketing costs = $4,678 – $3,291/$3,291 = 42·1%5. Increase in staff training costs = $3,396 – $1,287/$1,287 = 163·9%6. Decrease in enrolment costs = $960 – 5,032/5,032 = 80·9%7. Net operating profitDecreased from $3,635 to $2,106. This is fall of 1,529/3,635 = 42·1%3 (a) Optimum production planDefine the variablesLet x = no. of jars of face cream to be producedLet y = no. of bottles of body lotion to be producedLet C = contributionState the objective functionThe objective is to maximise contribution, CC = 9x + 8yState the constraintsSilk powder 3x + 2y δ 5,000Silk amino acids 1x + 0·5y δ 1,600Skilled labour 4x + 5y δ 9,600Non-negativity constraints:x, y ε 0Sales constraint:y δ 2,000Draw the graphSilk powder 3x + 2y = 5,000If x = 0, then 2y = 5,000, therefore y = 2,500If y = 0, then 3x = 5,000, therefore x = 1,666·7Silk amino acids 1x +0·5y = 1,600If x = 0, then 0·5y = 1,600, therefore y = 3,200If y = 0, then x = 1,600Skilled labour 4x + 5y = 9,600If x = 0, then 5y = 9,600, therefore y = 1,920If y = 0, then 4x = 9,600, therefore x = 2,40013Solve using iso-contribution lineIf y =800 and x = 0, then if C = 9x + 8yC = (8 x 800) = 6,400Therefore, if y = 0, 9x = 6,400Therefore x = 711·11Using the iso-contribution line, the furthest vertex from the origin is point c, the intersection of the constraints for skilled labourand silk powder.Solving the simultaneous equations for these constraints:4x + 5y = 9,600 x 33x + 2y = 5,000 x 412x + 15y = 28,80012x + 8y = 20,000Subtract the second one from the first one7y = 8,800, therefore y = 1,257·14.If y = 1,257·14 and:4x + 5y = 9,600Then 5 x 1,257·14 + 4x = 9,600Therefore x= 828·58If C = 9x + 8yC = $7,457·22 + $10,057·12 = $17,514·34143,5003,0002,5002,0001,5001,0005000 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500Jars of face creamBottles of body lotiony = 2,000bcda ec = 9x + 8y1x + 0·5y= 1,6003x + 2y= 5,000 4x + 5y = 9,600Silk powder Silk amino acids Skilled labourFeasible region Maximum sales of lotion Iso-contribution line(b) Shadow prices and slackThe shadow price for silk powder can be found by solving the two simultaneous equations intersecting at point c, whilstadding one more hour to the equation for silk powder.4x +5y = 9,600 x 33x + 2y = 5,001 x 412x + 15y = 28,80012x + 8y = 20,004Subtract the second one from the first one7y = 8,796, therefore y = 1,256·573x + (2 x 1,256·57) = 5,001.Therefore x = 829·29C = (9 x 829·29) + (8 x 1,256·57) = $17,516·17Original contribution = $17,514·34Therefore shadow price for silk powder is $1·83 per gram.The slack for amino acids can be calculated as follows:(828·58 x 1) + (0·5 x 1,257·14) = 1,457·15 grams used.Available = 1,600 grams.Therefore slack = 142·85 grams.4 (a) Cost per unit under full absorption costingTotal annual overhead costs: $Machine set up costs 26,550Machine running costs 66,400Procurement costs 48,000Delivery costs 54,320––––––––195,270––––––––Overhead absorption rate:A B C TotalProduction volumes 15,000 12,000 18,000Labour hours per unit 0·1 0·15 0·2Total labour hours 1,500 1,800 3,600 6,900Therefore, overhead absorption rate = $195,270/6,900 = $28·30 per hourCost per unit:A B C$ $ $Raw materials ($1·20 x 2/3/4kg) 2·4 3·6 4·8Direct labour ($14·80 x 0·1/0·15/0·2hrs) 1·48 2·22 2·96Overhead ($28·30 x 0·1/0·15/0·2 hrs) 2·83 4·25 5·66–––––––––––––––Full cost per unit 6·71 10·07 13·42–––––––––––––––(b) Cost per unit using full absorption costingCost drivers:Cost pools $ Cost driverMachine set up costs 26,550 36 production runs (16 + 12 + 8)Machine running costs 66,400 32,100 machine hours (7,500 + 8,400 + 16,200)Procurement costs 48,000 94 purchase orders (24 + 28 + 42)Delivery costs 54,320 140 deliveries (48 + 30 + 62)––––––––195,270––––––––Cost per machine set up $26,550/36 = $737·50Cost per machine hour $66,400/32,100 = $2·0685Cost per order $48,000/94 = $510·6383Cost per delivery $54,320/140 = $38815Allocation of overheads to each product:A B C Total$ $ $ $Machine set up costs 11,800 8,850 5,900 26,550Machine running costs 15,514 17,375 33,510 66,400Procurement costs 12,255 14,298 21,447 48,000Delivery costs 18,624 11,640 24,056 54,320–––––––––––––––––––––––––––––58,193 52,163 84,913 195,270–––––––––––––––––––––––––––––Number of units produced 15,000 12,000 18,000$ $ $Overhead cost per unit 3·88 4·35 4·72Total cost per unit A B C$ $ $Materials 2·4 3·6 4·8Labour 1·48 2·22 2·96Overheads 3·88 4·35 4·72–––––––––––––––––7·76 10·17 12·48–––––––––––––––––(c) Using activity-based costingWhen comparing the full unit costs for each of the products under absorption costing as compared to ABC, the followingobservations can be made:Product AThe unit cost for product A is 16% higher under ABC as opposed to traditional absorption costing. Under ABC, it is $7·76per unit compared to $6·71 under traditional costing. This is particularly significant given that the selling price for product Ais $7·50 per unit. This means that when the activities that give rise to the overhead costs for product A are taken into account,product A is actually making a loss. If the company wants to improve profitability it should look to either increase the sellingprice of product A or somehow reduce the costs. Delivery costs are also high, with 48 deliveries a year being made for productA. Maybe the company could seek further efficiencies here. Also, machine set up costs are higher for product A than for anyof the other products, due to the larger number of production runs. The reason for this needs to be identified and, if possible,the number of production runs needs to be reduced.Product BThe difference between the activity based cost for B as opposed to the traditional cost is quite small, being only $0·10. Sincethe selling price for B is $12, product B is clearly profitable whichever method of overhead allocation is used. ABC does notreally identify any areas for concern here.Product CThe unit cost for C is 7% lower under ABC when compared to traditional costing. More importantly, while C looks like it ismaking a loss under traditional costing, ABS tells a different story. The selling price for C is $13 per unit and, under ABC, itcosts $12·48 per unit. Under traditional absorption costing, C is making a loss of $0·42 per unit. Identifying the reason forthe differences in C, it is apparent that the number of production runs required to produce C is relatively low compared to thevolumes produced. This leads to a lower apportionment of the machine set up costs to C than would be given under traditionalabsorption costing. Similarly, the number of product tests carried out on C is low relative to its volume. ABC is therefore very useful in identifying that C is actually more profitable than A, because of the reasons identified above.The company needs to look at the efficiency that seems to be achieved with C (low number of production runs less testing)and see whether any changes can be made to A, to bring it more in line with C. Of course, this may not be possible, in whichcase the company may consider whether it wishes to continue to produce A and whether it could sell higher volumes of C.5 (a) Difficulties in the public sectorIn the public sector, the objectives of the organisation are more difficult to define in a quantifiable way than the objectives ofa private company. For example, a private company’s objectives may be to maximise profit. The meeting of this objective canthen be set out in the budget by aiming for a percentage increase in sales and perhaps the cutting of various costs. If, on theother hand, the public sector organisation is a hospital, for example, then the objectives may be largely qualitative, such asensuring that all outpatients are given an appointment within eight weeks of being referred to the hospital. This is difficult todefine in a quantifiable way, and how it is actually achieved is even more difficult to define.This leads onto the next reason why budgeting is so difficult in public sector organisations. Just as objectives are difficult todefine quantifiably, so too are the organisation’s outputs. In a private company the output can be measured in terms of salesrevenue. There is a direct relationship between the expenditure that needs to be incurred i.e. needs to be input in order toachieve the desired level of output. In a hospital, on the other hand, it is difficult to define a quantifiable relationship betweeninputs and outputs. What is more easy to compare is the relationship between how much cash is available for a particular16area and how much cash is actually needed. Therefore, budgeting naturally focuses on inputs alone, rather than therelationship between inputs and outputs.Finally, public sector organisations are always under pressure to show that they are offering good value for money, i.e.providing a service that is economical, efficient and effective. Therefore, they must achieve the desired results with theminimum use of resources. This, in itself, makes the budgeting process more difficult.(b) Incremental and zero-based budgeting‘Incremental budgeting’ is the term used to describe the process whereby a budget is prepared using a previous period’sbudget or actual performance as a base, with incremental amounts then being added for the new budget period.‘Zero-based budgeting’, on the other hand, refers to a budgeting process which starts from a base of zero, with no referencebeing made to the prior period’s budget or performance. Every department function is reviewed comprehensively, with allexpenditure requiring approval, rather than just the incremental expenditure requiring approval.(c) Stages in zero-based budgetingZero-based budgeting involves three main stages:1. Activities are identified by managers. These activities are then described in what is called a ‘decision package’. Thisdecision package is prepared at the base level, representing the minimum level of service or support needed to achievet he organisation’s objectives. Further incremental packages may then be prepared to reflect a higher level of service orsupport.2. Management will then rank all the packages in the order of decreasing benefits to the organisation. This will helpmanagement decide what to spend and where to spend it.3. The resources are then allocated based on order of priority up to the spending level.(d) No longer a place for incremental budgetingThe view that there is no longer a place for incremental budgeting in any organisation is a rather extreme view. It is knownfor encouraging slack and wasteful spending, hence the comment that it is particularly unsuitable for public sectororganisations, where cash cutbacks are being made. However, to say that there is no place for it at all is to ignore thedrawbacks of zero-based budgeting. These should not be ignored as they can make ZBB implausible in some organisationsor departments. They are as follows:– Departmental managers will not have the skills necessary to construct decision packages. They will need training forthis and training takes time and money.– In a large organisation, the number of activities will be so large that the amount of paperwork generated from ZBB willbe unmanageable.– Ranking the packages can be difficult, since many activities cannot be compared on the basis of purely quantitativemeasures. Qualitative factors need to be incorporated but this is difficult.– The process of identifying decision packages, determining their purpose, costs and benefits is massively time consumingand therefore costly.– Since decisions are made at budget time, managers may feel unable to react to changes that occur during the year. Thiscould have a detrimental effect on the business if it fails to react to emerging opportunities and threats. It could be argued that ZBB is more suitable for public sector than for private sector organisations. This is because, firstly, itis far easier to put activities into decision packages in organisations which undertake set definable activities. Localgovernment, for example, have set activities including the provision of housing, schools and local transport. Secondly, it is farmore suited to costs that are discretionary in nature or for support activities. Such costs can be found mostly in not for profitorganisations or the public sector, or in the service department of commercial operations.Since ZBB requires all costs to be justified, it would seem inappropriate to use it for the entire budgeting process in acommercial organisation. Why take so much time and resources justifying costs that must be incurred inorder to meet basicproduction needs? It makes no sense to use such a long-winded process for costs where no discretion can be exercisedanyway. Incremental budgeting is, by its nature, quick and easy to do and easily understood. These factors should not beignored.In conclusion, whilst ZBB is more suited to public sector organisations, and is more likely to make cost savings in hard timessuch as these, its drawbacks should not be overlooked.17Fundamentals Level – Skills Module, Paper F5Performance Management December 2010 Marking SchemeMarks1 (a) (i) Sales price variance 3Sales volume variance 3–––6–––(ii) Purchasing planning variance 1Purchasing efficiency variance 1–––2–––(iii) Actual hours worked 3Labour rate variance 2Labour efficiency variance 2–––7–––(b) Each valid reason 1–––5–––20–––19Marks2 Turnover8·3% decrease 0.5Actual t/o 14·6% higher 0.5Performed well CF market conditions 1Transfer of students 1–––Max. turnover 3Cost of sales19·2% decrease 0.563·7% of turnover 0.515% fee reduction from freelance staff 2Other costs of sale fell by $3·555m 2Online marking did not save as much as planned 1–––Max. COS 5–––Gross profit – numbers and comment 1Indirect expenses:Marketing costs42·1% increase 0.5Increase necessary to reap benefits of developments 1 Benefits may take more than one year to be felt 0.5 Property costs – stayed the same 0.5Staff training163·9% increase 0.5Necessary for staff retention 1Necessary to train staff on new website etc 1Without training, staff would have left 1Less student complaints 1Interactive website and student helplineAttracted new students 1Increase in pass rate 1Enrolment costsFall of 80·9% 0.5Result of electronic system being introduced 1 Reduced number of late enrolments 1–––Max. Indirect expenses 9–––Net operating profitFallen to $2·106 0.5Difficult market 1Staff training costs should decrease in future 1Future increase in market share 1Lower advertising cost in future 1Charge for website 1–––Max. net operating profit 3–––2020Marks3 (a) Optimum production plan Assigning letters for variables 0.5 Defining constraint for silk powder 0.5 Defining constraint for amino acids 0.5 Defining constraint for labour 0.5Non-negativity constraint 0.5Sales constraint: x 0.5Sales constraint: y 0.5Iso-contribution line worked out 1The graph:Labels 0.5Silk powder 0.5Amino acids 0.5Labour line 0.5Demand for x line 0.5Demand for y line 0.5Iso-contribution line 0.5Vertices a–e identified 0.5Feasible region shaded 0.5Optimum point identified 1Equations solved at optimum point 3 Total contribution 1–––14–––(b) Shadow prices and slackShadow price 4Slack 2–––6–––20–––4 (a) Contribution per unitOverhead absorption rate 2Cost for A 1Cost for B 1Cost for C 1–––5–––(b) Cost under ABCCorrect cost driver rates 5Correct overhead unit cost for A 1Correct overhead unit cost for B 1Correct overhead unit cost for C 1Correct cost per unit under ABC 1–––9–––(c) Using ABC to improve profitabilityOne mark per point about the Gadget Co 1–––6–––20–––21Marks5 (a) ExplanationDifficulty setting objectives quantifiably 2Difficulty in saying how to achieve them 1Outputs difficult to measure 2No relationship between inputs and outputs 2Value for money issue 2–––Maximum 5–––(b) Incremental and zero-based budgetingExplaining ‘incremental budgeting’ 2Explaining ‘zero-based budgeting’ 2–––4–––(c) Stages involved in zero-based budgetingEach stage 1–––3–––(d) DiscussionAny disadvantage of inc. that supports statement (max. 3) 1 Incremental budgeting is quick and easy 1Any disadvantage of ZBB that refutes statement (max. 3) 1 Easier to define decision packages in public sector 2more appropriate for discretionary costs 2。

ACCAF5考试真题及答案「完整版」

ACCAF5考试真题及答案「完整版」2016年ACCA F5考试真题及答案「完整版」Question:Jewel Co is setting up an online business importing and selling jewellery headphones. The cost of each set of headphones varies depending on the number purchased, although they can only be purchased in batches of 1，000 units. It also has to pay import taxes which vary according to the quantity purchased.Jewel Co has already carried out some market research and identified that sales quantities are expected to vary depending on the price charged. Consequently, the following data has been established for the first month：Required：(a)Calculate how many batches Jewel Co should import and sell.(b)Explain why Jewel Co could not use the algebraic method to establish the optimum price for its product.Answer:(a)(b)Therefore Jewel Co should import and sell four batches (4，000 units) of headphones since at this point it will make the greatest profit： $14，400 for the month.(b)The algebraic model requires several assumptions to be true. First, there must be a consistent relationship between price (P)and demand (Q), so that a demand equation can be established, usually in the form P = a-bQ. Here, although there is a clear relationship between the two, it is not a perfectly linear relationship and so more complicated techniques are required to calculate the demand equation. It also cannot be assumed that alinear relationship will hold for all values of P and Q other than the five given.Similarly, there must be a clear relationship between demand and marginal cost, usually satisfied by constant variable cost per unit and constant fixed costs. The changing variable costs per unit again complicate the issue, but it is the changes in fixed costs which make the algebraic method less useful in Jewel's case.The algebraic model is only suitable for companies operating in a monopoly and it is not clear here whether this is the case，but it seems unlikely, so any 'optimum' price might become irrelevant if Jewel's competitors charge significantly lower prices. Other more general factors not considered by the algebraic model are political factors which might affect imports, social factors which may affect customer tastes and economic factors which may affect exchange rates or customer spending power. The reliability of the estimates themselves -for sales prices, variable costs and fixed costs - could also be called into question.Question:Swim Co offers training courses to athletes and has prepared the following breakeven chart：Required：(a)State the breakeven sales revenue for Swim Co and estimate, to the nearest $10,000, the company‘s profit if 500 athletes attend a training course.(b)Using the chart above,explain the cost and revenue structure of the company.Answer:(a)The breakeven sales revenue for Swim Co is $90,000. The company‘s profit, to the nearest $10,000, if 500 athletes attend the course is $20,000 ($140,000 - $120,000). (From the graph, itis clear that the precise amount will be nearer $17,000, i.e. $140,000 - approximately $123,000.)(b)Cost structureFrom the chart, it is clear that Line C represents fixed costs, Line B represents total costs and Line A represents total revenue.Line C shows that initially, fixed costs are $20,000 even if no athletes attend the course. This level of fixed costs remains the same if 100 athletes attend but once the number of attendees increases above this level, fixed costs increase to $40,000.Line B represents total costs. If 100 athletes attend, total costs are $40,000($400 per athlete).Since $20,000 of this relates to fixed costs, the variable cost per athlete must be $200. When fixed costs step up beyond this point at the level of 200 athletes, total costs obviously increase as well and Line B consequently gets much steeper. However, since there are now 200 athletes to absorb the fixed costs, the cost per athlete remains the same at $400 per athlete($80,000/200), even though fixed costs have doubled.If 300 athletes attend the course, total cost per athlete becomes $300 each ($90,000/300).Since fixed costs account for $40,000 of this total cost, variable costs total $50,000, i.e. $166﹞67 per athlete. So, economies of scale arise at this level,as demonstrated by the fact that Line B becomes flatter.At 400 athletes, the gradient of the total costs line is unchanged from 300 athletes which indicates that the variable costs have remained the same. There is no further change at 500 athletes;fixed and variable costs remain steady.Revenue structureAs regards the revenue structure, it can be seen from Line A that for 100每400 athletes the price remains the same at $300per athlete. However, if 500 athletes attend, the price has been reduced as the total revenue line becomes flatter. $140,000/500 means that the price has gone down to $280 per athlete. This was obviously necessary to increase the number of attendees and at this point, profit is maximised.Question:Shoe Co,a shoe manufacturer,has developed a new product called the ‘Smart Shoe’ for children,which has a built-in tracking device. The shoes are expected to have a life cycle of two years,at which point Shoe Co hopes to introduce a new type of Smart Shoe with even more advanced technology. Shoe Co plans to use life cycle costing to work out the total production cost of the Smart Shoe and the total estimated profit for the two-year period.Shoe Co has spent $5·6m developing the Smart Shoe. The time spent on this development meant that the company missed out on the opportunity of earning an estimated $800,000 contribution from the sale of another product.The company has applied for and been granted a ten-year patent for the technology,although it must be renewed each year at a cost of $200,000. The costs of the patent application were $500,000,which included $20,000 for the salary costs of Shoe Co‘s lawyer,who is a permanent employee of the company and was responsible for preparing the application.Shoe Co is still negotiating with marketing companies with regard to its advertising campaign,so is uncertain as to what the total marketing costs will be each year. However,the following information is available as regards the probabilities of the range of costs which are likely to be incurred：Required：Applying the principles of life cycle costing,calculate the total expected profit for Shoe Co for the two-year period.Answer：NoteThe expected profit has been calculated using life cycle costing not relevant costing. Hence,the $20,000 salary cost included in patent costs should be included in the life cycle cost. Similarly,the opportunity cost of $800,000 is not included using life cycle costing whereas if relevant costing was being used to decide on a particular course of action,the opportunity cost would be included.Working 1Expected marketing cost in year 1:(0·2 x $2·2m)+ (0·5 x $2·6m)+ (0·3 x $2·9m)= $2·61mExpected marketing cost year 2:(0·3 x $1·8m)+ (0·4 x $2·1m)+ (0·3 x $2·3m)= $2·07mTotal expected marketing cost = $4·68m。

2010.Dec.ACCA.F9_OpenTuition-Paper-Mock-exam-Solutions

MOCK EXAM SolutionsYou can download Mock Exam Questions on:/acca/PAPER F9FINANCIAL MANAGEMENT This material is © protected and is licensed by Kevin J Kelly to Live Online tuition includes•Focused advice & help on WHAT and HOW to learn for the December F9 Exam, plus targeted EXAM TIPS•Revise a topic that you nd di ﬃcult,•Essential THEORY skills – I will teach you theAPPROACH required to be MARK – TIMEaware in the exam … don’t lose easy marksanymore. Instead, let me show you how to pick up the easy marks to help you passrst time! Students frequently forget that inF9 50% of the marks are available fortheory!•Essential NUMERIC skills – don’t risk failing theexam because you have got bogged down on aparticular numeric question in the exam. Do you have a reliable and structured approach for dealing with important numerical questions on Investment Appraisal, Financial Analysis, Working Capital Management, Cost of Capital, calculating WACC, Foreign Exchange calculations, etc., ? I will teach you essential numeric skills quickly and e ﬀectively using my unique “TEMPLATES ”.Can you provide your answers to numeric and theory questions at speed, demonstrating e ﬀective planning & logical layout? If not, let me show you how.•EXAM TECHNIQUE skills signi cantly improved – students often frequently under-perform in the exam when dealing with questions on Financial analysis, Investment Appraisal. Calculating WACC, Forex, etc., •Past F9 Exam Papers - explained in a simple and easy to understand fashionone-to-one tuition with ACCA Tutor Kevin Kelly For further information email Kevin Kelly: info@ or visit: Paper F9Book your one-to-one tuition with ACCA F9 Tutor, Kevin Kelly,(You choose any topic from within the F9 syllabus)Available Live on-line now £9.99 for 15 minutes or only £35.00 for 1 hr (All you will need is access to the internet and Skype)Contact: info@ or Mock Exam Service – Correction, Feedback and Assessment•Mock exam Assessment and Feedback. Correction Service for only £3.00 per question (£9.99 per paper - 4 questions). Marked and returned to you with DETAILED comments and suggestions for improvements online within 24 hours.•Revision questions marked and returned to you with comments and suggestions forimprovements £3.00 per question (£9.99 per paper - 4 questions)Mock Exam Assessment From only £3.00Solution 1Cost of Capital and Investment AppraisalBefore attempting this question you are advised to have carefully revised the following chapters of the Course NotesChapter 6 Management of Working Capital (4) - CashChapter 7 Investment AppraisalChapter 8 Relevant Cash Flows for DCFChapter 11 Sources of Finance - EquityChapter 12 Sources of Finance – DebtChapter 14 The Valuation of Securities – theoretical approachChapter 15 The Valuation of Securities – practical issuesChapter 16 The Cost of CapitalChapter 17 When (and when not!) to use the WACC for Investment AppraisalSolution 1a)Calculate the after-tax weighted average cost of capital of Orihuela SA (6 marks)*Tutors Note: Firstly, let’s recap on the procedure (Answer Plan) to follow in the exam … so that you produce an answer with a well structured layout that the marker can easily follow.WACC procedure may be summarised under the following headings. You will then only need to decide on which components of the following structure will be relevant to answering our specific exam question.WACC states: Ko = Ke (%) + Kdat (%)Approach / Procedure in the EXAMKe DVM (Growth or no Growth in Dividends?)P/E modelCAPMNPV # 1 Kdat Redeemable => IRR => NPV # 2InterpolateIRRedeemable => IRR => CI (1-t) / MV Weightings Preferably Market Values*Tutors Note: Looking at our question it is easily apparent that in our answer we will need to calculate Ke (the cost of equity) by reference to a suitable Dividend Valuation Model (DVM.. in this case Gordon’s Dividend Growth Formula) and the Kdat (the cost of redeemable debt AFTER TAX) by reference to first principles, using IRR.1This material is © protected and is licensed by Kevin J Kelly to Ke - Cost of EquityGordon’s formula states that Ke = Do (1+g) + gPe*Tutors Note: “Just Paid” = Do = $53, Current MPS = $18, Growth = g = 0.06Filling in the blanks we get:Ke = 3.0 (1+.06) + .0618Ke= 23.67%KDAT - Cost of Redeemable Debt*Tutors Note: We calculate Kdat from first principles - based on examination of the Relevant Cash Flows (Relevant Costs) associated with the bond. These c/f’s may be summarized as followsCalculation of NPV @ say 5%Table of Relevant Cash FlowsT o t1t2!!!.>t10Cost (MV) (93)Coupon Interest (1-t) 4.2 4.2……..> 4.2Redemption @par 100Redemption premium 10% 10Net Cash Flows (93) 4.2 4.2……. 114.20Df @5% 1 0.952 0.907 …. 0.614P.V. (93) 4.0 3.81 ……. 70.12NPV = 6.97*Tutors Note: Within the strict time constraints of the exam it would be a little time consuming to work out the NPV in this “normal” fashion. Clearly, it would be more efficient to use the Cumulative Discount Tables (or Annuity Factor Tables) to work out the Present Value of the constant CI cash flow ($4.20) between years 1 & 10 as follows:KDAT- Cost of Redeemable DebtCalculation of NPV @ say 5%Summary of Relevant Cash FlowsPVCost T o (93) x 1.00 (Real Cost) (93)CI after tax t1 to t10 4.20 x 7.722 (AF for 10 yrs) 32.43 Redemption t10 110 x .614 (df for yr 10) 67.54NPV+ 6.972This material is © protected and is licensed by Kevin J Kelly to This material is © protected and is licensed by Kevin J Kelly to 3*Tutors Note: The 2nd approach to calculating the NPV is much faster in this instance. Therefore, I will derive the 2nd NPV in this way also.Calculation of NPV @ say 10%Summary of Relevant Cash Flows PV Cost T o (93) x 1.00 (Real Cost) (93)CI after tax t 1 to t 10 4.20 x 6.145 (AF for 10 yrs) 25.81Redemption t 10 110 x .386 (df for yr 10) 42.46NPV - 24.73NPV = (24.73)*Tutors Note: We can now proceed to INTERPOLATE in order to estimate the Cost of Capital (df) that gives us a breakeven NPV … => the Kdat (of Redeemable Debt).*Tutors Note: The Formula for the IRR is either:IRR !- or if you prefer -Difference in Pos. NPV IRR ! Pos. Coc + Coc X Sum of NPV’s Where:L = Lower rate of InterestH = Higher rate of InterestN L = NPV @ Lower rate of InterestH L = NPV @ Higher rate of InterestInterpolateKdat = IRR ! ! 6.10%Weightings (based on Market Values)Market# ‘000 MPU Value %[E ] Equity 1,500 18.00 27,000 85.31[D ] Debt 5,000 93% 4,650 14.69[V ] Value 31,650 100%WACC states: Ko = Ke (%) + Kdat (%)*Tutors Note: Now, filling in the blanks in the formula we get:! Ko = 23.67(.8531) + 6.10(.1469) ! 21.09%Solution 1 contd.,(b)Advise the MD of Orihuela SA, with reasons, whether or not you believe theinvestment appears worthwhile. (6 marks) *Tutors Note: Questions of this nature, which question the economic value of investments (whether or not they are worthwhile) require you ALWAYS (unless you are instructed otherwise) to calculate the NPV of the investments. The DECISION CRITERION is then to choose the investment with the highest NPV.Why is this? The answer is simple, NPV is THEORETICALLY, the superior decision making technique.Calculation of NPVBased on examination of the Relevant Cash Flows (Relevant Costs)Table of Relevant Cash Flows- 000’s -t0 t1 t2 t3 t4 t5 t6Cash from Operations:Operating cash flows 710 745.5 782.8 821.9 863Tax - Payable (213) (223.6) (234.8) (246.6) (258.9) - Saved on CA’s (W1) 225 168.7 126.6 94.9 248.8 Other Relevant Cash Flows:Cost (3,000)Scrap Value 120Working Capital (W2)(390) (19.50) (20.5) (21.5) (22.5) 474Net Cash Flow (3,390)690.5 737 706.4 691.2 1305.3(10.1)d.f @21%(W3) 1.0 .826 .683 .564 .466 .385 .319P.V. (3,390) 570.3 503.4 398.4 322.1 502.5 (3.2) NPV = (1,096) Negative REJECT(W1)Calculation of Tax Relief on Capital AllowancesTaxYear WDV CA Relief Timing1 3,000 750 225 t22 2,250 562.5 168.75 t33 1,687.5 421.9 126.57 t44 1,265.6 316.4 94.92 t55 949.2 *829.2 248.76 t6Total Entitlement 2,880 x 30% 864This material is © protected and is licensed by Kevin J Kelly to 4* Calculation of Balancing Allowance / ChargeTax WDV of 949.2 – Sale Proceeds of 120 = Balancing Allowance of 829.2(W2)Calculation of annual Incremental Working Capital requirementBeginning Opening AnnualYear Balance Increment Timing1 390 (390) t02 409.5 (19.5) t13 429.975 (20.475) t24 451.474 (21.499) t35 474.047 (22.573) t4End of year 5 Repayment 474.047 t5(W3)Calculation of an appropriate df (Discount Factor) to use in the evaluationAssumption: that 21.09%, the WACC calculated in part (a) rounded to 21%, is the correct average cost of capital (df) to use in this instance. This assumption is based on the assertion that the new investment will have the same Business Risk (same Industry) and will be financed in the same way (the same Financial Risk / same Financing mix of capital, D:E) as the company’s existing operations. Consequently, it is considered appropriate to use the existing company WACC. If both of these conditions were not met then a project specific WACC would have to be calculated using CAPMAdvise the MD, with reasons, whether or not you believe the investment appears worthwhile.Purely on financial grounds I would advise the MD not to proceed with the proposed investment.The principle reason is that, in THEORY, proceeding with the proposed investment will result in an immediate DECREASE in shareholders wealth in the amount of $1,096,000.This advice however ignores consideration of a range of non-financial and/or qualitative factors which will necessarily be an important part of the strategic decision making process of the MD and the board of Orihuela Plc in this instance.*Tutors Note: Refer to the points listed under part ( c) below for further information on non-financial/qualitative factors.5This material is © protected and is licensed by Kevin J Kelly to Solution 1 contd.,(c)Advise the Managing Director on what factors he should consider before decidingon a “correct” buying price to pay for the target company. (3 marks) *Tutors Note: It is important to appreciate, when considering what price the predator company should pay for the target company, that questions about “correct price” are like trying to consider “how long is a piece of string”! There are many practical considerations to take into a/c, each varying in importance depending on the circumstances or motivations surrounding the takeover discussions. There are financial considerations (valuation methods, funding issues, stock market & share price reaction, synergies,…) as well as non-financial considerations (strategic, managerial, operational issues,…) to take into a/c. Suffice it to say that every minute aspect of the business and the industry in which it operates in are likely to be considered. …… Thus following on from this logic you should now be able to appreciate that there is NO SUCH THING as a “correct buying price” – in the final analysis it will depend on the negotiation skills of the people involved and sitting around the table! Having said all this an acceptable answer for 3 marks might look like this:(i) Range of Prices - Valuation methodsThere are several possible valuation models available, each of which have different underlying assumptions and thus each model will produce a different BUYING PRICE. For example, there are;•Dividend valuation models•Price / Earnings models•Discounted Cash Flow Models•Net Asset based modelsThe Net Assets or Balance Sheet approaches are often quite useful in these types of negotiations; the Net Realizable Value basis can provide a useful MINIMUM PRICE and the Net Replacement Cost basis can provide a useful MAXIMUM PRICE….around which the negotiations can take place.The other bases (P/E, DVM and DCF models) tend to provide prices which lie between the two extremities of the price range provided by the NRV and NRC.As I have stated above, the FINAL or “correct” buying price will be a matter of judgment and will very much depend on the negotiation skills of the people involved in the discussions.*Tutors Note: To recap:EQUITY valuation models include:•Dividend valuation models•Price / Earnings models•Discounted Cash Flow Models•Net Asset (Balance Sheet) based models providing valuations based on:N.B.V !Little useN.R.V !Min. (Seller)N.R.C !Max. (Buyer)6This material is © protected and is licensed by Kevin J Kelly to (ii) Other Financial considerationsCosts (accountants, legal, brokers, underwriting), Goodwill, stock marketreaction, EPS, Share Price, Funding arrangements,(iii) Other Non-Financial considerationsStrategic (rapid growth, acquire expertise, diversification, enhance EPS),Managerial & Operational….Solution 1 contd.,(d)(i)Calculate the theoretical ex-rights price of an ordinary share. (2 marks) Theoretical ex-rights price per ordnary share.Shares Price MVExisting (original) holding 4 2.80 11.20Rights Issue 1 2.20 2.2013.40TERP=> 13.40/5= $2.68*Tutors Note: => this implies that the value of the rights are $2.68 -$2.20 = $0.48 for every 4 shares held or new share acquired.(d)(ii)H ow will the wealth of an investor holding 10,000 ordinary shares in Murcia Plc be affected by the rights issue if they take up their rights to buy new shares or decline the option to do so. (3 marks) Expected effect on Wealth of Shareholders - Wealth -$ 10,000 sharesBefore $Current position (as above) 4 x 2.80 = 11.20 28,000Take up RightsNew position 5 x 2.68 = 13.40Cost of new share 1 x 2.20 = (2.20)Wealth 11.2028,000Before = 11.20After = 11.20of the ShareholderDecline Rights Issue offer but sells rightsNew value of existing sh/holding 4 x 2.68 = 10.72Proceeds from sale of rights 1 x 0.48 = 0.48Wealth 11.20 28,000 Before = 11.20 After = 11.20of the ShareholderThis material is © protected and is licensed by Kevin J Kelly to 7Decline Rights Issue offer and does nothing (does not sell rights)New value of existing sh/holding 4 x 2.68 = 10.72 26,800Before = 11.20After = 10.72 Wealth of the*Tutors Note: => this implies that the Wealth of the shareholder has decreased by the value of the rights that have not been taken up ($2.68 -$2.20 = $0.48). On 10,000 shares this is a fall in wealth of 2,500 shares x $0.48 = $1,200.To recap: In THEORY, the only way the investor can lose is if he IGNORES the rights issue offer and neglects to SELL the rights. Consequently, in THEORY, there is NO EFFECT on the wealth of the shareholder whether he decides to take up the rightsand/or sells the rights. But, from the point of view of retaining some influence within the company however, the decision whether to invest in the rights or not would be an important one.Solution 1 contd.,(e)Explain what you understand by the term “Funding Gap” and suggest remediesthat an SME (small or medium sized enterprise) finding itself in this positionmight consider. (5 marks) *Tutors Note: Given the economic climate that exists within the UK and Europeat present, it would be unwise not to be prepared for a question that refers to the current“Liquidity Crisis”, “Banking Crisis” or “Credit Crisis”.More than ever before, if companies are to survive these harsh economic times it is imperative that they operate sound principles of working capital management – note specifically that from a practical point of view good Cash Management involves knowing not only how to raise more money and/or spend less money but also importantly an understanding of the variety of Sources of Finance available through the EQUITY Markets, BOND Markets, MONEY MARKETS and central and regionalGovernment/European initiatives.As a corollary, part (e) should be an important part of your THEORY preparations for the forthcoming December 2010 examination. For this reason I am providing you with a solution that goes WAY BEYOND what might be expected in the exam for 5 marks but nevertheless I hope that you find this summary of Sources of Finance generally useful and that it helps to “bring together” what is an otherwise potentially expansive part of the syllabus.The FUNDING GAP ... facing SME’sThis material is © protected and is licensed by Kevin J Kelly to 8Funding Gap…. arises when the SME wants to expand beyond its existing Funding Capacity and finds that it is unable to access suitable Debt and/or Equity Finance to do so.•For investments below £500,000 most SME’s can access an informal funding network of their friends, families and business angels. Once companies requirefunding above £2m they are usually quite established and therefore perceived as lower risk and therefore are more likely to be able to secure funding frominstitutional investors.•The gap between these two finance situations is known as the Funding Gap.Maturity Gap……arises because LT loans are easier to raise than MT or ST loans.•LT loans can be secured against Personal Property and/or other assets via Mortgages.•Banks are basically unwilling to lend further without a corresponding increase in SECURITYEquity Gap…..arises out of the difficulty associated with obtaining additional Equity Finance beyond the Initial equity finance injected by the Owners and/or BUSINESS ANGELS… many assets are intangible.Compounding the Funding Gap difficulties being faced by SME’s are also the following:SecurityLack of suitable assets available to PLEDGE as security on Bank Borrowings - Fixed and/or Floating Charges on assetsSizeUsually SME is un-quoted…..a draw back to raising D and EUn-quoted (normally the SME is unquoted)•Greater difficulty in raising finance thru a Rights Issue or a Placing …. often family and friends will be exhausted (as well as financially!) from the SME.•Other external Investors are difficult to attract because of greater perceived Systematic Financial Risk and Systematic Business RiskTrack RecordYoung Entrepreneurial companies often have no or limited borrowing history / track record.Competitive Market Place for FinanceLarge quoted companies, government all competing for a limited pool of deposits.Lack of Financial ExpertiseDeficit of knowledge in identifying and raising suitable sources of financeRisk•Both D and E Investors consider SME’s more risky investments•High Failure rate of start-ups and SME’sUncertaintyNo or Poor Credit Rating with Credit Rating Agencies or the Banks themselves.Lack of adequate MIS or FISDetailed Accounting Records, Fixed Asset Registers (re; Fixed or Floating Charges), Projections, Budgets, Business Plans, suitably Qualified Directors with Financial Skills (ACCA qualified accountants)Exit Route• A problem for Equity Investors as the company is usually Un-quoted.•If company tries to buy back its own shares this can often just exacerbate C/F problemsPotential Sources of Finance for SME’s ….. REMEDIAL ACTIONEquity (E)Debt (D)Government AidShare Issues R.E’s ST LTOwners Div Policy B/Overdraft Loans (SFLGS)Business Angels Operating Lease Finance LeaseRI (Rights Issue) Factoring Mortgage LoansPrivate Placing Invoice Discounting MezanineFinanceVenture Capital Commercial Paper Franchise Finance(see definition in OT Course Notes) Trade Credit Sale & Lease back Flotation (IPO on AIM or maybe Official List) Euro-CurrencyLoansAfter Flotation could lead to: Working Capital mgt PreferenceShares- Offer for Sale -by Tender Cash Operating Cycle Public Debt- Offer for Sale -@ Fixed Price Debentures - if SME isquotedScrip DividendsIrredeemable DebenturesConvertible DebenturesDebentures with WarrantsZero Coupon BondsDeep Discount BondsJunk Bonds- SFLGS- Govt Grants- Govt.Loans- Govt. Tax Incentives- E.C.F’s (Enterprise Capital Funds)Government AidThe assistance available, in order to encourage Loans and/or Equity Investment into SME’s, is very Country Specific …. the various schemes available in the UK can differ to the variety and extent of the schemes available in Ireland, Spain, Germany, etc.,Considering the UK situation.., the main points to consider are:SFLGS- Definition. .. The Small Firms Loan Guarantee Scheme is designed to help Small Firms get a loan from the bank…..especially when they lack the SECURITY the Bank ordinarily needs.- Under the scheme, the bank can lend up to £250,000 without SECURITY over PERSONAL assets or a PERSONAL GUARANTEE being required of the borrower.- All available BUSINESS assets must be used as security if required by the bank.- The Government will guarantee 75% of the Loan.- A PREMIUM of 2% is payable on the guaranteed part of the loan.GRANTS- Definition…a CAPITAL or REVENUE Grant is a sum of money given to an individual or business for a specific project or purpose. The Grant usually covers only part of the total costs involved.- Grants to help with Business Development are available from a variety of sources such as the following sources:•Government•European Union•Regional Development Agencies•Business Link•Local Authorities•Charitable Organisations- Grants are awarded on the basis of:•Business Activity•Specific Industry Sector (e.g. Technology)•Geographical Area (e.g. areas in need of economic Regeneration or Regional Development)- Examples of various Government Grant schemes:•RSA – REGIONAL SELECTIVE ASSISTENCE SCHEME•RIG – REGIONAL INNOVATION GRANTS•ENTERPRISE GRANTS- Examples of various Government Loan schemes:•SFLGS – SMALL FIRMS LOAN GUARANTEE SCHEME•STFL – SMALL FIRMS TRAINING LOANS•EIB – EUROPEAN INVESTMENT BANK•EIF – EUROPEAN INVESTMENT FUND- Examples of various Government Tax Incentive schemes:•EIS – ENTERPRISE INVESTMENT SCHEME•VCT – VENTURE CAPITAL TRUSTS•EMPLOYEE SHARE INCENTIVE SCHEMES•DECREASING CORPORATION TAX THRESHOLD•INCREASING SALES TAX THRESHOLD•ECF - ENTERPRISE CAPITAL FUNDS- Definition…ECFs were launched in the UK in 2005. ECF’s are designed to becommercial funds, investing a combination of private and public money/funds in high-growth businesses.- Each ECF will be able to make Equity investments of up to 2 million intoeligible SMEs that have genuine growth potential but whose funding needs arenot currently met.Further Points to remember on the …“Equity” Sources of Finance mentioned above Business AngelsHigh net worth individuals who invest in Start-Ups and Development Stage of SMEs Usually have very good knowledge / expertise of INDUSTRY ( BUSINESS RISK ) they are buying into…..do you watch ‘Dragons Den” ? !RIThe key points to remember with Rights Issues are:Voting Rights remain Unchanged / RIs are at Directors Discretion / Rarely Fails / Cheaper / Pre-emption RightsVCDefinition…Venture Capital is the provision of Risk Finance to young Entrepreneurial Companies on a 5 – 7 year investment time horizon.Consider the following points in Choosing between Sources (E -v- D) Finance •Amount of Finance (Loan or Equity) required•Cost (Interest Rates – Fixed or Floating - versus Dividends)•Term Structure of Interest Rates (The Yield Curve)•Duration / Maturity / Redemption•Gearing / Capital Structure (Optimal balance reached?)•Accessibility•Control•Dividend Policy•Memorandum and Articles of Association•Debt CovenantsSolution 2Working Capital Management & Financial AnalysisBefore attempting this question you are advised to have carefully revised the following chapters of the Course NotesChapter 3 Management of Working Capital (1)Chapter 4 Management of Working Capital (2) - Inventory Chapter 5 Management of Working Capital (3) – Receivables & Payables Chapter 6 Management of Working Capital (4) - CashChapter 11 Sources of Finance - EquityChapter 12 Sources of Finance - DebtChapter 13 Capital Structure and Financial RatiosChapter 18 Cost of Capital – the Effect of Changes in Gearing Solution 2(a)Comment on why you think the bank has refused the additional loan facilityrequested and advise on what remedial action you think might be available.(13 marks) Tutor’s note: a discussion on the working capital financing policy, capital structure and the financial performance of UK Plc is required hereFirstly, a quick Tutorial on RatiosFINANCIAL ANALYSIS: SOME BASIC EXAMPLESRatios are potentially useful in financial analysis since they help summarize extensive amounts of data in a meaningful format.Ratios may be grouped into 5 broad categories:1. Profitability }Return on Capital employed (ROCE) + Return on Equity (ROI)2. Liquidity3. Working Capital4. Capital Structure5. Investor RatiosTutor’s note: There is no universal agreement on the definitions of the ratios to use here. Different textbooks/professors utilize alternative measures and even use alternative grouping schemes. For the purposes of ACCA F9 this classification is fine.Remember1.Be Selective……. Choose to calculate /use those ratios that will help you toanswer what you want to know:1.How well is the Company managed?2.How well is the Working Capital managed?3.How is the company financed?4.How good is the company’s Liquidity?5.How good an Investment is the company?2.Individual Ratios are of little use…... Look at the (a) TREND over timeand/or (b) inter-company comparisons within the SAME INDUSTRY and/or (c) BUDGETS.3.Look at trends over time in terms of ……..1. E.P.S.2.Dividends3.Sales4.Do not forget to adjust for INFLATION5.Look out for OVER-TRADING….. a successful company with insufficientinvestment in w/c (under-capitalized for Working Capital).Symptoms:1)HIGH ROCE2)POOR Liquidity Ratios3)POOR Creditors day ratio6.Working Capital Management can be assessed by an analysis of the CashOperating Cycle+ Debtors + Trade Debtors * 365 = x daysAnnual Credit Sales+ Stocks + Raw Material Stocks *365 = x daysAnnual Purchases+ Work in Progress *365 = x daysCost of Sales+ Finished Goods Stocks *365 = x daysCost of Sales- Creditors - Trade Creditors *365 = (x days)Annual Purchases…………Length of Cash Operating (W/C) Cycle X……….7.If a company Requires Finance consider:!Equity!Debt - rem: Loan Guarantee Scheme!Factoring / Invoice Discounting!Better Debtors Control!Better Stock management!Take more Credit from supplier!Sale and lease-back of Free Hold property!Sale of Investments and / or Assets!“Management-Buyout” …. Sell–off one of your divisions for cash.Finally, remember that in a Financial Analysis (ratio analysis) question you can expect the marks for the CALCULATIONS and the marks for COMMENTS to be broadly evenly split. In other words, expect a MAXIMUM of 50% of the marks for the calculations….. You have been warned!Tutor’s note: For those of you who find answering exam questions on Financial Analysis difficult can I suggest that you Study and Learn the following TEMPLATE and I hope you will thus find that your understanding and approach to answering questions on Financial Analysis improves accordingly. Use this template approach to practice ALL previous ACCA F9 questions on Financial Analysis so far examined.Financial Analysis TEMPLATE for UK Plc。

ACCA考试P1专业会计师真题2010年12月_真题-无答案

ACCA考试P1专业会计师真题2010年12月(总分125,考试时间180分钟)Section A – This ONE question is compulsory and MUST be attempted1.In the 2009 results presentation to analysts, the chief executive of ZPT, a global ****pany, announced an excellent set of results to the waiting audience. Chief executive Clive Xu announced that, compared to 2008, sales had increased by 50%, profi ts by 100% and total assets by 80%. The dividend was to be doubled from the previous year. He also announced that based on their outstanding performance, the executive directors would be paid large bonuses in line with their contracts. His own bonus as chief executive would be $20 million. When one of the analysts asked if the bonus was excessive, Mr Xu reminded the audience that the share price had risen 45% over the course of the year because of his efforts in skilfully guiding **pany. He said that he expected the share price to rise further on the results announcement, which it duly did. Because the results exceeded market expectation, the share price rose another 25% to $52.Three months later, Clive Xu called a press conference to announce a restatement of the 2009 results. This was necessary, he said, because of some ‘regrettable accounting errors’. This followed a meeting between ZPT and the legal authorities who were investigating a possible fraud at ZPT. He disclosed that in fact the fi gures for 2009 were increases of 10% for sales, 20% for profi ts and 15% for total assets which were all signifi cantly below market expectations. The proposed dividend would now only be a modest 10% more than last year. He said that he expected a market reaction to the restatement but hoped that it would only be a short-term effect.The fi rst questioner from the audience asked why the auditors had not spotted and corrected the fundamental accounting errors and the second questioner asked whether such a disparity between initial and restated results was due to fraud rather than ‘accounting errors’. When a journalist asked Clive Xu if he intended to pay back the $20 million bonus that had been based on the previous results, Mr Xu said he did not. The share price fell dramatically upon the restatement announcement and, because ZPT was such a **pany, it made headlines in the business pages in ter that month, **pany announced that following an internal investigation, there would be further restatements, all dramatically downwards, for the years 2006 and 2007. This caused another mass selling of ZPT shares resulting in a fi nal share value the following day of $1. This represented a loss of shareholder value of $12 billion from the peak share price. Clive Xu resigned and the government regulator for business ordered an investigation into what had happened at ZPT. The shares were suspended by the stock exchange. A month later, having failed to gain protection from its creditors in the courts, ZPT was declared bankrupt. Nothing was paid out to shareholders whilst suppliers received a fraction of the amounts due to them. Some non-current assets were acquired by competitors but all of ZPT’s 54,000 employees lost their jobs, mostly with little or no termination payment. Because the ZPT employees’ pension fund was not protected from creditors, the value of that was also severelyreduced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.The government investigation found that ZPT had been maintaining false accounting records for several years. This was done by developing an ****pany structure that contained a network of international branches and a business model that was diffi cult to understand. Whereas ZPT had begun as a simple **pany, Clive Xu had increased **plexity of **pany so that he could ‘hide’ losses and mis-report profi ts. In **pany’s reporting, he also substantially overestimated the value of future customer supply contracts. The investigation also found a number of signifi cant internal control defi ciencies including no effective management oversight of the external reporting process and a disregard of the relevant accounting standards.In addition to Mr Xu, several other directors **plicit in the activities although Shazia Lo, a senior qualified accountant working for the fi nancial director, had been unhappy about the situation for some time. She had approached the fi nance director with her concerns but having failed to get the answers she felt she needed, had threatened to tell the press that future customer supply contract values had been intentionally and materially overstated (the change in fair value would have had a profit impact). When her threat came to the attention of the board, she was intimidated in the hope that she would keep quiet. She fi nally accepted a large personal bonus in exchange for her silence in late 2008.The investigation later found that Shazia Lo had been continually instructed, against her judgement, to report fi gures she knew to be grossly optimistic. When she was offered the large personal bonus in exchange for her silence, she accepted it because she needed the money to meet several expenses related to her mother who was suffering a long-term illness and for whom no state health care was available. The money was used to pay for a lifesaving operation for her mother and also to rehouse her in a more healthy environment. Shazia Lo made no personal fi nancial gain from the bonus at all (the money was all used to help her mother) but her behaviour was widely reported and criticised in the press after the collapse of **pany.The investigation found that the auditor, JJC partnership (one of the largest in the country), had had its **promised by a large audit fee but also through receiving consultancy income from ZPT worth several times the audit fee. Because ZPT was such an important client for JJC, it had many resources and jobs **mitted to the ZPT account. JJC had, it was found, knowingly signed off inaccurate accounts in order to protect the management of ZPT and their own senior partners engaged with the ZPT account. After the investigation, JJC’s other clients gradually changed auditor, not wanting to be seen to have any connection with JJC. Accordingly, JJC’s audi t business has since closed down. This caused signifi cant disturbance and upheaval in the audit industry.Because ZPT was regarded for many years as a high **pany in a growing market, many institutional investors had increased the number of ZPT shares in their investment portfolios. When the share price lost its value, it meant that the overall value of their funds was reduced and some individual shareholders demanded to know why the institutional investors had not intervened sooner to either fi nd out what was really going on in ZPT or divest ZPT shares. Some were especially angry that even after the fi rst restatement was announced, the institutional investors did not make any attempt to intervene. One small investor said he wanted to see more ‘shareholder activism’, especially among the large institutional investors.Some time later, Mr Xu argued that one of the reasons for the development of **plex ZPT business model was that it was thought to be necessary to manage the many risks that ZPT faced in **plex and turbulent business environment. He said that a multiplicity of overseas offi ces was necessary to address exchange rate risks, a belief challenged by some observers who said it was just to enable the ZPT board to make their internal controls andrisk management less transparent.(a) Because of their large shareholdings, institutional investors are sometimes able to intervene directly in **panies they hold shares in.Required: (i) Explain the factors that might lead institutional investors to attempt to intervene directly in the management of a company; (6 marks) (ii) Construct the case for institutional investors attempting to intervene in ZPT after the fi rst results restatement was announced. (6 marks)(b) Distinguish between absolutist and relativist approaches to ethics and critically evaluate the behaviour of Shazia Lo (the accountant who accepted a bonus for her silence) using both of these ethical perspectives. (10 marks)(c) The ZPT case came to the attention of Robert Nie, a senior national legislator in the country where ZPT had its head offi ce. The country did not have any statutory corporate governance legislation and Mr Nie was furious at the ZPT situation because many of his voters had been badly fi nancially affected by it. He believed that legislation was needed to ensure that a similar situation could not happen again. Mr Nie intends to make a brief speech in the national legislative assembly outlining the case for his proposed legislation and some of its proposed provisions. Required: Draft sections of the speech to cover the following areas: (i) Explain the importance of sound corporate governance by assessing the consequences of the corporate governance failures at ZPT;(10 marks) (ii) Construct the case for the mandatory external reporting of internal fi nancial controls and risks; (8 marks) (iii) Explain the broad areas that the proposed external report on internal controls should include, drawing on the case content as appropriate. (6 marks) Professional marks will be awarded in part (c) for the structure, flow, persuasiveness and tone of the answer. (4 marks)Section B – TWO questions ONL Y to be attempted2.At a board meeting of JGP Chemicals Limited, the directors were discussing some recent negative publicity arising from the accidental emission of a chemical pollutant into the local river. As well as it resulting in a large fi ne from the courts, the leak had created a great deal of controversy in the **munity that relied on the polluted river for its normal use (including drinking). A **munity leader spoke for those affected when she said that a leak of this type must never happen again or JGP would suffer the loss of support from **munity. She also reminded JGP that it attracts 65% of its labour from the **munity.As a response to the problems that arose after the leak, the JGP board decided to consult an expert on whether the publication of a full annual environmental report might help to mitigate future environmental risks. The expert, Professor Appo (a prominent academic), said that **pany would need to establish an annual environmental audit before they could issue a report. He said that the environmental audit should include, in addition to a review and evaluation of JGP’s safety controls, a full audit of the environmental impact of JGP’s supply chain. He said that **ponents would be very important in addressing the concerns of a growing group of investors who are worried about such things. Professor Appo said that all **panies had a structural environmental risk and JGP was no exception to this. As major consumers of natural chemical resources and producers of potentially hazardous outputs, Professor Appo said that **panies should be aware of the wide range of ways in which they can affect the environment. CEO Keith Miasma agreed with Professor Appo and added that because JGP was in chemicals, any environmental issue had the potential to affectJGP’s overall reputation among a wide range of stakeholders.When the board was discussing the issue of sustainability in connection with the environmental audit, the fi nance director said that sustainability reporting would not be necessary as **pany was already sustainable because it had no ‘going concern’ issues. He said that JGP had been in business for over 50 yea rs, should be able to continue for many years to come and was therefore sustainable. As far as he was concerned, this was all that was meant by sustainability.In the discussion that followed, the board noted that in order to signal its seriousness to the **munity and to investors, the environmental audit should be as thorough as possible and that as much information should be made available to the public ‘in the interests of transparency’. It was agreed that contents of the audit (the agreed metrics) should be robust and with little room left for interpretation – they wanted to be able to demonstrate that they **plied with their agreed metrics for the environmental audit.Required:(a) Explain ‘sustainability’ in the context of environmental auditing and crit icise the fi nance director’s understanding of sustainability. (6 marks)(b) Explain the three stages in an environmental audit and explore, using information from the case, the issues that JGP will have in developing these stages. (9 marks)(c) Defi ne ‘environmental risk’. Distinguish between strategic and operational risks and explain why the environmental risks at JGP are strategic. (10 marks)3.KK is a large **pany. When a non-executive directorship of KK Limited became available, John Soria was nominated to fi ll the vacancy. John is the brother-in-law of KK’s chief executive Ken Kava. John is also the CEO of Soria Supplies Ltd, KK’s largest single supplier and is, therefore, very familiar with KK and its industry. He has sold goods to KK for over 20 years and is on friendly terms with all of the senior offi cers in **pany. In fact last year, Soria Supplies appointed KK’s fi nance director, Susan Schwab, to a non-executive directorship on its board. The executive directors of KK all know and like John and so plan to ask the **mittee to appoint him before the next AGM.KK has recently undergone a period of rapid growth and has recently entered several new overseas markets, some of which, according to the fi nance director, are riskier than the domestic market. Ken Kava, being the dominant person on the KK board, has increased the risk exposure of **pany according to some investors. They say that because most of the executive directors are less experienced, they rarely question his overseas expansion strategy. This expansion has also created a growth in employee numbers and an increase in the number of executive directors, mainly to manage the **plex operations of **pany. It was thought by some that **pany lacked experience and knowledge of international markets as it expanded and that this increased the risk of the strategy’s failure. Some shareholders believed that the aggressive strategy, led by Ken Kava, has been careless as it has exposed KK Limited to some losses on overseas direct investments made before all necessary information on the investment was obtained.As a large **pany, the governance of KK is important to its shareholders. Fin Brun is one of KK’s largest shareholders and holds a large portfolio of shares including 8% of the shares in KK. At the last AGM he complained to KK’s chief executive, Ken Kava, that he needed more information on directors’ performance. Fin said that he didn’t know how to vote on board reappointments because he had no information on how they had performed in their jobs. Mr Kava said that the board intended to include a corporate governance section in future annual reports to address this and to provide other information that shareholders had asked for. He added, however, that he would not be able to publish information on the performance of individual executive directors as this was **plicated and actually not the concern of shareholders. It was, he said, the performance of theboard as a whole that was important and he (Mr Kava) would manage the performance targets of individual directors.Required:(a) Explain the term ‘confl ict of interest’ in the context of non-executive directors and discuss the potential confl icts of interest relating to KK and Soria Supplies if John Soria were to become a non-executive director of KK Limited. (8 marks)(b) Assess the advantages of appointing experienced and effective non-executive directors to the KK board during the period in which **pany was growing rapidly. (7 marks)(c) Explain the typical contents of a ‘best practice’ corporate go vernance report within an annual report and how its contents could help meet the information needs of Fin Brun. (10 marks)4.During the global economic recession that began in mid 2008, **panies found it diffi cult to gain enough credit in the form of short-term loans from their banks and other lenders. In some cases, this caused working capital problems as short-term cash fl ow defi cits could not be funded.Ultra-Uber Limited (UU), a large manufacturer based in an economically depressed region, had traditionally operated a voluntary supplier payment policy in which it was announced that all trade payables would be paid at or before 20 days and there would be no late payment. This was operated despite the normal payment terms being 30 days. **pany gave the r eason for this as ‘a desire to publicly demonstrate our social responsibility and support our valued suppliers, most of whom, like UU, also provide employment in this region’. In the 20 years the policy had been in place, the UU website proudly boasted that it had never been broken. Brian Mills, the chief executive often mentioned this as the basis of **pany’s social responsibility. ‘Rather than trying to delay our payments to suppliers,’ he often said, ‘we support them and their cash flow. It’s the right t hing to do.’ Most of the other directors, however, especially the fi nance director, think that the voluntary supplier payment policy is a mistake. Some say that it is a means of Brian Mills exercising his own ethical beliefs in a way that is not supported by others at UU Limited.When UU itself came under severe cash fl ow pressure in the summer of 2009 as a result of its bank’s failure to extend credit, the fi nance director told Brian Mills that UU’s liquidity problems would be greatly relieved if they took an average of 30 rather than the 20 days to pay suppliers.In addition, the manufacturing director said that he could offer another reason why the short-term liquidity at UU was a problem. He said that the credit control department was poor, taking approximately 50 days to receive payment from each customer. He also said that his own inventory control could be improved and he said he would look into that. It was pointed out to the manufacturing director that cost of goods sold was 65% of turnover and this proportion was continuously rising, driving down gross and profi t margins. Due to poor inventory controls, excessively high levels of inventory were held in store at all stages of production. The long-serving sales manager wanted to keep high levels of finished goods so that customers could buy from existing inventory and the manufacturing director wanted to keep high levels of raw materials and work-in-progress to give him minimum response times when a new order came in.One of the non-executive directors (NEDs) of UU Limited, Bob Ndumo, said that he could not work out why UU was in such a situation as no **pany in which he was a NED was having liquidity problems. Bob Ndumo held a number of other NED positions but these were mainly in service-**panies.Required:(a) Defi ne ‘liquidity risk’ and explain why it might be a signifi cant risk to UU Limited. (5 marks)(b) Defi ne ‘risk embeddedness’ and explain the methods by which risk awareness and management can be embedded in organisations. (7 marks)(c) Examine the obstacles to embedding liquidity risk management at UU Limited. (8 marks)(d) Criticise the voluntary supplier payment policy as a means of demonstrating UU’s social responsibility. (5 marks)。

ACCA历年真题及答案P7(INT)-2009-dec-question-answer

P a p e r P 7 ( I N T )2Using the specific information provided in respect of Papaya Co:(c)Explain the information that you would require in order to perform analytical procedures during the planningof the audit. (6 marks)(d)Assess the financial statements risks to be addressed when planning the final audit for the year ending31 December 2009, producing your answer in the form of briefing notes to be used at the audit planningmeeting. (16 marks) Professional marks will be awarded in part (d) for the format of the answer, and for the clarity of assessment provided.(2 marks)(34 marks)3[P.T.O.2You are a manager in Grape & Co, a firm of Chartered Certified Accountants. You have been temporarily assigned as audit manager to the audit of Banana Co, because the engagement manager has been taken ill. The final audit of Banana Co for the year ended 30 September 2009 is nearing completion, and you are now reviewing the audit files and discussing the audit with the junior members of the audit team. Banana Co designs and manufactures equipment such as cranes and scaffolding, which are used in the construction industry. The equipment usually follows a standard design, but sometimes Banana Co designs specific items for customers according to contractually agreed specifications. The draft financial statements show revenue of $12·5 million, net profit of $400,000, and total assets of $78 million.The following information has come to your attention during your review of the audit files:During the year, a new range of manufacturing plant was introduced to the factories operated by Banana Co. All factory employees received training from an external training firm on how to safely operate the machinery, at a total cost of $500,000. The training costs have been capitalised into the cost of the new machinery, as the finance director argues that the training is necessary in order for the machinery to generate an economic benefit.After the year end, Cherry Co, a major customer with whom Banana Co has several significant contracts, announced its insolvency, and that procedures to shut down the company had commenced. The administrators of Cherry Co have suggested that the company may be able to pay approximately 25% of the amounts owed to its trade payables. A trade receivable of $300,000 is recognised on Banana Co’s statement of financial position in respect of this customer.In addition, one of the junior members of the audit team voiced concerns over how the audit had been managed. The junior said the following:‘I have only worked on two audits prior to being assigned to the audit team of Banana Co. I was expecting to attenda meeting at the start of the audit, where the partner and other senior members of the audit team discussed the audit,but no meeting was held. In addition, the audit manager has been away on holiday for three weeks, and left a senior in charge. However, the senior was busy with other assignments, so was not always available.I was given the task of auditing the goodwill which arose on an acquisition made during the year. I also worked onthe audit of inventory, and attended the inventory count, which was quite complicated, as Banana Co has a lot of work-in-progress. I tried to be as useful as possible during the count, and helped the client’s staff count some of the raw materials. As I had been to the inventory count, I was asked by the audit senior to challenge the finance director regarding the adequacy of the provision against inventory, which the senior felt was significantly understated.Lastly, we found that we were running out of time to complete our audit procedures. The audit senior advised that we should reduce the sample sizes used in our tests as a way of saving time. He also suggested that if we picked an item as part of our sample for which it would be time consuming to find the relevant evidence, then we should pick a different item which would be quicker to audit.’Required:In respect of the specific information provided:(a)Comment on the matters to be considered, and explain the audit evidence you should expect to find duringyour file review in respect of:(i)The training costs that have been capitalised into the cost of the new machinery; and(ii)The trade receivable recognised in relation to Cherry Co. (12 marks)(b)Evaluate the audit junior’s concerns regarding the management of the audit of Banana Co. (10 marks)4(c)There are specific regulatory obligations imposed on accountants and auditors in relation to detecting andreporting money laundering activities. You have been asked to provide a training session to the new audit juniors on auditors’ responsibilities in relation to money laundering.Required:Prepare briefing notes to be used at your training session in which you:(i)Explain the term ‘money laundering’. Illustrate your explanation with examples of money launderingoffences, including those which could be committed by the accountant; and(ii)Explain the policies and procedures that a firm of Chartered Certified Accountants should establish in order to meet its responsibilities in relation to money laundering.(10 marks) Professional marks will be awarded in part (c) for the format of the answer, and the quality of the explanations provided.(2 marks)(34 marks)5[P.T.O.Section B – TWO questions ONLY to be attempted3Your audit client, Apricot Co, is intending to purchase a new warehouse at a cost of $500,000. One of the directors of the company, Pik Choi, has agreed to make the necessary finance available through a director’s loan to the company. This arrangement has been approved by the other directors, and the cash will be provided on 30 March 2010, one day before the purchase is due to be completed. Pik’s financial advisor has asked to see a cash flow projection of Apricot Co for the next three months. Your firm has been asked to provide an assurance report to Pik’s financial advisor on this prospective financial information.The cash flow forecast is shown below:January 2010February 2010March 2010$’000$’000$’000 Operating cash receipts:Cash sales125135140Receipts from credit sales580600625Operating cash payments:Purchases of inventory(410)(425)(425)Salaries(100)(100)(100)Overheads(175)(175)(175)Other cash flows:Dividend payment(80)Purchase of new licence(35)Fixtures for new warehouse(60)Loan receipt500Payment for warehouse(500)––––––––––––Cash flow for the month(15)(45)5Opening cash1008540––––––––––––Closing cash854045––––––––––––The following information is relevant:1.Apricot Co is a wholesaler of catering equipment and frozen food. Its customers are mostly restaurant chains andfast food outlets.2.Customers who pay in cash receive a 10% discount. Analysis has been provided showing that for sales madeon credit, 20% of customers pay in the month of the sale, 60% pay after 45 days, 10% after 65 days, 5% after90 days, and the remainder are bad debts.3.Apricot Co pays for all purchases within 30 days in order to take advantage of a 12% discount from suppliers.4.Overheads are mainly property rentals, utility bills, insurance premiums and general office expenses.5.Apricot Co needs to have a health and safety licence as it sells food. Each licence is valid for one year and isissued once an inspection has taken place.6. A profit forecast has also been prepared for the year ending 31 December 2010 to help with internal planningand budgeting.This is the first time that Apricot Co has requested an assurance report, and the directors are unsure about the contents of the report that your firm will issue. They understand that it is similar in format to an audit report, but that the specific contents are not the same.Required:(a)Recommend the procedures that should be performed on the cash flow forecast for the three months ending31 March 2010 in order to provide an assurance report as requested by Apricot Co. (11 marks)(b)Explain the main contents of the report that will be issued on the prospective financial information.(5 marks)(16 marks)64(a)As a result of the International Audit and Assurance Standards Board’s Clarity Project, many revised and redrafted ISAs that have been issued will become effective for audits of financial statements for periods beginning on or after 15 December 2009. One of the objectives of the Clarity Project is to clarify mandatory requirements. This has been done by changing the wording used in the ISAs to indicate requirements which are expected to be applied in all audits. Some argue that this will introduce a more prescriptive (rules-based) approach to auditing, and that a principles-based approach is more desirable.Required:(i)Contrast the prescriptive and the principles-based approaches to auditing; and (2 marks)(ii)Outline the arguments for and against a prescriptive (rules-based) approach to auditing.(5 marks)(b)You are a manager in the audit department of Peaches & Co, a firm of Chartered Certified Accountants. One ofyour responsibilities is to act as a mentor to new recruits into the department. A new junior auditor, Glen Rambaran, has asked you to answer some questions which relate to issues encountered in his first few weeks working at Peaches & Co. The questions are shown below:(i)When I was on my initial training course, there was a session on ethics in which the presenter talked aboutbeing intimidated by a client. I assume this does not mean physical intimidation, so what is an intimidationthreat?(3 marks) (ii)I know that Peaches & Co is facing competition from a new audit firm, and that our firm is advertising its services in a national newspaper. What are the rules on advertising for new clients?(3 marks) (iii)I heard one of the audit managers say that our firm had lost an audit client to a competitor because of lowballing. What is lowballing and is it allowed?(3 marks)Required:For each of the three questions raised, provide a response to the audit junior, in which you identify and explain the ethical or professional issue raised.(16 marks)7[P.T.O.5(a)Guidance on subsequent events is given in ISA 560 (Redrafted) Subsequent Events.Required:Explain the auditor’s responsibility in relation to subsequent events. (6 marks)(b)You are the manager responsible for the audit of Lychee Co, a manufacturing company with a year ended30 September 2009. The audit work has been completed and reviewed and you are due to issue the audit reportin three days. The draft audit opinion is unmodified. The financial statements show revenue for the year ended30 September 2009 of $15 million, net profit of $3 million, and total assets at the year end are $80 million.The finance director of Lychee Co telephoned you this morning to tell you about the announcement yesterday, ofa significant restructuring of Lychee Co, which will take place over the next six months. The restructuring willinvolve the closure of a factory, and its relocation to another part of the country. There will be some redundancies and the estimated cost of closure is $250,000. The financial statements have not been amended in respect of this matter.Required:In respect of the announcement of the restructuring:(i)Comment on the financial reporting implications, and advise the further audit procedures to beperformed; and (6 marks) (ii)Recommend the actions to be taken by the auditor if the financial statements are not amended.(4 marks)(16 marks)End of Question Paper8Professional Level – Options Module, Paper P7 (INT)Advanced Audit and Assurance (International)December 2009 Answers 1(a)(i)It is mandatory to perform analytical procedures as part of risk assessment. Analytical procedures can help the auditor to develop an understanding of the entity, and highlight matters of which the auditor was previously unaware.Procedures are therefore invaluable in terms of developing knowledge about the operations and performance of theentity. For example, this may be particularly important in the case of a new audit client, when analytical proceduressuch as a comparison of margins made by the entity with those made by its competitors will provide the auditor withsome degree of knowledge about the relative performance of the entity within its business environment.In addition, performing analytical procedures at the planning stage may indicate aspects of the financial statementswhich appear to carry a high risk of material misstatement. This would happen when unexpected trends and unusualrelationships between pieces of financial data were revealed by the analytical procedures. For example, procedures mayreveal that revenue has increased by 20% compared to the previous year, but that the budgeted increase was only 5%and the industry average increase was only 8%. These results could indicate the possible overstatement of revenue, andthus the auditor has been alerted to a possible material misstatement in the financial statements.For these reasons, performing analytical procedures can help the auditor to identify and to prioritise potential areas ofrisk, and to develop an appropriate audit strategy to minimise detection risk.(ii)Analytical procedures are usually performed before the financial year end, and will therefore be based on draft projected figures up to the year end, or interim financial information, budgets and management accounts. This may make theanalysis problematical for the following reasons.Firstly, the information will not cover the entire accounting period. Extrapolating figures to cover a 12 month period isnot always easy to do, especially for a seasonal business where income and expenses do not accrue evenly throughoutthe year. Care must be taken when performing the procedures to take account of this, and it should not be assumedthat income and expense figures should simply be grossed up on a monthly basis to enable annual comparisons.Secondly, year end close down procedures will not have occurred. For example, many entities will only account for itemssuch as asset impairments or revisions to estimated figures such as provisions at the financial year end. Thuscomparisons to figures derived from prior year published accounts may not be valid.Thirdly, information may be produced differently during the year, controls may be weaker, and the internal managementaccounts may not be produced in compliance with the same reporting framework as the year end financial statements.Measurement, recognition and presentation of financial information may be very different, so care should be taken whenextracting figures from management accounts to be used in comparisons with published financial information.Finally, some entities, especially smaller companies, may not have a complete or formal reporting system during theyear, making analytical procedures before the year end accounts have been produced difficult. It may be possible toperform some limited analysis on the information that is available before the year end, but the use of this analysis willbe limited due to its incomplete nature. This means that it may be impossible to base expectations on the data, as it isincomplete at the time of the preliminary analytical review.(b)The definitions of ‘overall audit strategy’ and ‘audit plan’ are found in ISA 300 (Redrafted) Planning an Audit of FinancialStatements.The overall audit strategy sets the scope, timing and direction of the audit. Scope involves determining the characteristics of the audit client, such as its locations, and the relevant financial reporting framework, as these factors will help to establish the scale of the assignment. Timing refers to establishing deadlines for completion of work and key dates for expected communications. Establishing the overall audit strategy also includes the consideration of preliminary materiality, and initial identification of high risk areas within the financial statements. All of these matters contribute to the assessment of the nature, timing and extent of resources necessary to perform the engagement.The overall audit strategy should then lead to the development of the audit plan.The audit plan is more detailed than the audit strategy and includes a description of the risk assessment procedures, and the further planned audit procedures necessary at the assertion level for gathering evidence on the material transactions and balances in the financial statements. The general purpose of developing the audit plan is to design audit procedures which will reduce audit risk to an acceptably low level.The difference between the audit strategy and the audit plan is therefore that the strategy is the initial planning to ensure there will be adequate resources allocated to the audit assignment in response to an initial evaluation of the entity’s characteristics, whereas the audit plan is a detailed programme of audit procedures.The strategy will therefore usually be developed before the plan; however, the two activities should be seen as inter-related, as changes in one may result in changes to the other. Both the strategy and the plan should be fully documented as this represents the record of proper planning of the audit assignment.(c)Financial information is needed in order to calculate operating and net margins and to compare to prior period(s). If possible,separate information from the statement of comprehensive income, and asset and liability information should be obtained for each segment of the business.11It is important that the information is disaggregated as Papaya Co operates in different business segments and different geographical locations. Information would be needed at a minimum level of disaggregation as follows:–Financial information for the Papaya Mart chain of supermarkets–Financial information for the operations in Farland–Financial information for the Papaya Express chain of supermarkets–Financial information for the new financial services division.The information should be separated out as above to enable analytical procedures to be performed on each separate component of the business, as each component is likely to achieve different margins and returns on capital. Calculating ratios and making comparisons for the company as a whole would be relatively meaningless. For example, the margins made by the two different supermarket chains are likely to be different, as the Papaya Express stores are in city centres where overheads are likely to be much higher than in the out of town locations used by the Papaya Mart stores. The two types of supermarket also sell a different range of goods, which will also make the overall margins different.Analytical procedures should be performed on the operations in Farland as a separate exercise if possible. This division is likely to have a different cost base, and revenue may be based on a different pricing structure due to the overseas locations of the stores. There may also be distortions to the figures caused by retranslation into the currency of Papaya Co.The financial services division will have a completely different profit structure, cost base and return on investment than the retail divisions and so must be analysed separately. It is likely to be much less capital intensive, which will mean that returns on investment and asset utilisation ratios will be very different to the retail divisions.Information about any significant non-recurring items of income and expense for each division should also be requested as these would cause fluctuations in profit and make comparisons difficult if not taken into account. For example, the heavy advertising costs of the new overseas operations will reduce the margin of that division of supermarkets compared to the local stores.Budgeted information should also be requested. This will be important for the two new divisions – the foreign stores, and the financial services division. As these are start-up activities during the year, there will be no possible comparisons to prior year information. Therefore the main analytical procedures to be performed will be comparisons of actual to budgeted performance.The auditor should bear in mind the reliability of the budgeted information when performing these procedures.The auditor should also request any information about new accounting policies or estimation techniques which have been used this year. New accounting treatments may distort comparisons, so full understanding of the impact of any new policies is important when evaluating the results of analytical procedures. For example, the new forward exchange contracts entered into during the year will have caused the introduction of a new accounting policy which may cause fluctuations in profit.It is also useful to make comparisons to similar companies in the same industry. There should be financial information which is readily available for Papaya Co’s competitors in the supermarket retail sector, and also for financial services companies.This is a useful source of information, as the auditor will be able to gauge the relative performance of Papaya Co, and assess if margins and returns are similar to industry comparisons or averages. Care should be taken however, when comparing the new divisions to industry competitors, as there may be one-off start-up costs included in the statement of comprehensive income for this year, which will reduce profitability.(d)Briefing notes to be used at audit planning meetingSubject: Financial statement risks identified at planning meetingIntroductionAt a recent planning meeting held with the finance director of Papaya Co, several issues were discussed which could lead to financial statement risks. All of these issues relate to matters which are potentially material to the financial statements.Alleged collusion and price fixingIt appears that several companies are under investigation for breaching regulations, and Papaya Co could face potentially material financial penalties if found guilty. The situation needs to be assessed by reference to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The risk is that the financial statements do not reflect the situation as either a provision ora contingent liability, depending on the evaluation of the potential outcome of the case. If it is considered that the companyfaces a probable cash outflow, then a provision and associated expense should be recognised. If the outflow is considered possible, then a note to the financial statements should describe the contingent liability and show an estimate of the potential financial effect. Therefore the financial statement risk is both understated liabilities and overstated profit, if the cash outflow is considered probable but no provision is made. Alternatively, the risk is incomplete disclosure if the outflow is considered possible and no note is provided.Convertible debenturesAccording to IAS 32 Financial Instruments: Presentation, convertible debt instruments should be presented in the statement of financial position split into two separate components. This is because the company does not know if it has an obligation to pay cash on the redemption of the debt in 2015, or whether the debt will be settled by an equity distribution. Therefore, on the receipt of cash proceeds, the credit entry is split between debt and equity. The debt is valued by discounting the potential cash outflows to present value, with the credit entry to equity a residual balancing figure. The financial statement risk is firstly that split accounting has not been applied, so the whole of the credit has been recognised as either debt or equity, and therefore incorrectly recognised in the statement of financial position. This would then have a further consequence for the statement of comprehensive income, as any finance charge calculated on the basis of an incorrect debt component would then also be incorrectly measured.Forward exchange contractsThese contracts are derivative financial instruments. As such, they must be recognised in the statement of financial position at the year end, as a financial asset or a financial liability, depending on whether the terms of the derivative contract are favourable or unfavourable at the reporting date. The financial statement risk is that the derivatives have not been recognised at all, particularly because the contracts were acquired at no cost, so there is no accounting entry when the contract is taken out. A second risk relates to the valuation of the derivative asset or liability. This could be complex to calculate, and if not performed by an experienced specialist, could cause the over or understatement of the financial instrument recognised, and an associated incorrect entry recognised in profit. Finally, IFRS 7 Fi nanci al Instruments: Di sclosures imposes potentially onerous disclosure requirements in relation to derivative instruments. The risk is that disclosures made in the notes to the financial statements are incomplete.Land held for development potentialThere are indicators that the land could be impaired at the year end. Some land was sold at a loss during the year, and it seems that planning permission for the development of the sites is becoming harder to obtain, meaning that the value of the land has fallen. Following IAS 36 Impairment of Assets, an impairment review must be carried out if there are indicators of impairment to an asset. It is likely that land will be overstated in the statement of financial position, and expenses understated, unless an impairment review is conducted and any resulting loss fully recognised. In addition, the losses made on the disposal of land during the year should be separately disclosed in the statement of comprehensive income or a note to the financial statements per IAS 1 (Revised) Presentation of Financial Statements, so there is a risk of inadequate disclosure if this is not done.Inspection of warehousesA new regulatory requirement has resulted in an inspection of all of the warehouses operated by Papaya Co. Under IAS 16Property, Plant and Equipment, costs of a major inspection should be capitalised and then depreciated over the period to the next inspection. The risk is that the cost has been expensed, in other words, treated as an operating expense. This would result in understated profit and understated non-current assets.Other financial statement risks (not arising from notes made at the planning meeting) include the following:Disclosure of operating segmentsIFRS 8 Operating Segments requires listed companies to disclose in a note to the financial statements information about the performance of the various different operating segments of the business. Papaya Co has two potential new disclosures this year end. The first is the new financial services division, which is likely to be a separate reportable segment under IFRS 8.The second new disclosure relates to the overseas expansion of the company, as IFRS 8 requires disclosure of limited geographical analysis of revenue and non-current assets. The financial statement risk is the non-disclosure of information relating to these new operating and geographical segments.Internally generated brand namesPapaya Mart and Papaya Express are internally generated brand names. IAS 38 Intangible Assets prohibits the recognition of internally generated brands. The risk arises from significant expenditure on the launch of the brand in Farland. If any of the associated expense has been capitalised as a brand name, this would mean that non-current assets are overstated, and profit for the year would be overstated.ConclusionThere are several financial statement risks identified at the planning meeting, resulting from the company operating in a regulated industry, changed market conditions, and new business activities for the company. Now that the risks have been identified, an appropriate audit strategy will be devised to minimise the risk of material misstatement in relation to these matters.Tutori al note: Credi t wi ll be awarded for other fi nanci al statement ri sks i denti fi ed from the questi on scenari o, such as potential over-valuation of inventories, classification of land as held for sale, incorrect timing of recognition of revenue from financial services products, and potential impairment of loans made to financial services customers.2(a)(i)Training costsMatters to considerMateriality– the relevant materiality calculations are:Based on revenue: 500,000/12·5 million x 100 = 4%Based on net profit: 500,000/400,000 x 100 = 125%Based on total assets: 500,000/78 million x 100 = <1%Based on the above, the training costs are immaterial to the statement of financial position, but material to the statementof comprehensive income and therefore to revenue and profit. It is important to note that any adjustment made torecognise the costs as an expense will have the effect of turning the profit of $400,000 currently recognised into a lossof $100,000.Accounting treatmentThe finance director’s argument is based on the idea that the training costs are directly related to the assets concernedand therefore should be capitalised. IAS 16 Property, Plant and Equi pment(paragraph 19 c) does not permit thecapitalisation of these costs as they are operating costs rather than costs directly attributable to the item of plant. Theconcept behind this is that assets should only be recognised if they are controlled by the entity. It is unlikely that。

2010年12月ACCA考试P1真题

2010年12月ACCA考试P1真题Section A-This ONE question is compulsory and MUST be attempted1In the 2009 results presentation to analysts,the chief executive of ZPT,a global internet communications company,announced an excellent set of results to the waiting audience.Chief executive Clive Xu announced that,compared to 2008,sales had increased by 50%,profi ts by 100% and total assets by 80%.The dividend was to be doubled from the previous year.He also announced that based on their outstanding performance,the executive directors would be paid large bonuses in line with their contracts.His own bonus as chief executive would be $20 million.When one of the analysts asked if the bonus was excessive,Mr Xu reminded the audience that the share price had risen 45% over the course of the year because of his efforts in skilfully guiding the company.He said that he expected the share price to rise further on the results announcement,which it duly did.Because the results exceeded market expectation,the share price rose another 25% to $52.Three months later,Clive Xu called a press conference to announce a restatement of the 2009 results.This was necessary,he said,because of some'regrettable accounting errors'.This followed a meeting between ZPT and the legal authorities who were investigating a possible fraud at ZPT.He disclosed that in fact the fi gures for 2009 were increases of 10% for sales,20% for profi ts and 15% for total assets which were all signifi cantly below market expectations.The proposed dividend would now only be a modest 10% more than last year.He said that he expected a market reaction to the restatement but hoped that it would only be a short-term effect.The first questioner from the audience asked why the auditors had not spotted and corrected the fundamental accounting errors and the second questioner asked whether such a disparity between initial and restated results was due to fraud rather than 'accounting errors'.When a journalist asked Clive Xu if he intended to pay back the $20 million bonus that had been based on the previous results,Mr Xu said he did not.The share price fell dramatically upon the restatement announcement and,becauseZPT was such a large company,it made headlines in the business pages in many countries.Section A-This ONE question is compulsory and MUST be attempted1 Later that month,the company announced that following an internal investigation,there would be further restatements,all dramatically downwards,for the years 2006 and 2007.This caused another mass selling of ZPT shares resulting in a fi nal share value the following day of $1.This represented a loss of shareholder value of $12 billion from the peak share price.Clive Xu resigned and the government regulator for business ordered an investigation into what had happened at ZPT.The shares were suspended by the stock exchange.A month later,having failed to gain protection from its creditors in the courts,ZPT was declared bankrupt.Nothing was paid out to shareholders whilst suppliers received a fraction of the amounts due to them.Some non-current assets were acquired by competitors but all of ZPT's 54,000 employees lost their jobs,mostly with little or no termination payment.Because the ZPT employees'pension fund was not protected from creditors,the value of that was also severely reduced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.ced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.ced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.ced to pay debts which meant that employees with many years of service would have a greatly reduced pension to rely on in old age.The government investigation found that ZPT had been maintaining false accounting records for several years.This was done by developing anoverly-complicated company structure that contained a network of international branches and a business model that was diffi cult to understand.Whereas ZPT had begun as a simple telecommunications company,Clive Xu had increased the complexity of the company so that he could'hide'losses and mis-report profi ts.In the company's reporting,he also substantially overestimated the value of future customer supply contracts.The investigation also found a number of signifi cant internal controldefi ciencies including no effective management oversight of the external reporting process and a disregard of the relevant accounting standards.In addition to Mr Xu,several other directors were complicit in the activities although Shazia Lo,a senior qualifi ed accountant working for the fi nancial director,had been unhappy about the situation for some time.She had approached the fi nance director with her concerns but having failed to get the answers she felt she needed,had threatened to tell the press that future customer supply contract values had been intentionally and materially overstated(the change in fair value would have had a profi t impact).When her threat came to the attention of the board,she was intimidated in the hope that she would keep quiet.She fi nally accepted a large personal bonus in exchange for her silence in late 2008.Section A-This ONE question is compulsory and MUST be attemptedThe investigation later found that Shazia Lo had been continually instructed,against her judgement,to report fi gures she knew to be grossly optimistic.When she was offered the large personal bonus in exchange for her silence,she accepted it because she needed the money to meet several expenses related to her mother who was suffering a long-term illness and for whom no state health care was available.The money was used to pay for a lifesaving operation for her mother and also to rehouse her in a more healthy environment.Shazia Lo made no personal fi nancial gain from the bonus at all(the money was all used to help her mother)but her behaviour was widely reported and criticised in the press after the collapse of the company.The investigation found that the auditor,JJC partnership(one of the largest in the country),had had its independence compromised by a large audit fee but also through receiving consultancy income from ZPT worth several times the audit fee.Because ZPT was such an important client for JJC,it had many resources and jobs entirely committed to the ZPT account.JJC had,it was found,knowingly signed off inaccurate accounts in order to protect the management of ZPT and their own senior partners engaged with the ZPT account.After the investigation,JJC's other clients gradually changed auditor,not wanting to be seen to have any connection withJJC.Accordingly,JJC's audit business has since closed down.This caused signifi cant disturbance and upheaval in the audit industry.Because ZPT was regarded for many years as a high performing company in a growing market,many institutional investors had increased the number of ZPT shares in their investment portfolios.When the share price lost its value,it meant that the overall value of their funds was reduced and some individual shareholders demanded to know why the institutional investors had not intervened sooner to either find out what was really going on in ZPT or divest ZPT shares.Some were especially angry that even after the first restatement was announced,the institutional investors did not make any attempt to intervene.One small investor said he wanted to see more 'shareholder activism',especially among the large institutional investors.Section A-This ONE question is compulsory and MUST be attemptedSome time later,Mr Xu argued that one of the reasons for the development of the complex ZPT business model was that it was thought to be necessary to manage the many risks that ZPT faced in its complex and turbulent business environment.He said that a multiplicity of overseas offi ces was necessary to address exchange rate risks,a belief challenged by some observers who said it was just to enable the ZPT board to make their internal controls and risk management less transparent.(a)Because of their large shareholdings,institutional investors are sometimes able to intervene directly in the companies they hold shares in.Required:(i)Explain the factors that might lead institutional investors to attempt to intervene directly in the management of a company;(6 marks)(ii)Construct the case for institutional investors attempting to intervene in ZPT after the fi rst results restatement was announced.(6 marks)(b)Distinguish between absolutist and relativist approaches to ethics and critically evaluate the behaviour of Shazia Lo(the accountant who accepted a bonus for her silence)using both of these ethical perspectives.(10 marks) Section A-This ONE question is compulsory and MUST be attempted(c)The ZPT case came to the attention of Robert Nie,a senior national legislator in the country where ZPT had its head offi ce.The country did not have any statutory corporate governance legislation and Mr Nie was furious at the ZPT situation because many of his voters had been badly fi nancially affected by it.He believed that legislation was needed to ensure that a similar situation could not happen again.Mr Nie intends to make a brief speech in the national legislative assembly outlining the case for his proposed legislation and some of its proposed provisions.Required:Draft sections of the speech to cover the following areas:(i)Explain the importance of sound corporate governance by assessing the consequences of the corporate governance failures at ZPT;(10 marks) (ii)Construct the case for the mandatory external reporting of internal fi nancial controls and risks;(8 marks)(iii)Explain the broad areas that the proposed external report on internal controls should include,drawing on the case content as appropriate.(6 marks) Professional marks will be awarded in part(c)for thestructure,flow,persuasiveness and tone of the answer.(4 marks)(50 marks)Section B–TWO questions ONLY to be attempted2 At a board meeting of JGP Chemicals Limited,the directors were discussing some recent negative publicity arising from the accidental emission of a chemical pollutant into the local river.As well as it resulting in a large fine from the courts,the leak had created a great deal of controversy in the local community that relied on the polluted river for its normal use(including drinking).A prominent community leader spoke for those affected when she said that a leak of this type must never happen again or JGP would suffer the loss of support from the community.She also reminded JGP that it attracts 65% of its labour from the local community.As a response to the problems that arose after the leak,the JGP board decided to consult an expert on whether the publication of a full annual environmental report might help to mitigate future environmental risks.The expert,Professor Appo(aprominent academic),said that the company would need to establish an annual environmental audit before they could issue a report.He said that the environmental audit should include,in addition to a review and evaluation of JGP's safety controls,a full audit of the environmental impact of JGP's supply chain.He said that these components would be very important in addressing the concerns of a growing group of investors who are worried about such things.Professor Appo said that all chemical companies had a structural environmental risk and JGP was no exception to this.As major consumers of natural chemical resources and producers of potentially hazardous outputs,Professor Appo said that chemical companies should be aware of the wide range of ways in which they can affect the environment.CEO Keith Miasma agreed with Professor Appo and added that because JGP was in chemicals,any environmental issue had the potential to affect JGP's overall reputation among a wide range of stakeholders.Section B–TWO questions ONLY to be attempted2 When the board was discussing the issue of sustainability in connection with the environmental audit,the finance director said that sustainability reporting would not be necessary as the company was already sustainable because it had no 'going concern' issues.He said that JGP had been in business for over 50 years,should be able to continue for many years to come and was therefore sustainable.As far as he was concerned,this was all that was meant by sustainability.In the discussion that followed,the board noted that in order to signal its seriousness to the local community and to investors,the environmental audit should be as thorough as possible and that as much information should be made available to the public 'in the interests of transparency'.It was agreed that contents of the audit(the agreed metrics)should be robust and with little room left for interpretation–they wanted to be able to demonstrate that they had complied with their agreed metrics for the environmental audit.Required:(a)Explain'sustainability'in the context of environmental auditing and criticise the fi nance director's understanding of sustainability.(6 marks)(b)Explain the three stages in an environmental audit and explore,using information from the case,the issues that JGP will have in developing these stages.(9 marks)(c)Define'environmental risk'.Distinguish between strategic and operational risks and explain why the environmental risks at JGP are strategic.(10 marks) (25 marks)Section B–TWO questions ONLY to be attempted3KK is a large listed company.When a non-executive directorship of KK Limited became available,John Soria was nominated to fi ll the vacancy.John is the brother-in-law of KK's chief executive Ken Kava.John is also the CEO of Soria Supplies Ltd,KK's largest single supplier and is,therefore,very familiar with KK and its industry.He has sold goods to KK for over 20 years and is on friendly terms with all of the senior offi cers in the company.In fact last year,Soria Supplies appointed KK's fi nance director,Susan Schwab,to a non-executive directorship on its board.The executive directors of KK all know and like John and so plan to ask the nominations committee to appoint him before the next AGM.KK has recently undergone a period of rapid growth and has recently entered several new overseas markets,some of which,according to the finance director,are riskier than the domestic market.Ken Kava,being the dominant person on the KK board,has increased the risk exposure of the company according to some investors.They say that because most of the executive directors are less experienced,they rarely question his overseas expansion strategy.This expansion has also created a growth in employee numbers and an increase in the number of executive directors,mainly to manage the increasingly complex operations of the company.It was thought by some that the company lacked experience and knowledge of international markets as it expanded and that this increased the risk of the strategy's failure.Some shareholders believed that the aggressive strategy,led by Ken Kava,has been careless as it has exposed KK Limited to some losses on overseas direct investments made before all necessary information on the investment was obtained.As a large listed company,the governance of KK is important to its shareholders.Fin Brun is one of KK's largest shareholders and holds a large portfolio of shares including 8% of the shares in KK.At the last AGM he complained to KK's chief executive,Ken Kava,that he needed more information ondirectors'performance.Fin said that he didn't know how to vote on board reappointments because he had no information on how they had performed in their jobs.Mr Kava said that the board intended to include a corporate governance section in future annual reports to address this and to provide other information that shareholders had asked for.He added,however,that he would not be able to publish information on the performance of individual executive directors as this was too complicated and actually not the concern of shareholders.It was,he said,the performance of the board as a whole that was important and he(Mr Kava)would manage the performance targets of individual directors.Required:(a)Explain the term'confl ict of interest'in the context of non-executive directors and discuss the potential confl icts of interest relating to KK and Soria Supplies if John Soria were to become a non-executive director of KK Limited.(8 marks)(b)Assess the advantages of appointing experienced and effective non-executive directors to the KK board during the period in which the company was growing rapidly.(7 marks)(c)Explain the typical contents of a'best practice'corporate governance report within an annual report and how its contents could help meet the information needs of Fin Brun.(10 marks)(25 marks)Section B–TWO questions ONLY to be attempted4 During the global economic recession that began in mid 2008,many companies found it diffi cult to gain enough credit in the form of short-term loans from their banks and other lenders.In some cases,this caused working capital problems as short-term cash fl ow defi cits could not be funded.Ultra-Uber Limited(UU),a large manufacturer based in an economically depressed region,had traditionally operated a voluntary supplier payment policy in which it was announced that all trade payables would be paid at or before 20 days and there would be no late payment.This was operated despite the normal payment terms being 30 days.The company gave the reason for this as 'a desire to publicly demonstrate our social responsibility and support our valued suppliers,most of whom,like UU,also provide employment in this region'.In the 20 years the policy had been in place,the UU website proudly boasted that it had never been broken.Brian Mills,the chief executive often mentioned this as the basis of the company's social responsibility.'Rather than trying to delay our payments to suppliers,'he often said,'we support them and their cash flow.It's the right thing to do.'Most of the other directors,however,especially the fi nance director,think that the voluntary supplier payment policy is a mistake.Some say that it is a means of Brian Mills exercising his own ethical beliefs in a way that is not supported by others at UU Limited.When UU itself came under severe cash flow pressure in the summer of 2009 as a result of its bank's failure to extend credit,the fi nance director told Brian Mills that UU's liquidity problems would be greatly relieved if they took an average of 30 rather than the 20 days to pay suppliers.Section B–TWO questions ONLY to be attemptedIn addition,the manufacturing director said that he could offer another reason why the short-term liquidity at UU was a problem.He said that the credit control department was poor,taking approximately 50 days to receive payment from each customer.He also said that his own inventory control could be improved and he said he would look into that.It was pointed out to the manufacturing director that cost of goods sold was 65% of turnover and this proportion was continuously rising,driving down gross and profi t margins.Due to poor inventory controls,excessively high levels of inventory were held in store at all stages of production.The long-serving sales manager wanted to keep high levels of fi nished goods so that customers could buy from existing inventory and the manufacturing director wanted to keep high levelsof raw materials and work-in-progress to give him minimum response times when a new order came in.One of the non-executive directors(NEDs)of UU Limited,Bob Ndumo,said that he could not work out why UU was in such a situation as no other company in which he was a NED was having liquidity problems.Bob Ndumo held a number of other NED positions but these were mainly in service-based companies.Required:(a)Defi ne 'liquidity risk'and explain why it might be a signifi cant risk to UU Limited.(5 marks)(b)Defi ne 'risk embeddedness'and explain the methods by which risk awareness and management can be embedded in organisations.(7 marks)(c)Examine the obstacles to embedding liquidity risk management at UU Limited.(8 marks)(d)Criticise the voluntary supplier payment policy as a means of demonstrating UU's social responsibility.(5 marks)(25 marks)。

2010年12月ACCA考试F5真题

2010年12月ACCA考试F5真题ALL FIVE questions are compulsory and MUST be attempted1 Carad Co is an electronics company which makes two types of televisions - plasma screen TVs and LCD TVs. It operates within a highly competitive market and is constantly under pressure to reduce prices. Carad Co operates a standard costing system and performs a detailed variance analysis of both products on a monthly basis. Extracts from the management information for the month of November are shown below: NoteTotal number of units made and sold 1,400 1Material price variance $28,000 A 2Total labour variance $6,050 A 3Notes（1）The budgeted total sales volume for TVs was 1,180 units,consisting of an equal mix of plasma screen TVs and LCD screen TVs. Actual sales volume was 750 plasma TVs and 650 LCD TVs. Standard sales prices are $350 per unit for the plasma TVs and $300 per unit for the LCD TVs.The actual sales prices achieved during November were $330 per unit for plasma TVs and $290 per unit for LCD TVs. The standard contributions for plasma TVs and LCD TVs are $190 and $180 per unit respectively.（2）The sole reason for this variance was an increase in the purchase price of one of its key components， X. Each plasma TV made and each LCD TV made requires one unit of component X,for which Carad Co's standard cost is $60 per unit. Due to a shortage of components in the market place,the market price for November went up to $85 per unit for X. Carad Co actually paid $80 per unit for it.（3）Each plasma TV uses 2 standard hours of labour and each LCD TV uses 1·5 standard hours of labour.The standard cost for labour is $14 per hour and this also reflects the actual cost per labour hour for the company's permanent staff in November. However,because of the increase in sales and production volumes in November,the company also had to use additional temporary labour at the higher cost of $18 per hour.The total capacity of Carad’s permanent workforce is 2,200 hoursproduction per month,assuming full efficiency.In the month of November,the permanent workforce were wholly efficient,taking exactly 2 hours to complete each plasma TV and exactly 1·5 hours to produce each LCD TV.The total labour variance therefore relates solely to the temporary workers,who took twice as long as the permanent workers to complete their production.Required:（a）Calculate the following for the month of November,showing all workings clearly：（i）The sales price variance and sales volume contribution variance; （6 marks）（ii）The material price planning variance and material price operational variance; （2 marks）（iii）The labour rate variance and the labour efficiency variance. （7 marks）（b）Explain the reasons why Carad Co would be interested in the material price planning variance and the material price operational variance. （5 marks）（20 marks）2 The Accountancy Teaching Co（AT Co）is a company specialising in the provision of accountancy tuition courses in the private sector.It makes up its accounts to 30 November each year.In the year ending 30 November 2009,it held 60% of market share.However,over the last twelve months,the accountancy tuition market in general has faced a 20% decline in demand for accountancy training leading to smaller class sizes on courses.In 2009 and before,AT Co suffered from an ongoing problem with staff retention,which had a knock-on effect on the quality of service provided to students.Following the completion of developments that have been ongoing for some time,in 2010 the company was able to offer a far-improved service to students.The developments included:- A new dedicated 24 hour student helpline- An interactive website providing instant support to students- A new training programme for staff- An electronic student enrolment system- An electronic marking system for the marking of students' progress tests.The costs of marking electronically were expected to be $4 million less in 2010 than marking on paper.Marking expenditure is always included in cost of sales Extracts from the management accounts for 2009 and 2010 are shown below:2009 2010$'000 $'000 $'000 $'000 Turnover 72,025 66,028Cost of sales （52,078）（42,056）——————————Gross profit 19,947 23,972 Indirect expenses：Marketing 3,291 4,678Property 6,702 6,690Staff training 1,287 3,396Interactive website running costs - 3，270Student helpline running costs - 2,872Enrolment costs 5,032 960------- -------Total indirect expenses （16,312）（21,866）------- -------Net operating profit 3,635 2,106------- -------On 1 December 2009,management asked all ＆freelance lecturers'to reduce their fees by at least 10% with immediate effect（'freelance lecturers'are not employees of the company but are used to teach students when there are not enough of AT Co's own lecturers to meet tuition needs）.All employees were also told that they would not receive a pay rise for at least one year.Total lecture staff costs（including freelance lecturers）were $41·663 million in 2009 and were included in cost of sales，as is always the case.Freelance lecturer costs represented 35% of these total lecture staff costs.In 2010 freelance lecture costs were $12·394 million.No reduction wasmade to course prices in the year and the mix of trainees studying for the different qualifications remained the same.The same type and number of courses were run in both 2009 and 2010 and the percentage of these courses that was run by freelance lecturers as opposed to employed staff also remained the same.Due to the nature of the business,non-financial performance indicators are also used to assess performance,as detailed below.20092010 Percentage of students transferring to AT Co from another training8% 20% providerNumber of late enrolments due to staff error 297 106 Percentage of students passing exams first time 48% 66% Labour turnover 32% 10% Number of student complaints 315 84 Average no. of employees 1,080 1,081 Required:Assess the performance of the business in 2010 using both financial performance indicators calculated from the above information AND the non-financial performance indicators provided.NOTE:Clearly state any assumptions and show all workings clearly.Your answer should be structured around the following main headings:turnover;cost of sales;gross profit;indirect expenses;net operating profit.However,in discussing each of these areas you should also refer to the non-financial performance indicators,where relevant.（20 marks）3 The Cosmetic Co is a company producing a variety of cosmetic creams and lotions.The creams and lotions are sold to a variety of retailers at a price of $23·20 for each jar of face cream and $16·80 for each bottle of body lotion. Each of the products has a variety of ingredients,with the key ones being silk powder,silk amino acids and aloe vera. Six months ago,silk worms were attacked by disease causing a huge reduction in the availability of silk powder and silk amino acids.The CosmeticCo had to dramatically reduce production and make part of its workforce,which it had trained over a number of years,redundant.The company now wants to increase production again by ensuring that it uses the limited ingredients available to maximise profits by selling the optimum mix of creams and lotions.Due to the redundancies made earlier in the year,supply of skilled labour is now limited in the short-term to 160 hours（9,600 minutes）per week,although unskilled labour is unlimited.The purchasing manager is confident that they can obtain 5,000 grams of silk powder and 1,600 grams of silk amino acids per week.All other ingredients are unlimited.The following information is available for the two products:Cream Lotion Materials required：silk powder （at $2·20 per gram） 3 grams 2 grams- silk amino acids （at $0·80 per gram） 1 gram 0·5 grams- aloe vera （at $1·40 per gram） 4 grams 2 grams Labour required：skilled（$12 per hour） 4 minutes 5 minutes- unskilled （at $8 per hour） 3 minutes 1·5 minutesEach jar of cream sold generates a contribution of $9 per unit,whilst each bottle of lotion generates a contribution of $8 per unit.The maximum demand for lotions is 2,000 bottles per week,although demand for creams is unlimited. ixed costs total $1,800 per week.The company does not keep inventory although if a product is partially complete at the end of one week,its production will be completed in the following week.Required：（a）On the graph paper provided,use linear programming to calculate the optimum number of each product that the Cosmetic Co should make per week,assuming that it wishes to maximise contribution. Calculate the total contribution per week for the new production plan.All workings MUST be rounded to 2 decimal places.（14 marks）（b）Calculate the shadow price for silk powder and the slack for silk amino acids. All workings MUST be rounded to 2 decimal places.（6 marks）（20 marks）4 The Gadget Co produces three products,A,B and C,all made from the same material. Until now,it has used traditional absorption costing to allocate overheads to its products.The company is now considering an activity based costing system in the hope that it will improve rmation for the three products for the last year is as follows:A B C Production and sales volumes （units）15，000 12，000 18，000 Selling price per unit $7.50 $12 $13Raw material usage（kg）per unit 2 3 4Direct labour hours per unit 0. 1 0.15 0.2 Machine hours per unit 0.5 0.7 0.9 Number of production runs per annum 16 12 8Number of purchase orders per annum 24 28 42 Number of deliveries to retailers per annum 48 30 62The price for raw materials remained constant throughout the year at $1.20 per kg. Similarly,the direct labour cost for the whole workforce was $14.80 per hour.The annual overhead costs were as follows:$Machine set up costs 26,550Machine running costs 66,400 Procurement costs 48,000Delivery costs 54,320Required:（a）Calculate the full cost per unit for products A,B and C under traditional absorption costing, using direct labour hours as the basis for apportionment.（5 marks）（b） Calculate the full cost per unit of each product using activity based costing.（9 marks）（c） Using your calculation from（a）and （b）above,explain how activity based costing may help The Gadget Co improve the profitability of each product.（6 marks）5 Some commentators argue that:＆With continuing pressure to control costs and maintain efficiency,the time has come for all public sector organisations to embrace zero-based budgeting.There is no longer a place for incremental budgeting in any organisation,particularly public sector ones,where zero-based budgeting is far more suitable anyway.Required:（a）Discuss the particular difficulties encountered when budgeting in public sector organisations compared with budgeting in private sectororganisations,drawing comparisons between the two types of organisations.（5 marks）（b）Explain the terms ＆incremental budgeting 'and ＆zero-based budgeting'.（4 marks）（c）State the main stages involved in preparing zero-based budgets.（3 marks）（d）Discuss the view that 'there is no longer a place for incremental budgeting in any organisation,particularly public sector ones,'highlighting any drawbacks of zero-based budgeting that need to be considered.（8 marks）（20 marks）Formulae SheetLearning curve。

ACCAF5考试真题答案

ACCAF5考试真题答案AnswersFundamentals Level – Skills Module, Paper F5Performance Management December 2014 Answers Section A1ADivision A: Profit = $14·4m x 30% = $4·32mImputed interest charge = $32·6m x 10% = $3·26mResidual income = $1·06mDivision B: Profit = 8·8m x 24% = $2·112mImputed interest charge = $22·2m x 10% = $2·22mResidual income = $(0·108)m2 3 4 5DAll costs are included when using life cycle costing.AThis is the definition of a basic standard.BThe first statement is describing management control, not strategic planning.CNumber of units required to make target profit = fixed costs + target profit/contribution per unit of P1. Fixed costs = ($1·2 x 10,000) + ($1 x 12,500) – $2,500 = $22,000.Contribution per unit of P = $3·20 + $1·20 = $4·40.($22,000 + $60,000)/$4·40 = 18,636 units.6AProduct A B C DSelling price per unitRaw material costDirect labour cost at $11 per hour Variable overhead cost Contribution per unit $160$24$66$24$214$56$88$18$100$22$33$24$140$40$22$18 $46$52$21$60––––––––––––––––Direct labour hours per unit Contribution per labour hour Rank6$7·6728$6·5043$72$3013Normal monthly hours (total units x hours per unit)1,8001,000720800 If the strike goes ahead, only 2,160 labour hours will be available.Therefore make all of D, then 1,360 hours’ worth of A (2,160 – 800 hrs).7 8B460 – 400 = 60 clients$40,000 – $36,880 = $3,120VC per unit = $3,120/60 = $52Therefore FC = $40,000 – (460 x $52) = $16,080BIncrease in variable costs from buying in (2,200 units x $40 ($140 – $100)) = $88,000 Less the specific fixed costs saved if A is shut down = ($10,000)Decrease in profit = $78,000Only the first statement is correct. Traditional absorption costing tends to over-allocate costs to high volume products, not under-allocate them.10 11BBy definition, a shadow price is the amount by which contribution will increase if an extra kg of material becomesavailable. 20 x $2·80 = $56.CNeither statement is correct. Responsibility is not assigned solely to senior managers as, for example, in a TQM environment quality is everybody’s responsibility. In addition, standard costing can be difficult to apply in dynamic situations.12 13AThe second statement is talking about flow cost accounting, not input/output analysis.DTarget 1 is a financial target and so assesses economy factors. Target 2 is measuring the rate of work handled by staff which is an efficiency measure. Target 3 is assessing output, so is a measure of effectiveness.14 15BIn comparison to participative budgeting, an advantage of non-participative budgeting is that it should be less time consuming, as less collaboration will be required in order to produce the budgets.CThe target costing process always begins with the target selling price being set. The required profit is then determined and deducted from the target selling price to estimate the target cost. The target cost is then compared to the estimated current cost and the cost gap is then calculated.16 17AThis is a description of an incremental budget.ANew profit figures before salary paid:Good manager: $180,000 x 1·3 = $234,000Average manager: $180,000 x 1·2 = $216,000Poor: $180,000 x 1·1 = $198,000EV of profits = (0·35 x $234,000) + (0·45 x $216,000) + (0·2 x $198,000) = $81,900 + $97,200 + $39,600 = $218,700 Deduct salary cost and EV with manager = $178,700Therefore do not employ manager as profits will fall by $1,300.18BSet-up costs per production run = $140,000/28 = $5,000Cost per inspection = $80,000/8 = $10,000Other overhead costs per labour hour = $96,000/48,000 = $2 Overheads costs of product D:$Set-up costs (15 x $5,000) Inspection costs (3 x $10,000) Other overheads (40,000 x $2)75,000 30,000 80,000––––––––185,00020This is an example of feedforward control as the manager is using a forecast to assist in making a future decision.AIf demand is inelastic or the product life cycle is short, a price skimming approach would be more appropriate.1 Chair Co(a) Learning curve formula = y = ax bCumulative average time per unit for 8 units: Y = 12 x 8–·415 = 5·0628948 hours.Therefore cumulative total time for 8 units = 40·503158 hours. Cumulative average time per unit for 7 units: Y = 12 x 7–·415= 5·3513771 hours.Therefore cumulative total time for 7 units = 37·45964 hours.Therefore incremental time for 8th unit = 40·503158 hours –37·45964 hours = 3·043518 hours. T otal labour cost for 8th unit =3·043518 x $15 = $45·65277 Material an d overheads cost per unit = $230 Therefore total cost per unit = $275·65277 Therefore price per unit = $413·47915 (b) (i)Actual learning rate Cumulative number of seats produced 1 2 4 8Cumulative totalCumulative average hours per unit 12·5 12·5 x r 12·5 x r 2 hours 12·5 ? ? 34·312·5 x r 3Using algebra: 34·3 = 8 x (12·5 x r 3)4·2875 = (12·5 x r 3) 0·343 = r 3 r = 0·70The learning effect was 70% as compared to the forecast rate of 75%, meaning that the labour force learnt more quickly than anticipated. (ii) Adjusted priceThe adjusted price charged will be lower than the original price calculated in part (a). This is because the incremental cost of the 8th unit will be lower given the 70% learning rate, even though the first unit took 12·5 hours. We kno w this because we are told that the cumulative time for 8 units was actually 34·3 hours. This is lower than the estimated cumulative time in part (a) for 8 units of 40·503158 hours and therefore, logically, the actual incremental time for the 8th unit must be lower than the estimated 3·043518 hours calculated in part (a). Consequently, total cost will be lower and price will be lower, given that this is based on cost.2Glam CoBottleneck activity(a) The bottleneck may have been worked out as follows:Total salon hours = 8 x 6 x 50 = 2,400 each year. The capacity for each senior stylist must be 2,400 hours, which equates to 2,400 cuts each year (2,400/1). Since there are three senior stylists, the total capacity is 7,200 hours or 7,200 cuts each year. Using this method, the capacity for each activity is as follows: Cut Treatment 16,000 4,800 Assistants Senior stylists Junior stylists 48,000 7,200 9,6009,600The bottleneck activity is clearly the work performed by the senior stylists.The senior stylists’ time is called a bottleneck activity because it is the activity which prevents the salon’s throughpu t from being higher than it is. The total number of cuts o r treatments which can be completed by the salon’s senior stylists is less than the number which can be completed by other staff members, considering the number of each type of staff available and the time required by each type of staff for each client.(b) TPARCut $ Treatment$ Selling price 60 110Materials ThroughputThroughput per bottleneck hour Total salon costs per BN hour (w1) TPAR0·60 59·40 59·40 42·56 1·48 (7·40+0·6) 102 68 42·56 1·6Working 1: Total salon costs(3 x $40,000) + (2 x $28,000) + (2 x $12,000) + $106,400 = $306,400 Therefore cost for each bottleneck hour =$306,400/7,200 = $42·56Note: Answers based on total salary costs were $80,000 were also equally acceptable since the wording of question was open to interpretation.3Hi Life Co Direct materials: Fabric WoodNote 1 2 $ 200 m 2 at $17·50 per m 2 20 m at $8·20 per m 30 m at $8·50 per m 3,500 164 2552 Direct labour: SkilledSemi-skilledFactory overheadsAdministration overheads50 hours at $24 per hour 300 hours at $14 per hour 20 hours at $15 per hour3 4 5 61,200 4,200 300 –––––––Total cost 9,619–––––– 1 2 Since the material is in regular use by HL Co, it is replacement cost which is the relevant cost for the contract. 30 m will have to be ordered from the alternative supplier for immediate delivery but the remaining 20 m can be used from inventory and replaced by an order from the usual supplier at a cost of $8·20 per m.3 4 5There is no cost for the first 150 hours of labour because there is spare capacity. The remaining 50 hours will be paid at time and a half, which is $16 x 1·5, i.e. $24 per hour.HL Co will choose to use the agency workers, who will cost $14 per hour, since this is cheaper than paying existing semi-skilled workers at $18 per hour ($12 x 1·5) to work overtime.None of the general factory costs are incremental, so they have all been excluded. However, the supervisor’s overtime pay is incremental, so has been included. The supervisor’s normal salary, on the other hand, h as been excluded because it is not incremental.6 These are general overheads and are not incremental, so no value should be included for them.4Jamair(a) The four perspectivesFinancial perspective –this perspective is concerned with how a company looks to its shareholders. How can it create value for them? Kaplan and Norton identified three core financial themes which will drive the business strategy: revenue growth and mix, cost reduction and asset utilisation.Customer perspective – this co nsiders how the organisation appears to customers. The organisation should ask itself: ‘to achieve our vision, how should we appear to our cust omers?’ The customer perspective should identify the customer and market segments in which the business will compete. There is a strong link between the customer perspective and the revenue objectives in the financial perspective. If customer objectives are achieved, revenue objectives should be too.Internal perspective – this requires the organ isation to ask itself: ‘what must we excel at to achieve our financial and customer objectives?’ It must identify the internal business processes which are critical to the implementation of the organisation’s strategy. These will include the innovation process, the operations process and the post-sales process.Learning and growth perspective –this requires theorganisation to ask itself whether it can continue to improve and create value. The organisation must continue to invest in its infrastructure –i.e. people, systems and organisational procedures – in order to improve the capabilities which will help the other three perspectives to be achieved.(b)Goals and measuresFinancial perspectiveGoal Performance measureTo use fewer planes to transport customers Lease costs of plane per customerExplanation – operating efficiency will be driven by getting more customers on fewer planes. This goal and measure cover the cost side of this.Goal Performance measureTo increase seat revenue per plane Revenue per available passenger mileExplanation – this covers the first part of achieving operating efficiency – by having fewer empty seats on planes.Customer perspectiveGoal Performance measureTo ensure that flights are on time‘On time arrival’ ranking from the aviation authorityExplanation – Jamair is currently number 7 in the rankings. If it becomes known as a particularly reliable airline, customers are more likely to use it, which will ultimately increase revenue.Goal Performance measureTo reduce the number of flights cancelled The number of flights cancelledExplanation –again, if flights are seen to be cancelled frequently by Jamair, customers will not want to use it. It needsto be perceived as reliable by its customers.Internal perspectiveGoal Performance measureTo improve turnaround time on the ground‘On the ground’ timeExplanation –less time spent on the ground means fewer planes are needed, which will reduce plane leasing costs. However, it is important not to compromise the quality of cleaning or make errors in refuelling as a consequence of reducing on the ground time.Goal Performance measureTo improve the cleanliness of Jamair’s planes The percentage of customers happy with the standard of the planes, as reported in the customer satisfaction surveys.Explanation –at present, only 85% of customers are happy with the standard of cleanliness on Jamair’s planes. This could be causing loss of revenue.Goal Performance measureTo develop the online booking system Percentage downtime.Explanation –since the company relies entirely on the booking system for customer booking of flights and check-in, it is critical that it can deal with the growing number of customers.Learning perspectiveGoal Performance measureTo reduce the employee absentee rate The number of days absent per employeeExplanation –it is critical to Jamair that its workforce is reliable as, at worse, absent staff lead to cancelled flights.Goal Performance measureNumber of days’ training per ground crew member Toincrease ground crew training on cleaning andrefuelling proceduresExplanation –if ground crew are better trained, they can reduce the number of minutes that the plane stays on the ground, which will result in fewer planes being required and therefore lower costs. Also, if their cleaning is better, customer satisfaction and retention will increase.Note: Only one goal and measure were required for each perspective. In order to gain full marks, answers had to be specific to Jamair as stated in the requirements.5Safe Soap Co(a) Variance calculationsMix varianceTotal kg of materials per standard batch = 0·25 + 0·6 + 0·5 = 1·35 kgTherefore standard quantity to produce 136,000 batches = 136,000 x 1·35 kg = 183,600 kgActual total kg of materials used to produce 136,000 batches = 34,080 + 83,232 + 64,200 = 181,512 kgMaterial Actual quantityStandard mixkgs181,512 x 0·25/1·35 = 33,613·33181,512 x 0·6/1·35 =Actual quantityActual mixkgs34,08083,232Variance Standard costper kgVariancekgs(466·67)(2,560)$104$(4,666·70)(10,240)LyeCoconut oil Shea butter80,672181,512 x 0·5/1·35 = 67,226·6764,2003,026·6739,080·01––––––––––––––––––––––––––181,512181,512(5,826·69)A––––––––––––––––––––––––––Yield varianceMaterial Standard quantityStandard mix Actual quantityStandard mixkgs33,613·3380,672Variance Standard costper kgVariancekgs386·67928$104$3,866·703,712Lye Coconut oil Shea butter 0·25 x 136,000 = 0·6 x 136,000 =0·5 x 136,000 =34,00081,60068,00067,226·67773·3332,319·99––––––––183,600––––––––––––––––––181,5129,898·69F––––––––––––––––––––––––––(b)(i) A materials mix variance will occur when the actual mix of materials used in production is different from the standard mix. So, it is inputs which are being considered. Since the total mix variance is adverse for the Safe Soap Co, this means that the actual mix used in September and October was more expensive than the standard mix.A material yield variance arises because the output which was achieved is different from the output which would have been expected from the inputs. So, whereas the mix variance focuses on inputs, the yield variance focuses on outputs.In both September and October, the yield variance was favourable, meaning that the inputs produced a higher level of output than one would have expected.(ii)Whilst the mix and yield variances provide Safe Soap Co with a certain level of information, they do not necessarily explain any quality issues which arise because of the change in mix. The consequences of the change may well havean impact on sales volumes. In Safe Soap Co’s case, the sales volume variance is adverse, meaning that sales volumes have fallen in October. It is not known whether they also fell in September but it would be usual for the effects on sales of the change in mix to be slightly delayed, in this case by one month, given that it is only once the customers startreceiving the slightly altered soap that they may startexpressing their dissatisfaction with the product.There may also be other reasons for the adverse sales volume variance but given the customer complaints which have been received, the sales manager’s views should b e taken on b oard.Fundamentals Level – Skills Module, Paper F5Performance Management December 2014 Marking Scheme Section A Marks2 marks per question40––––––Section B1(a)PriceCumulative average time per unit for 8 units T otal time for 8 unitsCumulative average time per unit for 7 units T otal time for 7 unitsIncremental time for 8th unitCost for 8th unitTotal cost1 0·5 1 0·5 0·5 0·5 0·5Price0·5–––5–––(b)(i)Learning rateCalculating learning rate Saying whether better or worse 2·5 0·5–––3–––(ii)Effect on price2–––Total marks10––––––2(a)(b)Calculation and justification of bottleneckExplanation of bottleneck31–––4–––TPARThroughput1111 Throughput per bottleneck hourTotal salon costsCost per hourTPAR2–––6–––Total marks10––––––3Fabric calculation Fabric reasonWood calculation 0·5 0·5 1Wood reason1Skilled labour calculation Skilled labour reason 1 1Semi-skilled labour calculationSemi-skilled labour reasonFactory overheads calculation Factory overheads reason Administration overheads reason T otal relevant cost (lowest costestimate)0·5 1 0·5 1·5 1 0·5–––Total marks10––––––（此文档部分内容来源于网络，如有侵权请告知删除，文档可自行编辑修改内容，供参考，感谢您的配合和支持）Marks4(a)(b)PerspectivesExp lanation for each perspective1·5–––6–––Goals and measuresEach goal/measure/explanationPresentation and structure21–––9–––Total marks15––––––5(a)(b)Variance calculationsMix varianceQuantity variance44–––8–––(i)VariancesMarks per variance explained2 –––4–––(ii)DiscussionPer valid point1–––3–––Total marks15––––––。

2011年6月份ACCA考试《F5》真题

P a p e r F 5ALL FIVE questions are compulsory and MUST be attempted1Cement Co is a company specialising in the manufacture of cement, a product used in the building industry. The company has found that when weather conditions are good, the demand for cement increases since more building work is able to take place. Last year, the weather was so good, and the demand for cement was so great, that Cement Co was unable to meet demand. Cement Co is now trying to work out the level of cement production for the coming year in order to maximise profits. The company doesn’t want to miss out on the opportunity to earn large profits by running out of cement again. However, it doesn’t want to be left with large quantities of the product unsold at the end of the year, since it deteriorates quickly and then has to be disposed of. The company has received the following estimates about the probable weather conditions and corresponding demand levels for the coming year:Weather Probability DemandGood25%350,000 bagsAverage45%280,000 bagsPoor30%200,000 bagsEach bag of cement sells for $9 and costs $4 to make. If cement is unsold at the end of the year, it has to be disposed of at a cost of $0·50 per bag.Cement Co has decided to produce at one of the three levels of production to match forecast demand. It now has to decide which level of cement production to select.Required:(a)Construct a pay off table to show all the possible profit outcomes.(8 marks)(b)Decide the level of cement production the company should choose, based on the following decision rules:(i)Maximin(1 mark)(ii)Maximax(1 mark) (iii)Expected value(4 marks) You must justify your decision under each rule, showing all necessary calculations.(c)Describe the ‘maximin’ and ‘expected value’ decision rules, explaining when they might be used and theattitudes of the decision makers who might use them.(6 marks)(20 marks)22Heat Co specialises in the production of a range of air conditioning appliances for industrial premises. It is about to launch a new product, the ‘Energy Buster’, a unique air conditioning unit which is capable of providing unprecedented levels of air conditioning using a minimal amount of electricity. The technology used in the Energy Buster is unique so Heat Co has patented it so that no competitors can enter the market for two years. The company’s development costs have been high and it is expected that the product will only have a five-year life cycle.Heat Co is now trying to ascertain the best pricing policy that they should adopt for the Energy Buster’s launch onto the market. Demand is very responsive to price changes and research has established that, for every $15 increase in price, demand would be expected to fall by 1,000 units. If the company set the price at $735, only 1,000 units would be demanded.The costs of producing each air conditioning unit are as follows:$Direct materials42Labour12(1·5 hours at $8 per hour. See note below)Fixed overheads6(based on producing 50,000 units per annum)–––T otal cost60–––NoteThe first air conditioning unit took 1·5 hours to make and labour cost $8 per hour. A 95% learning curve exists, in relation to production of the unit, although the learning curve is expected to finish after making 100 units. Heat Co’s management have said that any pricing decisions about the Energy Buster should be based on the time it takes to make the 100th unit of the product. You have been told that the learning co-efficient, b = –0·0740005.All other costs are expected to remain the same up to the maximum demand levels.Required:(a)(i)Establish the demand function (equation) for air conditioning units;(3 marks)(ii)Calculate the marginal cost for each air conditioning unit after adjusting the labour cost as required by the note above; (6 marks) (iii)Equate marginal cost and marginal revenue in order to calculate the optimum price and quantity.(3 marks)(b)Explain what is meant by a ‘penetration pricing’ strategy and a ‘market skimming’ strategy and discusswhether either strategy might be suitable for Heat Co when launching the Energy Buster. (8 marks)(20 marks)3[P.T.O.3Noble is a restaurant that is only open in the evenings, on SIX days of the week. It has eight restaurant and kitchen staff, each paid a wage of $8 per hour on the basis of hours actually worked. It also has a restaurant manager and a head chef, each of whom is paid a monthly salary of $4,300. Noble’s budget and actual figures for the month of May was as follows:Budget ActualNumber of meals1,200 1,560$$$$Revenue:Food48,00060,840Drinks12,00011,700–––––––––––––––60,00072,540Variable costs:Staff wages(9,216)(13,248)Food costs(6,000)(7,180)Drink costs(2,400)(5,280)Energy costs(3,387)(3,500)(21,003)(29,208)–––––––––––––––Contribution38,99743,332Fixed costs:Manager’s and chef’s pay(8,600)(8,600)Rent, rates and depreciation(4,500)(13,100)(4,500)(13,100)––––––––––––––––––––––––––––––Operating profit25,89730,232–––––––––––––––The budget above is based on the following assumptions:1The restaurant is only open six days a week and there are four weeks in a month. The average number of orders each day is 50 and demand is evenly spread across all the days in the month.2The restaurant offers two meals: Meal A, which costs $35 per meal and Meal B, which costs $45 per meal. In addition to this, irrespective of which meal the customer orders, the average customer consumes four drinks each at $2·50 per drink. Therefore, the average spend per customer is either $45 or $55 including drinks, depending on the type of meal selected. The May budget is based on 50% of customers ordering Meal A and 50% of customers ordering Meal B.3Food costs represent 12·5% of revenue from food sales.4Drink costs represent 20% of revenue from drinks sales.5When the number of orders per day does not exceed 50, each member of hourly paid staff is required to work exactly six hours per day. For every incremental increase of five in the average number of orders per day, each member of staff has to work 0·5 hours of overtime for which they are paid at the increased rate of $12 per hour.You should assume that all costs for hourly paid staff are treated wholly as variable costs.6Energy costs are deemed to be related to the total number of hours worked by each of the hourly paid staff, and are absorbed at the rate of $2·94 per hour worked by each of the eight staff.Required:(a)Prepare a flexed budget for the month of May, assuming that the standard mix of customers remains thesame as budgeted. (12 marks)4(b)After preparation of the flexed budget, you are informed that the following variances have arisen in relation tototal food and drink sales:Sales mix contribution variance$1,014AdverseSales quantity contribution variance$11,700FavourableRequired:BRIEFLY describe the sales mix contribution variance and the sales quantity contribution variance. Identify why each of them has arisen in Noble’s case.(4 marks)(c)Noble’s owner told the restaurant manager to run a half-price drinks promotion at Noble for the month of Mayon all drinks. Actual results showed that customers ordered an average of six drinks each instead of the usual four but, because of the promotion, they only paid half of the usual cost for each drink. You have calculated the sales margin price variance for drink sales alone and found it to be a worrying $11,700 adverse. The restaurant manager is worried and concerned that this makes his performance for drink sales look very bad.Required:Briefly discuss TWO other variances that could be calculated for drinks sales or food sales in order to ensure that the assessment of the restaurant manager’s performance is fair. These should be variances that COULD be calculated from the information provided above although no further calculations are required here.(4 marks)(20 marks) 4(a)Brace Co is an electronics company specialising in the manufacture of home audio equipment. Historically, the company has used solely financial performance measures to assess the performance of the company as a whole.The company’s Managing Director has recently heard of the ‘balanced scorecard approach’ and is keen to learn more.Required:Describe the balanced scorecard approach to performance measurement.(10 marks)(b)Brace Co is split into two divisions, A and B, each with their own cost and revenue streams. Each of the divisionsis managed by a divisional manager who has the power to make all investment decisions within the division.The cost of capital for both divisions is 12%. Historically, investment decisions have been made by calculating the return on investment (ROI) of any opportunities and at present, the return on investment of each division is 16%.A new manager who has recently been appointed in division A has argued that using residual income (RI) tomake investment decisions would result in ‘better goal congruence’ throughout the company.Each division is currently considering the following separate investments:Project for Division A Project for Division BCapital required for investment$82·8 million$40·6 millionSales generated by investment$44·6 million$21·8 millionNet profit margin28%33%The company is seeking to maximise shareholder wealth.Required:Calculate both the return on investment and residual income of the new investment for each of the two divisions. Comment on these results, taking into consideration the manager’s views about residual income.(10 marks)(20 marks)5[P.T.O.5Thin Co is a private hospital offering three types of surgical procedures known as A, B and C. Each of them uses a pre-operative injection given by a nurse before the surgery. T hin Co currently rent an operating theatre from a neighbouring government hospital. Thin Co does have an operating theatre on its premises, but it has never been put into use since it would cost $750,000 to equip. The Managing Director of Thin Co is keen to maximise profits and has heard of something called ‘throughput accounting’, which may help him to do this. The following information is available:1All patients go through a five step process, irrespective of which procedure they are having:–step 1: consultation with the advisor;–step 2: pre-operative injection given by the nurse;–step 3: anaesthetic given by anaesthetist;–step 4: procedure performed in theatre by the surgeon;–step 5: recovery with the recovery specialist.2The price of each of procedures A, B and C is $2,700, $3,500 and $4,250 respectively.3The only materials’ costs relating to the procedures are for the pre-operative injections given by the nurse, the anaesthetic and the dressings. These are as follows:Procedure A Procedure B Procedure C$ per procedure$ per procedure$ per procedurePre-operative nurse’s injections7008001,000Anaesthetic354045Dressings5·605·605·604There are five members of staff employed by Thin Co. Each works a standard 40-hour week for 47 weeks of the year, a total of 1,880 hours each per annum. Their salaries are as follows:–Advisor: $45,000 per annum;–Nurse: $38,000 per annum;–Anaesthetist: $75,000 per annum;–Surgeon: $90,000 per annum;–Recovery specialist: $50,000 per annum.T he only other hospital costs (comparable to ‘factory costs’ in a traditional manufacturing environment) are general overheads, which include the theatre rental costs, and amount to $250,000 per annum.5Maximum annual demand for A, B and C is 600, 800 and 1,200 procedures respectively. Time spent by each of the five different staff members on each procedure is as follows:Procedure A Procedure B Procedure CHours Hours Hoursper procedure per procedure per procedureAdvisor0·240·240·24Nurse0·270·280·30Anaesthetist0·250·280·33Surgeon0·7511·25Recovery specialist0·600·700·74Part hours are shown as decimals e.g. 0·24 hours = 14·4 minutes (0·24 x 60).Surgeon’s hours have been correctly identified as the bottleneck resource.6Required:(a)Calculate the throughput accounting ratio for procedure C.Note: It is recommended that you work in hours as provided in the table rather than minutes.(6 marks) (b)The return per factory hour for products A and B has been calculated and is $2,612·53 and $2,654·40respectively. The throug hput accounting ratio for A and B has also been calculated and is 8·96 and 9·11 respectively.Calculate the optimum product mix and the maximum profit per annum.(7 marks) (c)Assume that your calculations in part (b) showed that, if the optimum product mix is adhered to, there will beexcess demand for procedure C of 696 procedures per annum. In order to satisfy this excess demand, the company is considering equipping and using its own theatre, as well as continuing to rent the existing theatre.The company cannot rent any more theatre time at either the existing theatre or any other theatres in the area, so equipping its own theatre is the only option. An additional surgeon would be employed to work in the newly equipped theatre.Required:Discuss whether the ov erall profit of the company could be improv ed by equipping and using the extra theatre.Note: Some basic calculations may help your discussion.(7 marks)(20 marks)7[P.T.O.8。

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P a p e r F 5This is a blank page.The question paper begins on page 3.2ALL FIVE questions are compulsory and MUST be attempted1Carad Co is an electronics company which makes two types of televisions – plasma screen TVs and LCD TVs. It operates within a highly competitive market and is constantly under pressure to reduce prices. Carad Co operates a standard costing system and performs a detailed variance analysis of both products on a monthly basis. Extracts from the management information for the month of November are shown below:NoteT otal number of units made and sold1,4001Material price variance$28,000A2T otal labour variance$6,050A3Notes(1)The budgeted total sales volume for TVs was 1,180 units, consisting of an equal mix of plasma screen TVs andLCD screen TVs. Actual sales volume was 750 plasma TVs and 650 LCD TVs. Standard sales prices are $350 per unit for the plasma TVs and $300 per unit for the LCD TVs. The actual sales prices achieved during November were $330 per unit for plasma TVs and $290 per unit for LCD TVs. The standard contributions for plasma TVs and LCD TVs are $190 and $180 per unit respectively.(2)The sole reason for this variance was an increase in the purchase price of one of its key components, X. Eachplasma TV made and each LCD TV made requires one unit of component X, for which Carad Co’s standard cost is $60 per unit. Due to a shortage of components in the market place, the market price for November went up to $85 per unit for X. Carad Co actually paid $80 per unit for it.(3)Each plasma TV uses 2 standard hours of labour and each LCD TV uses 1·5 standard hours of labour. Thestandard cost for labour is $14 per hour and this also reflects the actual cost per labour hour for the company’s permanent staff in November. However, because of the increase in sales and production volumes in November, the company also had to use additional temporary labour at the higher cost of $18 per hour. The total capacity of Carad’s permanent workforce is 2,200 hours production per month, assuming full efficiency. In the month of November, the permanent workforce were wholly efficient, taking exactly 2 hours to complete each plasma TV and exactly 1·5 hours to produce each LCD TV. The total labour variance therefore relates solely to the temporary workers, who took twice as long as the permanent workers to complete their production.Required:(a)Calculate the following for the month of November, showing all workings clearly:(i)The sales price variance and sales volume contribution variance;(6 marks)(ii)The material price planning variance and material price operational variance;(2 marks) (iii)The labour rate variance and the labour efficiency variance.(7 marks)(b)Explain the reasons why Carad Co would be interested in the material price planning variance and thematerial price operational variance.(5 marks)(20 marks)3[P.T.O.2The Accountancy T eaching Co (AT Co) is a company specialising in the provision of accountancy tuition courses in the private sector. It makes up its accounts to 30 November each year. In the year ending 30 November 2009, it held 60% of market share. However, over the last twelve months, the accountancy tuition market in general has faceda 20% decline in demand for accountancy training leading to smaller class sizes on courses. In 2009 and before, ATCo suffered from an ongoing problem with staff retention, which had a knock-on effect on the quality of service provided to students. Following the completion of developments that have been ongoing for some time, in 2010 the company was able to offer a far-improved service to students. The developments included:– A new dedicated 24 hour student helpline–An interactive website providing instant support to students– A new training programme for staff–An electronic student enrolment system–An electronic marking system for the marking of students’ progress tests. The costs of marking electronically were expected to be $4 million less in 2010 than marking on paper. Marking expenditure is always included in cost of salesExtracts from the management accounts for 2009 and 2010 are shown below:20092010$’000$’000$’000$’000 T urnover72,02566,028Cost of sales(52,078)(42,056)–––––––––––––––Gross profit19,94723,972Indirect expenses:Marketing3,2914,678Property6,7026,690Staff training1,2873,396Interactive website running costs–3,270Student helpline running costs–2,872Enrolment costs5,032960––––––––––––T otal indirect expenses(16,312)(21,866)–––––––––––––––Net operating profit3,6352,106–––––––––––––––On 1 December 2009, management asked all ‘freelance lecturers’ to reduce their fees by at least 10% with immediate effect (‘freelance lecturers’ are not employees of the company but are used to teach students when there are not enough of AT Co’s own lecturers to meet tuition needs). All employees were also told that they would not receive a pay rise for at least one year. T otal lecture staff costs (including freelance lecturers) were $41·663 million in 2009 and were included in cost of sales, as is always the case. Freelance lecturer costs represented 35% of these total lecture staff costs. In 2010 freelance lecture costs were $12·394 million. No reduction was made to course prices in the year and the mix of trainees studying for the different qualifications remained the same. The same type and number of courses were run in both 2009 and 2010 and the percentage of these courses that was run by freelance lecturers as opposed to employed staff also remained the same.Due to the nature of the business, non-financial performance indicators are also used to assess performance, as detailed below.20092010 Percentage of students transferring to AT Co fromanother training provider8%20%Number of late enrolments due to staff error297106Percentage of students passing exams first time48%66%Labour turnover32%10%Number of student complaints31584Average no. of employees1,0801,0814Required:Assess the performance of the business in 2010 using both financial performance indicators calculated from the above information AND the non-financial performance indicators provided.NOTE: Clearly state any assumptions and show all workings clearly. Your answer should be structured around the following main headings: turnover; cost of sales; gross profit; indirect expenses; net operating profit. However, in discussing each of these areas you should also refer to the non-financial performance indicators, where relevant.(20 marks)5[P.T.O.3The Cosmetic Co is a company producing a variety of cosmetic creams and lotions. The creams and lotions are sold to a variety of retailers at a price of $23·20 for each jar of face cream and $16·80 for each bottle of body lotion. Each of the products has a variety of ingredients, with the key ones being silk powder, silk amino acids and aloe vera. Six months ago, silk worms were attacked by disease causing a huge reduction in the availability of silk powder and silk amino acids. The Cosmetic Co had to dramatically reduce production and make part of its workforce, which it had trained over a number of years, redundant.The company now wants to increase production again by ensuring that it uses the limited ingredients available to maximise profits by selling the optimum mix of creams and lotions. Due to the redundancies made earlier in the year, supply of skilled labour is now limited in the short-term to 160 hours (9,600 minutes) per week, although unskilled labour is unlimited. The purchasing manager is confident that they can obtain 5,000 grams of silk powder and 1,600 grams of silk amino acids per week. All other ingredients are unlimited. The following information is available for the two products:Cream Lotion Materials required: silk powder (at $2·20 per gram) 3 grams 2 grams–silk amino acids (at $0·80 per gram) 1 gram0·5 grams–aloe vera (at $1·40 per gram) 4 grams 2 gramsLabour required: skilled ($12 per hour) 4 minutes 5 minutes–unskilled (at $8 per hour) 3 minutes1·5 minutesEach jar of cream sold generates a contribution of $9 per unit, whilst each bottle of lotion generates a contribution of $8 per unit. The maximum demand for lotions is 2,000 bottles per week, although demand for creams is unlimited.Fixed costs total $1,800 per week. The company does not keep inventory although if a product is partially complete at the end of one week, its production will be completed in the following week.Required:(a)On the graph paper provided, use linear programming to calculate the optimum number of each product thatthe Cosmetic Co should make per week, assuming that it wishes to maximise contribution. Calculate the total contribution per week for the new production plan. All workings MUST be rounded to 2 decimal places.(14 marks)(b)Calculate the shadow price for silk powder and the slack for silk amino acids. All workings MUST be roundedto 2 decimal places.(6 marks)(20 marks)64The Gadget Co produces three products, A, B and C, all made from the same material. Until now, it has used traditional absorption costing to allocate overheads to its products. The company is now considering an activity based costing system in the hope that it will improve profitability. Information for the three products for the last year is as follows:A B CProduction and sales volumes (units)15,00012,00018,000Selling price per unit$7.50$12$13Raw material usage (kg) per unit234Direct labour hours per unit0·10·150·2Machine hours per unit0·50·70·9Number of production runs per annum16128Number of purchase orders per annum242842Number of deliveries to retailers per annum483062The price for raw materials remained constant throughout the year at $1·20 per kg. Similarly, the direct labour cost for the whole workforce was $14·80 per hour. The annual overhead costs were as follows:$Machine set up costs26,550Machine running costs66,400Procurement costs48,000Delivery costs54,320Required:(a)Calculate the full cost per unit for products A, B and C under traditional absorption costing, using directlabour hours as the basis for apportionment.(5 marks)(b)Calculate the full cost per unit of each product using activity based costing.(9 marks)(c)Using your calculation from (a) and (b) above, explain how activity based costing may help The Gadget Coimprove the profitability of each product.(6 marks)(20 marks) 5Some commentators argue that: ‘With continuing pressure to control costs and maintain efficiency, the time has come for all public sector organisations to embrace zero-based budgeting. There is no longer a place for incremental budgeting in any organisation, particularly public sector ones, where zero-based budgeting is far more suitable anyway.’Required:(a)Discuss the particular difficulties encountered when budgeting in public sector organisations compared withbudgeting in private sector organisations, drawing comparisons between the two types of organisations.(5 marks)(b)Explain the terms ‘incremental budgeting’ and ‘zero-based budgeting’.(4 marks)(c)State the main stages involved in preparing zero-based budgets.(3 marks)(d)Discuss the view that ‘there is no longer a place for incremental budgeting in any organisation, particularlypublic sector ones,’ highlighting any drawbacks of zero-based budgeting that need to be considered.(8 marks)(20 marks)7[P.T.O.8。