ACCA_F7_2006年12月考试【试题答案】
ACCA 历年真题f7int_jun_2011_ans
Fundamentals Level – Skills Module, Paper F7 (INT)Financial Reporting (International) June 2011 Answers 1(a)(i)Prodigal – Consolidated statement of comprehensive income for the year ended 31 March 2011$’000 Revenue (450,000 + (240,000 x 6/12) – 40,000 intra-group sales)530,000Cost of sales (w (i))(278,800)––––––––Gross profit251,200Distribution costs (23,600 + (12,000 x 6/12))(29,600)Administrative expenses (27,000 + (23,000 x 6/12))(38,500)Finance costs (1,500 + (1,200 x 6/12))(2,100)––––––––Profit before tax181,000Income tax expense (48,000 + (27,800 x 6/12))(61,900)––––––––Profit for the year119,100––––––––Other comprehensive incomeGain on revaluation of land (2,500 + 1,000)3,500Loss on fair value of equity financial asset investments (700 + (400 x 6/12))(900)––––––––2,600––––––––T otal comprehensive income121,700––––––––Profit attributable to:Owners of the parent111,600Non-controlling interest (w (ii))7,500––––––––119,100––––––––T otal comprehensive income attributable to:Owners of the parent 114,000Non-controlling interest (w (ii))7,700––––––––121,700––––––––(ii)Prodigal – Equity section of the consolidated statement of financial position as at 31 March 2011Equity attributable to owners of the parentShare capital (250,000 + 80,000) see below330,000Share premium (100,000 + 240,000) see below340,000Revaluation reserve (land) (8,400 + 2,500 + (1,000 x 75%))11,650Other equity reserve (3,200 – 700 – (400 x 6/12 x 75%)) 2,350Retained earnings (w (iii))201,600––––––––885,600 Non-controlling interest (w (iv))107,700––––––––T otal equity993,300––––––––The share exchange would result in Prodigal issuing 80 million shares (160,000 x 75% x 2/3) at a value of $4 each(capital 80,000; premium 240,000).(b)IFRS 3 allows (as an option) a non-controlling interest to be valued at its proportionate share of the acquired subsidiary’sidentifiable net assets; this carries forward the only allowed method in the previous version of this Standard. Its effect on the statement of financial position is that the resulting carrying value of purchased goodwill only relates to the parent’s element of such goodwill and as a consequence the non-controlling interest does not reflect its share of the subsidiary’s goodwill. Some commentators feel this is an anomaly as the principle of a consolidated statement of financial position is that it should disclose the whole of the subsidiary’s assets that are under the control of the parent (not just the parent’s share). This principle is applied to all of a subsidiary’s other identifiable assets, so why not goodwill?Any impairment of goodwill under this method would only be charged against the parent’s interest, as the non-controlling interest’s share of goodwill is not included in the consolidated financial statements.The second (new) method of valuing the non-controlling interest at its fair value would (normally) increase the value of the goodwill calculated on acquisition. This increase reflects the non-controlling interest’s ownership of the subsidiary’s goodwill and has the effect of ‘grossing up’ the goodwill and the non-controlling interests in the statement of financial position (by the same amount). It is argued that this method reflects the whole of the subsidiary’s goodwill/premium on acquisition and is thus consistent with the principles of consolidation.Under this method any impairment of the subsidiary’s goodwill is charged to both the controlling (parent’s share) and non-controlling interests in proportion to their holding of shares in the subsidiary.Workings (figures in brackets in $’000)(i)Cost of sales $’000$’000Prodigal260,000Sentinel (110,000 x 6/12)55,000Intra-group purchases (40,000)Unrealised profit on sale of plant1,000Depreciation adjustment on sale of plant (1,000/2½ years x 6/12)(200)Unrealised profit in inventory (12,000 x 10,000/40,000)3,000––––––––278,800––––––––(ii)Non controlling interest in income statement profit:Sentinel’s post-acquisition profit (66,000 x 6/12)33,000Less:Unrealised profit in inventory (w (i))(3,000)–––––––30,000x 25% = 7,500 Non controlling interest in total comprehensive incomeAs above7,500Other comprehensive income (1,000 – (400 x 6/12) x 25%)200–––––––7,700–––––––(iii)Retained earningsProdigal at 1 April 201090,000Per statement of comprehensive income111,600––––––––201,600––––––––(iv)Non-controlling interest in statement of financial positionAt acquisition100,000Per statement of comprehensive income7,700––––––––107,700––––––––2(i)Highwood – Statement of comprehensive income for the year ended 31 March 2011$’000Revenue 339,650Cost of sales (w (i))(216,950)–––––––––Gross profit122,700Distribution costs (27,500)Administrative expenses (30,700 – 1,300 + 600 allowance (w (ii)))(30,000)Finance costs (w (iii))(2,848)–––––––––Profit before tax62,352Income tax expense (19,400 – 800 + 400 (w (iv)))(19,000)–––––––––Profit for the year43,352Other comprehensive income:Gain on revaluation of property (w (i))15,000Deferred tax on revaluation (w (i))(3,750)–––––––––T otal comprehensive income54,602–––––––––(ii)Highwood – Statement of changes in equity for the year ended 31 March 2011Share Equity Revaluation Retained Totalcapital option reserve earnings equity$’000$’000$’000$’000$’000 Balance at 1 April 2010 (see below)56,000nil nil7,00063,0008% loan note issue (w (iii))1,5241,524Dividend paid (w (v))(5,600)(5,600)Comprehensive income11,25043,35254,602–––––––––––––––––––––––––––––––––––Balance at 31 March 201156,0001,52411,25044,752113,526–––––––––––––––––––––––––––––––––––Note: the retained earnings of $1·4 million in the trial balance is after deducting the dividend paid of $5·6 million (w (v)), therefore the retained earnings at 1 April 2010 were $7 million.(iii)Highwood – Statement of financial position as at 31 March 2011Assets$’000$’000Non-current assetsProperty, plant and equipment (77,500 + 40,000) (w (i))117,500Current assetsInventory (36,000 – 2,700 + 6,000) (w (i))39,300T rade receivables (47,100 + 10,000 – 600 allowance) (w (ii))56,50095,800–––––––––––––––T otal assets213,300––––––––Equity and liabilitiesEquity (see answer (ii))Equity shares of 50 cents each56,000Other component of equity – equity option1,524Revaluation reserve11,250Retained earnings 44,752––––––––113,526Non-current liabilitiesDeferred tax (w (iv))6,7508% convertible loan note (28,476 + 448) (w (iii))28,92435,674–––––––Current liabilitiesT rade payables24,500Liability to Easyfinance (w (ii))8,700Bank overdraft11,500Current tax payable19,40064,100–––––––––––––––T otal equity and liabilities213,300––––––––Workings (figures in brackets in $’000)(i)Cost of sales and non-current assets$’000Cost of sales per question207,750Depreciation –building (see below)2,500–plant and equipment (see below) 10,000Adjustment/increase to closing inventory (see below)(3,300)––––––––216,950––––––––Freehold propertyThe revaluation of the property will create an initial revaluation reserve of $15 million (80,000 – (75,000 – 10,000)).$3·75 million of this (25%) will be transferred to deferred tax leaving a net revaluation reserve of $11·25 million. The building valued at $50 million will require a depreciation charge of $2·5 million (50,000/20 years remaining) for the current year. This will leave a carrying amount in the statement of financial position of $77·5 million (80,000 –2,500).Plant and equipment:Cost Accumulated depreciation$’000$’0001 April 201074,50024,500Charge for year ((74,500 – 24,500) x 20%)10,000––––––––––––––31 March 201174,50034,500––––––––––––––The carrying amount in the statement of financial position is $40 million.Inventory adjustmentGoods delivered (deduct from closing inventory)(2,700)Cost of goods sold (7,800 x 100/130) (add to closing inventory)6,000––––––Net increase in closing inventory3,300––––––(ii)Factored receivablesAs Highwood still bears the risk of the non-payment of the receivables, the substance of this transaction is a loan. Thus the receivables must remain on Highwood’s statement of financial position and the proceeds of the ‘sale’ treated as a current liability. The difference between the factored receivables (10,000) and the loan received (8,700) of $1·3 million, which has been charged to administrative expenses, should be reversed except for $600,000 which should be treated as an allowance for uncollectible receivables.(iii)8% convertible loan noteThis is a compound financial instrument having a debt (liability) and an equity component. These must be quantifiedand accounted for separately:year ended 31 March outflow10%present value$’000$’00020112,4000·912,18420122,4000·831,992201332,4000·7524,300–––––––Liability component 28,476Equity component (balance)1,524–––––––Proceeds of issue30,000–––––––The finance cost for the year will be $2,848,000 (28,476 x 10% rounded). Thus $448,000 (2,848 – 2,400 interestpaid) will be added to the carrying amount of the loan note in the statement of financial position.(iv)Deferred taxcredit balance required at 31 March 2011 (27,000 x 25%)6,750revaluation of property (w (i))(3,750)balance at 1 April 2010(2,600)––––––charge to income statement400––––––(v)The dividend paid in November 2010 was $5·6 million. This is based on 112 million shares in issue (56,000 x 2 –the shares are 50 cents each) times 5 cents.3(a)Bengal – Statement of cash flows for the year ended 31 March 2011:(Note: figures in brackets are in $’000)$’000$’000Cash flows from operating activities:Profit before tax5,250Adjustments for:depreciation of non-current assets 640finance costs650increase in inventories (3,600 – 1,800)(1,800)increase in receivables (2,400 – 1,400)(1,000)increase in payables (2,800 – 2,150)650–––––––Cash generated from operations 4,390Finance costs paid(650)Income tax paid (w (i))(1,250)–––––––Net cash from operating activities2,490Cash flows from investing activities:Purchase of property, plant and equipment (w (ii))(6,740)Purchase of intangibles (6,200)––––––Net cash used in investing activities(12,940)Cash flows from financing activities:Issue of 8% loan note7,000Equity dividends paid (w (iii))(750)––––––Net cash from financing activities6,250–––––––Net decrease in cash and cash equivalents (4,200)Cash and cash equivalents at beginning of period4,000–––––––Cash and cash equivalents at end of period(200)–––––––Workings(i)Income tax paid:$’000Provision b/f (1,200)Income statement tax charge (2,250)Provision c/f – current2,200––––––Balance – cash paid(1,250)––––––(ii)Property, plant and equipment:$’000Balance b/f5,400Depreciation(640)Balance c/f–current(9,500)–held for sale(2,000)––––––Balance – cash purchases6,740––––––(iii)Equity dividendRetained earnings b/f2,250Profit for period3,000Retained earnings c/f(4,500)––––––Balance – dividend paid750––––––(b)Note: references to 2011 and 2010 refer to the periods ending 31 March 2011 and 2010 respectively.It is understandable that the shareholder’s observations would cause concern. A large increase in sales revenue has not led to a proportionate increase in profit. T o assess why this has happened requires consideration of several factors that could potentially explain the results. Perhaps the most obvious would be that the company has increased its sales by discounting prices (cutting profit margins). Interpreting the ratios in the appendix rules out this possible explanation as the gross profit margin has in fact increased in 2011 (up from 40% to 42%). Another potential cause of the disappointing profit could be overheads (distribution costs and administrative expenses) getting out of control, perhaps due to higher advertising costs or more generous incentives to sales staff. Again, when these expenses are expressed as a percentage of sales, this does not explain the disparity in profit as the ratio has remained at approximately 19%. What is evident is that there has been a very large increase in finance costs which is illustrated by the interest cover deteriorating from 36 times to only 9 times. The other ‘culprit’ is the taxation expense: expressed as a percentage of pre-tax accounting profit, the effective rate of tax has gone from 28·6% in 2010 to 42·9% in 2011. There are a number of factors that can affect a period’s effective tax rate (including under-or over-provisions from the previous year), but judging from the figures involved, it would seem likely that either there was a material adjustment from an under-provision of tax in 2010 or there has been a considerable increase in the rate levied by the taxation authority.As an illustration of the effect, if the same effective tax rate in 2010 had applied in 2011, the after-tax profit would have been $3,749,000 (5,250 x (100% – 28·6%) rounded) and, using this figure, the percentage increase in profit would be 50% ((3,749 – 2,500)/2,500 x 100) which is slightly higher than the percentage increase in revenue. Thus an increase in the tax rate and increases in finance costs due to much higher borrowings more than account for the disappointing profit commented upon by the concerned shareholder.The other significant observation in comparing 2011 with 2010 is that the company has almost certainty acquired another business. The increased expenditure on property, plant and equipment of $6,740,000 and the newly acquired intangibles (probably goodwill) of $6·2 million are not likely to be attributable to organic or internal growth. Indeed the decrease in the bank balance of $4·2 million and the issue of $7 million loan notes closely match the increase in non-current assets. This implies that the acquisition has been financed by cash resources (which the company looks to have been building up) and issuing debt (no equity was issued). This in turn explains the dramatic increase in the gearing ratio (and the consequent fall in interest cover) and the fall in the current ratio (due to the use of cash resources for the business purchase). Although the current ratio at 1·5:1 is on the low side of acceptability, it does include $2 million of non-current assets held for sale. A better comparison with 2010 is the current ratio at 1·2:1 which excludes the non-current assets held for sale. It may be that these assets were part of the acquisition of the new business and are ‘surplus to requirements’, hence they have been made available for sale. They are likely to be valued at their ‘fair value less cost to sell’ and the prospect of their sale should be highly probable (normally within one year). That said, if the assets are not sold in the near future, it would call into question the acceptability of the company’s current ratio which may cause short-term liquidity problems.The overall performance of Bengal has deteriorated (as measured by its ROCE) from 38·9% to 31·9%. This is mainly due toa lower rate of net asset turnover (down from 1·9 to 1·4 times), however when the turnover of property, plant and equipmentis considered (down from 3·2 to 2·7 times) the asset utilisation position is not as bad as it first looks, in effect it is the presence of the acquired intangibles that is mostly responsible for the fall.Further, it may be that the new business was acquired part way through the year and thus the returns from this element may be greater next year when a full period’s profits will be reported. It may also be that the integration of the new business requires time (and expense) before it delivers its full potential.In summary, although reported performance has deteriorated, it may be that future results will benefit from the current year’s investment and show considerable improvement. Perhaps some equity should have been issued to lower the company’s gearing (and finance costs) and if the dividend of $750,000 had been suspended for a year there would be a better liquid position.AppendixCalculation of ratios (figures in $’000):20112010Gross profit margin (10,700/25,500 x 100)42·0%40·0 %Operating expenses % (4,800/25,500 x 100)18·8%19·1%Interest cover ((5,250 + 650)/650)9 times36 timesEffective rate of tax (2,250/5,250)42·9%28·6%Return on capital employed (ROCE) ((5,250 + 650)/(9,500 + 9,000) x 100)31·9%38·9%Net asset turnover (25,500/18,500)1·4 times1·9 timesProperty, plant and equipment turnover (25,500/9,500)2·7 times3·2 timesNet profit (before tax) margin (5,250/25,500 x 100)20·6%20·3%Current ratio (8,000/5,200)1·5:12·1:1(including non-current assets held for sale in 2011)Alternative current ratio (6,000/5,200)1·2:12·1:1(excluding non-current assets held for sale in 2011)Gearing (debt/equity) (9,000/9,500)94·7%27·6%The figures for the calculation of 2011’s ratios are given in brackets; the figures for 2010 are derived from the equivalent figures.4(a)T wo important and interrelated aspects of relevance are its confirmatory and predictive roles. The Framework specifically states that to have predictive value, information need not be in the form of an explicit forecast. The serious drawback of forecast information is that it does not have (strong) confirmatory value; essentially it will be an educated guess.IFRS examples of enhancing the predictive value of historical financial statements are:(i)The disclosure of continuing and discontinued operations. This allows users to focus on those areas of an entity’soperations that will generate its future results. Alternatively it could be thought of as identifying those operations whichwill not yield profits or, perhaps more importantly, losses in the future.(ii)The separate disclosure of non-current assets held for sale. This informs users that these assets do not form part of an entity’s long-term operating assets.(iii)The separate disclosure of material items of income or expense (e.g. a gain on the disposal of a property). These are often ‘one off’ items that may not be repeated in future periods. They are sometimes called ‘exceptional’ items ordescribed in the Framework as ‘unusual, abnormal and infrequent’ items.(iv)The presentation of comparative information (and the requirement for the consistency of its presentation such as retrospective application of changes in accounting policies) allows for a degree of trend analysis. Recent trends may helppredict future performance.(v)The requirement to disclose diluted EPS is often described as a ‘warning’ to shareholders of what EPS would have been if any potential (future) equity shares such as convertibles and options had already been exercised.(vi)The Framework’s definitions of assets (resources from which future economic benefits should flow) and liabilities (obligations which will result in a future outflow of economic benefits) are based on an entity’s future prospects ratherthan its past costs.Note: other examples may be acceptable.Tutorial note:The IASB revised framework ‘The Conceptual Framework for Financial Reporting’ is not listed as an examinable document in 2011. However, candidates using this knowledge will be given equal credit.(b)(i)The estimated profit after tax for Rebound for the year ending 31 March 2012 would be:$’000Existing operations (continuing only) ($2 million x 1·06) 2,120Newly acquired operations ($450,000 x 12/8 months x 1·08) 729––––––2,849––––––Note: the profit from newly acquired operations in 2011 was for only eight months; in 2012 it will be for a full year.(ii)Diluted EPS on continuing operations2011comparative 2010$2,730,000 (see workings) x 10018·7 cents–––––––––––––––––––––––14,600,000 (see workings)$2,030,000 (see workings) x 10014·5 cents–––––––––––––––––––––––14,000,000 (see workings)Workings (figures in brackets are in ’000 or $’000)The earnings are calculated as follows:2011comparative 2010$’000$’000 Continuing operations:Existing operations 2,0001,750Newly acquired operations450nilRe convertible loan stock (see below)280280––––––––––––2,7302,030––––––––––––The weighted average number of shares (in ’000) is calculated as follows:At 1 April 2009 (3,000 x 4 (i.e. shares of 25 cents each))12,00012,000Re convertible loan stock (see below)2,0002,000Re share options (see below) 600(weighted for six months)nil––––––––––––––14,60014,000––––––––––––––Convertible loan stock:On an assumed conversion there would be an increase in income of $280,000 ($5,000 x 8% x 0·7 after tax).There would be an increase in the number of shares of 2 million ($5,000/$100 x 40)These adjustments would apply fully to both years.Share options:Exercising the options would create proceeds of $2 million (2,000 x $1). At the market price of $2·50 each this wouldbuy 800,000 shares ($2,000/$2·50) thus the diluting number of shares is 1·2 million (2,000 – 800).This would be weighted for 6/12 in 2011 as the grant was half way through the year.5MoccaIncome statement year ended 31 March 2011$’000Revenue recognised ((65% (w (i)) x 12,500) – 3,500 in 2010)4,625Contract expenses recognised (balancing figure)(3,515)––––––Profit recognised ((65% (w (ii)) x 3,000) – 840 in 2010)1,110––––––Statement of financial position as at 31 March 2011Non-current assetsPlant (8,000 – 2,500 (w (iii)))5,500Current assetsReceivables (8,125 –7,725)400Amounts due from customers – Note 11,125Note 1Amounts due from customers:Contract costs incurred (w (iii))7,300Recognised profits (3,000 x 65%)1,950––––––9,250Progress billings(8,125)––––––Amounts due from customers1,125––––––Workings (in $’000)(i)Percentage complete:Agreed value of work completed at year end8,125–––––––Contract price12,500Percentage completed (8,125/12,500 x 100)65%(ii)Estimated profit:$’000 Contract price12,500 Plant depreciation (8,000 x 24/48 months)(4,000) Other costs(5,500)–––––––Profit3,000–––––––(iii)Contract costs incurred:Plant depreciation (8,000 x 15/48 months)2,500 Other costs 4,800––––––7,300––––––Fundamentals Level – Skills Module, Paper F7 (INT)Financial Reporting (International) June 2011 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)(i)Statement of comprehensive incomerevenue2cost of sales4distribution costs and administrative expenses1finance costs1income tax expense1non-controlling interest in profit for year1½other comprehensive income2non-controlling interest in other comprehensive income1½14(ii)Consolidated equityshare capital1share premium1revaluation reserve (land)1other equity reserve1retained earnings1½non-controlling interest 1½7(b) 1 mark per valid point 4Total for question252(i)Statement of comprehensive incomerevenue½cost of sales4distribution costs½administrative expenses 1½finance costs1½income tax expense1½other comprehensive income1½11(ii)Statement of changes in equityopening balance on retained earnings1other component of equity (equity option) 1dividend paid 1comprehensive income14(iii)Statement of financial positionproperty, plant and equipment2½inventory1trade receivables 1deferred tax1issue of 8% loan note1½liability to Easyfinance1bank overdraft½trade payables½current tax payable110Total for question25Marks 3(a)Statement of cash flowsprofit before tax½depreciation of non-current assets ½finance costs added back½working capital items1½finance costs paid½income tax paid1purchase of property, plant and equipment 1½purchase of intangibles½8% loan note½equity dividends paid1cash and cash equivalents at beginning of period½cash and cash equivalents at end of period½9(b) 1 mark per valid point (including up to 5 for appropriate ratios)16Total for question25 4(a) 1 mark per valid point/example 6(b)(i)profit from continuing operations1profit from newly acquired operations23 (ii)EPS for 2010 and 2011 at 3 marks each6Total for question15 5revenue 3 profit 1½plant in statement of financial position 1½amounts due from customers 1 trade receivables 1 disclosure note2Total for question1022。
ACCA考试F7考试历年真题精选及详细解析1109-59
B It is credited to profit or loss
C It is debited to profit or loss
D It is deducted from positive goodwill
C Delta is located in a country where local accounting standards are compulsory and these are not compatible with IFRS used by the rest of the group
D Gamma is located in a country where a military coup has taken place and Petre has lost control of the investment for the foreseeable future
Allocated goodwill 50,000
Product patent 20,000
Net current assets (at net realisable value) 30,000
––––––––
300,000
––––––––
As a result of adverse publicity, Fyngle has a recoverableamount of only $200,000.
B Beta is a bank and its activity is so different from the engineering activities of the rest of the group that it would be meaningless to consolidate it
12月ACCA考试F4习题及答案
12月ACCA考试F4习题及答案2016年12月ACCA考试F4精选习题及答案第一部分语法及词汇练习1. John regretted __ to the meeting last week.A not goingB not to goC not having been goingD not to be going2. We regret to inform you that the materials you ordered are __.A out of workB out of stockC out of reachD out of practice3. They __ in spite of the extremely difficult conditions.A carried outB carried offC carried onD carried forward4. Mrs. Brown is supposed __ for Italy last week.A to have leftB to be leavingC to leaveD to have been left5. He’s watching TV? He’s __ to be cleaning his room.A knownB consideredC regardedD supposed6. My camera can be __ to take pictures in cloudy or sunny conditions.A treatedB adjustedC adoptedD remedied7. A new technique __, the yields as a whole increased by 20 percent.A working outB having worked outC having been worked outD to have been worded out8. Between 1974 and 1997, the number of overseas visitors expanded __ 27%.A byB forC toD in9. Children who are over-protected by their parents may become __.A hurtB damagedC spoiledD harmed10. When Mr. Jones gets old, he will __ over his business tohis son.A takeB handC thinkD get11. We had a party last month, and it was a lot of fun, so let’s have __ one this month.A anotherB moreC the otherD other12. No agreement was reached in the discussion as neither side would give way to __.A the otherB any otherC anotherD other13. It was difficult to guess what her __ to the news would be.A impressionB reactionC commentD opinion14. I decided to go to the library as soon as I __.A finish what I didB finished what I didC would finish what I was doingD finished what I was doing15. We are interested in the weather because it __ us so directly what we wear, what we do, and even how we feel.A benefitsB affectsC guidesD effects16. Will all those __ the proposal raise their hands?A in relation toB in contrast toC in excess ofD in favor of17. Children are very curious __.A at heartB in personC on purposeD by nature18. The match was cancelled because most of the members __ a match without a standard court.A objected to havingB were objected to haveC objected to haveD were objected to having19. The man in the corner confessed to __ a lie to the manager of the company.A have toldB having toldC being toldD be told第二部分定语从句长难句成分分析及翻译练习5. Television, it is often said, keeps one informed about current events, allow one to follow the latest developments inscience and politics, and offers an endless series of programs which are both instructive and entertaining.人们常说, 通过电视可以了解时事, 掌握科学和政治的最新动态。
ACCA_F7_2007年12月试题
ALL FIVE questions are compulsory and MUST be attempted1On 1 October 2006 Plateau acquired the following non-current investments:– 3 million equity shares in Savannah by an exchange of one share in Plateau for every two shares in Savannah plus $1 per acquired Savannah share in cash. The market price of each Plateau share at the date of acquisition was $6.–30% of the equity shares of Axle at a cost of $7·50 per share in cash.Only the cash consideration of the above investments has been recorded by Plateau.The summarised draft balance sheets of the three companies at 30 September 2007 are:Plateau Savannah Axle$’000 $’000 $’000 AssetsNon-current assetsProperty, plant and equipment18,40010,40018,000Investments in Savannah and Axle12,000nil nilAvailable-for-sale investments6,500nil nil–––––––––––––––––––––36,90010,40018,000 Current assetsInventory6,9006,2003,600T rade receivables3,2001,5002,400–––––––––––––––––––––T otal assets47,00018,10024,000–––––––––––––––––––––Equity and liabilitiesEquity shares of $1 each10,0004,0004,000Retained earnings–at 30 September 200616,0006,50011,000–for year ended 30 September 20078,0002,4005,000–––––––––––––––––––––34,00012,90020,000 Non-current liabilities7% Loan notes5,0001,0001,000Current liabilities8,0004,2003,000–––––––––––––––––––––T otal equity and liabilities47,00018,10024,000–––––––––––––––––––––The following information is relevant:(i)At the date of acquisition the fair values of Savannah’s assets were equal to their carrying amounts with theexception of Savannah’s land which had a fair value of $500,000 below its carrying amount; it was written down by this amount shortly after acquisition and has not changed in value since then.(ii)On 1 October 2006, Plateau sold an item of plant to Savannah at its agreed fair value of $2·5 million. Its carrying amount prior to the sale was $2 million. The estimated remaining life of the plant at the date of sale was five years (straight-line depreciation).(iii)During the year ended 30 September 2007 Savannah sold goods to Plateau for $2·7 million. Savannah had marked up these goods by 50% on cost. Plateau had a third of the goods still in its inventory at 30 September 2007. There were no intra-group payables/receivables at 30 September 2007.(iv)Impairment tests on 30 September 2007 concluded that the value of the investment in Axle was not impaired, but consolidated goodwill was impaired by $900,000.(v)The available-for-sale investments are included in Plateau’s balance sheet (above) at their fair value on 1 October 2006, but they have a fair value of $9 million at 30 September 2007(vi)No dividends were paid during the year by any of the companies.Required:(a)Prepare the consolidated balance sheet for Plateau as at 30 September 2007.(20 marks)(b) A financial assistant has observed that the fair value exercise means that a subsidiary’s net assets are includedat acquisition at their fair (current) values in the consolidated balance sheet. The assistant believes that it is inconsistent to aggregate the subsidiary’s net assets with those of the parent because most of the parent’s assets are carried at historical cost.Required:Comment on the assistant’s observation and explain why the net assets of acquired subsidiaries are consolidated at acquisition at their fair values.(5 marks)(25 marks)2The following trial balance relates to Llama, a listed company, at 30 September 2007:$’000$’000Land and buildings –at valuation 1 October 2006 (note (i))130,000Plant –at cost (note (i))128,000Accumulated depreciation of plant at 1 October 200632,000Investments –at fair value through profit and loss (note (i))26,500Investment income 2,200Cost of sales (note (i))89,200Distribution costs11,000Administrative expenses 12,500Loan interest paid800Inventory at 30 September 2007 37,900Income tax (note (ii))400T rade receivables 35,100Revenue180,400Equity shares of 50 cents each fully paid 60,000Retained earnings at 1 October 200625,5002% loan note 2009 (note (iii))80,000T rade payables34,700Revaluation reserve (arising from land and buildings)14,000Deferred tax11,200Suspense account (note (iv))24,000Bank6,600––––––––––––––––471,000471,000––––––––––––––––The following notes are relevant:(i)Llama has a policy of revaluing its land and buildings at each year end. The valuation in the trial balance includes a land element of $30 million. The estimated remaining life of the buildings at that date (1 October 2006) was 20 years. On 30 September 2007, a professional valuer valued the buildings at $92 million with no change in the value of the land. Depreciation of buildings is charged 60% to cost of sales and 20% each to distribution costs and administrative expenses.During the year Llama manufactured an item of plant that it is using as part of its own operating capacity. The details of its cost, which is included in cost of sales in the trial balance, are:$’000Materials cost 6,000Direct labour cost 4,000Machine time cost8,000Directly attributable overheads6,000The manufacture of the plant was completed on 31 March 2007 and the plant was brought into immediate use,but its cost has not yet been capitalised.All plant is depreciated at 121/2% per annum (time apportioned where relevant) using the reducing balance method and charged to cost of sales. No non-current assets were sold during the year.The fair value of the investments held at fair value through profit and loss at 30 September 2007 was $27·1 million.(ii)The balance of income tax in the trial balance represents the under/over provision of the previous year’s estimate.The estimated income tax liability for the year ended 30 September 2007 is $18·7 million. At 30 September 2007 there were $40 million of taxable temporary differences. The income tax rate is 25%. Note: you may assume that the movement in deferred tax should be taken to the income statement.(iii)The 2% loan note was issued on 1 April 2007 under terms that provide for a large premium on redemption in2009. The finance department has calculated that the effect of this is that the loan note has an effective interest rate of 6% per annum.(iv)The suspense account contains the corresponding credit entry for the proceeds of a rights issue of shares made on 1 July 2007. The terms of the issue were one share for every four held at 80 cents per share. Llama’s share price immediately before the issue was $1. The issue was fully subscribed.Required:Prepare for Llama:(a)An income statement for the year ended 30 September 2007.(9 marks)(b) A balance sheet as at 30 September 2007.(13 marks)(c) A calculation of the earnings per share for the year ended 30 September 2007.(3 marks) Note: a statement of changes in equity is not required.(25 marks)3Shown below are the recently issued (summarised) financial statements of Harbin, a listed company, for the year ended 30 September 2007, together with comparatives for 2006 and extracts from the Chief Executive’s report that accompanied their issue.Income statement 20072006$’000$’000 Revenue 250,000180,000Cost of sales(200,000)(150,000)––––––––––––––––Gross profit50,00030,000Operating expenses(26,000)(22,000)Finance costs (8,000)(nil)––––––––––––––––Profit before tax16,0008,000Income tax expense (at 25%)(4,000)(2,000)––––––––––––––––Profit for the period12,0006,000––––––––––––––––Balance sheetNon-current assetsProperty, plant and equipment 210,00090,000Goodwill10,000nil––––––––––––––––220,00090,000––––––––––––––––Current assetsInventory 25,00015,000T rade receivables13,0008,000Bank nil14,000––––––––––––––––38,00037,000––––––––––––––––T otal assets258,000127,000––––––––––––––––Equity and liabilitiesEquity shares of $1 each 100,000100,000Retained earnings 14,00012,000––––––––––––––––114,000112,000––––––––––––––––Non-current liabilities8% loan notes100,000nil––––––––––––––––Current liabilitiesBank overdraft17,000nilT rade payables23,00013,000Current tax payable4,0002,000––––––––––––––––44,00015,000––––––––––––––––T otal equity and liabilities258,000127,000––––––––––––––––Extracts from the Chief Executive’s report:‘Highlights of Harbin’s performance for the year ended 30 September 2007:an increase in sales revenue of 39%gross profit margin up from 16·7% to 20%a doubling of the profit for the period.In response to the improved position the Board paid a dividend of 10 cents per share in September 2007 an increase of 25% on the previous year.’You have also been provided with the following further information.On 1 October 2006 Harbin purchased the whole of the net assets of Fatima (previously a privately owned entity) for $100 million. The contribution of the purchase to Harbin’s results for the year ended 30 September 2007 was:$’000Revenue 70,000Cost of sales(40,000)–––––––Gross profit30,000Operating expenses(8,000)–––––––Profit before tax22,000–––––––There were no disposals of non-current assets during the year.The following ratios have been calculated for Harbin for the year ended 30 September 2006:Return on year-end capital employed7·1%(profit before interest and tax over total assets less current liabilities)Net asset (equal to capital employed) turnover 1·6Net profit (before tax) margin4·4%Current ratio 2·5Closing inventory holding period (in days)37T rade receivables’ collection period (in days)16T rade payables’ payment period (based on cost of sales) (in days)32Gearing (debt over debt plus equity)nilRequired:(a)Calculate ratios for Harbin for the year ended 30 September 2007 equivalent to those calculated for the yearended 30 September 2006 (showing your workings). (8 marks) (b)Assess the financial performance and position of Harbin for the year ended 30 September 2007 comparedto the previous year. Your answer should refer to the information in the Chief Executive’s report and the impact of the purchase of the net assets of Fatima.(17 marks)(25 marks)4(a)An important requirement of the IASB’s Framework for the Preparation and Presentation of Financial Statements (Framework) is that in order to be reliable, an entity’s financial statements should represent faithfully the transactions and events that it has undertaken.Required:Explain what is meant by faithful representation and how it enhances reliability.(5 marks)(b)On 1 April 2007, Fino increased the operating capacity of its plant. Due to a lack of liquid funds it was unableto buy the required plant which had a cost of $350,000. On the recommendation of the finance director, Fino entered into an agreement to lease the plant from the manufacturer. The lease required four annual payments in advance of $100,000 each commencing on 1 April 2007. The plant would have a useful life of four years and would be scrapped at the end of this period. The finance director, believing the lease to be an operating lease, commented that the agreement would improve the company’s return on capital employed (compared to outright purchase of the plant).Required:(i)Discuss the validity of the finance director’s comment and describe how IAS 17 Leases ensures thatleases such as the above are faithfully represented in an entity’s financial statements.(4 marks) (ii)Prepare extracts of Fino’s income statement and balance sheet for the year ended 30 September 2007 in respect of the rental agreement assuming:(1)It is an operating lease(2 marks)(2)It is a finance lease (use an implicit interest rate of 10% per annum).(4 marks)(15 marks)5Product development costs are a material cost for many companies. They are either written off as an expense or capitalised as an asset.Required:(a)Discuss the conceptual issues involved and the definition of an asset that may be applied in determiningwhether development expenditure should be treated as an expense or an asset.(4 marks)(b)Emerald has had a policy of writing off development expenditure to the income statement as it was incurred. Inpreparing its financial statements for the year ended 30 September 2007 it has become aware that, under IFRS rules, qualifying development expenditure should be treated as an intangible asset. Below is the qualifying development expenditure for Emerald:$’000Year ended 30 September 2004300Year ended 30 September 2005240Year ended 30 September 2006800Year ended 30 September 2007400All capitalised development expenditure is deemed to have a four year life. Assume amortisation commences at the beginning of the accounting period following capitalisation. Emerald had no development expenditure before that for the year ended 30 September 2004.Required:Treating the above as the correction of an error in applying an accounting policy, calculate the amounts which should appear in the income statement and balance sheet (including comparative figures), and statement of changes in equity of Emerald in respect of the development expenditure for the year ended 30 September 2007.Note: ignore taxation.(6 marks)(10 marks)End of Question Paper。
12月ACCA考试F4练习题及答案
12月ACCA考试F4练习题及答案Additional information:In January 2009 Company A received the donation of a machine.The value added tax(VAT) invoice for the machine showed that it had cost RMB 150,000 plus VAT of RMB 20,000.No entry in respect of the donation of this machine has been recorded in the accounting system of Company A.Required:(i)Briefly explain the enterprise income tax(EIT) treatment of:-the donated machine;and-each of the items listed in Notes 1 to 3.(15 marks)(ii)Calculate the correct amount of taxable profits and the enterprise income tax(EIT) payable by Company A for the year 2009.(7 marks)(b)Company B is a resident enterprise,which was incorporated in the year 1990.The table below shows the taxable profits of Company B,as agreed by the tax bureau,for the years 2002 to 2009 inclusive.Year 2002 2003 2004 2005 2006 2007 2008 2009Taxable profits (in RMB) (900,000) 100,000 (300,000) 100,000 100,000 200,000 (100,000) 850,000Required:(i)Briefly explain the tax treatment of losses,including the period for the offset of losses;(2 marks)(ii)State,giving reasons,how much enterprise income tax(EIT)will be payable by Company B for each of the years 2008 and 2009.(4 marks)(c)Define the term'resident enterprise'for the purposes of enterprise income tax(EIT)and state the differences in the scope of the assessment of EIT for resident and non-resident enterprises.(7 marks)(35 marks)2(a)Mr Zhang,a Chinese citizen,is a University professor.He had the following income for the month of January 2009:(1)Monthly employment income of RMB 18,000 and a bonus for the year 2008 of RMB 12,000.(2)Income of RMB 18,000 for publishing a book on 6 January 2009.One of the chapters of the book was published in a magazine as a four-day series commencing on 19 January 2009 for which Mr Zhang received income of RMB 1,000 per day.(3)A net gain of RMB 12,000 from trading in the A-shares market.(4)Income of RMB 4,800 for giving four separate seminars for Enterprise X.(5)A translation fee of RMB 5,200 from a media publisher.(6)Received RMB 300,000 from the sale of the property(50 square metres)that he had lived in for six years.Mr Zhang had acquired the property for RMB 180,000.(7)Gross interest income of RMB 6,000 from a bank deposit.(8)Received RMB 11,000 as insurance compensation.Required:Calculate the individual income tax(IIT)payable(if any)by Mr Zhang on each of his items of income for the month of January2009,clearly identifying any item which is tax exempt.(10 marks)(b)Mr Smith,who is a UK national,is employed by a UK construction company to work in Shanghai on a project that will last for a period of 18 consecutive months.Required:(i)State,giving reasons,whether Mr Smith will be a resident taxpayer or a non-resident taxpayer in the PRC and the scope of his individual income tax(IIT)assessment;(2 marks)(ii)List any THREE fringe benefits that can be provided to Mr Smith that will not be subject to individual income tax(IIT)in China;(3 marks)(iii)Briefly explain the requirements for the reporting and payment of the individual income tax(IIT)due for Mr Smith if he is paid RMB 30,000 per month.(5 marks)。
ACCA历年考题f2_2006_dec_ppq
Sales Production
Month 1 Month 2
3,800
4,400
3,900
4,200
The opening inventory for Month 1 was 400 units. Profits or losses have been calculated for each month using both absorption and marginal costing principles.
(1 mark)
3 Regression analysis is being used to find the line of best fit (y = a + bx) from eleven pairs of data. The calculations have produced the following information: Σx = 440, Σy = 330, Σx2 = 17,986, Σy2 = 10,366, Σxy = 13,467 and b = 0.69171
Units (2 marks)
2 The following assertions relate to financial accounting and to cost accounting: (i) The main users of financial accounting information are external to an organisation. (ii) Cost accounting is that part of financial accounting which records the cash received and payments made by an organisation.
2016年12月ACCA考试《高级财务管理》真题及答案
2016年12月ACCA考试《高级财务管理》真题及答案2016年12月ACCA考试《高级财务管理》真题(总分：100.00，做题时间：150分钟)案例分析题Section A为必做题，Section B任意选两题。
(总题数：4，分数：125.00)Section A – This ONE question is compulsory and MUST be attemptedMorada Co is involved in offering bespoke travel services and maintenance services. In addition to owning a few hotels, it has built strong relationships with companies in the hospitality industry all over the world. It has a good reputation of offering unique, high quality holiday packages at reasonable costs for its clients. The strong relationships have also enabled it to offer repair and maintenance services to a number of hotel chains and cruise ship companies.Following a long discussion at a meeting of the board of directors (BoD) about the future strategic direction which Morada Co should follow, three directors continued to discuss one particular issue over dinner. In the meeting, the BoD had expressed concern that Morada Co was exposed to excessive risk and therefore its cost of capital was too high. The BoD feared that several good projects had been rejected over the previous two years, because they did not meet Morada Co’s high cost of capital threshold. Each director put forward a proposal, which they then discussed in turn. At the conclusion of the dinner, the directors decided to ask for a written report on the proposals put forward by the first director and the second director, beforetaking all three proposals to the BoD for further discussion.First director’s proposalThe first director is of the opinion that Morada Co should reduce its debt in order to mitigate its risk and therefore reduce its cost of capital. He proposes that the company should sell its repair and maintenance services business unit and focus just on offering bespoke travel services and hotel accommodation. In the sale, the book value of non-current assets will reduce by 30% and the book value of current liabilities will reduce by 10%. It is thought that the non-current assets can be sold for an after-tax profit of 15%.The first director suggests that the funds arising from the sale of the repair and maintenance services business unit and cash resources should be used to pay off 80% of the long-term debt. It is estimated that as a result of this, Morada Co’s credit rating will improve from Baa2 to A2.Second director’s proposalThe second director is of the opinion that risk diversification is the best way to reduce Morada Co’s risk and therefore reduce its cost of capital. He proposes that the company raise additional funds using debt finance and then create a new strategic business unit. This business unit will focus on construction of new commercial properties.The second director suggests that $70 million should be borrowed and used to invest in purchasing non-current assets for the construction business unit. The new debt will be issued in the form of four-year redeemable bonds paying an annual coupon of 6·2%. It is estimated that if this amount of debt is rai sed, then Morada Co’s credit rating will worsen to Ca3 from Baa2. Current liabilities are estimated to increase to $28 million.Third director’s proposalThe third director is of the opinion that Morada Co does not need to undertake the proposals suggested by the first director and the second director just to reduce the company’s risk profile. She feels that the above proposals require a fundamental change in corporate strategy and should be considered in terms of more than just tools to manage risk. Instead, she proposes that a risk management system should be set up to appraise Morada Co’s current risk profile, considering each type of business risk and financial risk within the company, and taking appropriate action to manage the risk where it is deemed necessary.Morada Co, extracts from the forecast financial position for the coming yearOther financial informationMorada Co’s forecast after-tax earnings for the coming year are expected to be $28 million. It is estimated that the company will make a 9% return after-tax on any new investment in non-current assets, and will suffer a 9% decrease in after-tax earnings on any reduction in investment in non-current assets.Morada Co’s current share price is $2·88 per share.According to the company’s finance division, it is very difficult to predict how the share price will react to either the proposal made by the first director or the proposal made by the second director. Therefore it has been assumed that the share price will not change following either proposal.The finance division has further assumed that the proportion of the book value of non-current assets invested in each business unit gives a fair representation of the size of each business unit within Morada Co.Morada Co’s equity beta is estimated at 1·2, while the asset beta of the repairs and maintenance services business unit is estimated to be 0·65. The relevant equity beta for the new, larger company including the construction unit relevant to the second director’s proposals has been estimated as 1·21.The bonds are redeemable in four years’ time at face value. For the purposes of estimating the cost of capital, it can be assumed that debt beta is zero. However, the four-year credit spread over the risk free rate of return is 60 basis points for A2 rated bonds, 90 basis points for Baa2 rated bonds and 240 basis points for Ca3 rated bonds.A tax rate of 20% is applicable to all companies. The current risk free rate of return is estimated to be 3·8% and the market risk premium is estimated to be 7%.Required:（分数：50）(1).Explain how business risk and financial risk are related; and how risk mitigation and risk diversification can form part of a company’s risk management strategy.（分数：6）________________________________________________________________ _________________ _________正确答案：(The owners or shareholders of a business will accept that it needs to engage in some risky activities in order to generate returns in excess of the risk free rate of return.A business will be exposed to differing amounts of business and financial risk depending on the decisions it makes. Business risk depends on the decisions a business makes with respect to the services and products it offers and consists of the variability in its profits. For example, it could be related to the demand for its products, the rate of innovation, actions of competitors, etc. Financial risk relates to the volatility of earnings due to the financial structure of the business and could be related to its gearing, the exchange rate risk it is exposed to, its credit risk, its liquidity risk, etc. A business exposed to high levels of business risk may not be able to take excessive financial risk, and vice versa, as the shareholders or owners may not want to bear risk beyond an acceptable level.Risk management involves the process of risk identification, of assessing and measuring the risk through the process of predicting, analysing and quantifying it, and then making decisions on which risks to assume, which to avoid, which to retain and which to transfer. As stated above, a business will not aim to avoid all risks, as it will want to generate excess returns. Dependent on factors such as controllability, frequency and severity of the risk, it may decide to eliminate or reduce some risks from the business through risk transfer. Risk mitigation is the process of transferring risks out of a business through, for example, hedging or insurance, or avoiding certain risks altogether. Risk diversification is a process of risk reduction through spreading business activity into different products and services, different geographical areas and/or different industriesto minimise being excessively exposed by focusing exclusively on one product/service.)(2).Prepare a report for the board of directors of Morada Co which:(i) Estimates Morada Co’s cost of equity and cost of capital, based on market value of equity and debt, before any changes and then after implementing the proposals put forward by the first and by the second directors;(17 marks)(ii) Estimates the i mpact of t he first and second directors’ proposals on Morada Co’s forecast after-tax earnings and forecast financial position for the coming year; and (7 marks) (iii) Discusses the impact on Morada Co of the changes proposed by the first and second directors and recommends whether or not either proposal should be accepted. The discussion should include an explanation of any assumptions made in the estimates in (b)(i) and (b)(ii) above. (9 marks) Professional marks will be awarded in part (b) for the format, structure and presentation of the report. (4 marks)（分数：37）________________________________________________________________ _________________。
2006年12月ACCA F1考试真题(上海交大ACCA)
Section A – This ONE question is compulsory and MUST be attempted1Bailey’s is a large toy manufacturer based in a traditional industrial region. Established in the 1970s, it has faced many changes in the market and survived. This has been due in part to employing a largely unskilled low paid staff, and maintaining its main advantage, that of low production costs based on low pay. Most of the production involves repetitive and boring work with little challenge and opportunity for innovation. Although many of the employees have been with the company for some time, there has been a high level of employee turnover.Howe ve r, an unhappy atmosphe re has be e n appare nt for some time. The re has be e n a numbe r of instance s of arguments between the staff, friction between different departments, disturbance, low morale, poor production and general unrest, made worse recently by a decline in business which may lead to staff reduction and redundancy. Poor pay is leading to family problems that are affecting the commitment and motivation of the employees.The business was recently sold to the new owner, Rebecca Stonewall. She is concerned that the negative atmosphere she has found will harm the prospects of the business and is determined to address the issues that have become apparent.She has therefore decided that it is time to take account of opinions and views of the employees in an attempt both to ide ntify the proble ms and to re solve the m. She has appointe d e xte rnal counse llors since she thinks that a programme of individual counselling might be appropriate and is also of the opinion that some form of different or improved approach to motivation might be the answer to the problems at Bailey’s.Required:(a)Define the role that the external counsellor must fulfil at Bailey’s.(3 marks)(b)Describe the skills that a counsellor should possess.(14 marks)(c)Briefly describe three advantages to Bailey’s of counselling.(3 marks)(d)Explain to the management of Bailey’s why consideration should be given to resolving the problems through:(i)job rotation;(5 marks)(ii)job enlargement;(5 marks) (iii)job enrichment.(5 marks)(e)Briefly provide five reasons to the management of Bailey’s why financial rewards could be considered toimprove motivation.(5 marks)(40 marks)2Section B – FOUR questions ONLY to be attempted2T raditionally, the only objective of a business was to make a profit. However, some writers have suggested that this idea is simplistic and that profitability is only one objective amongst many.Required:State and explain Drucker’s eight classifications of objectives.(15 marks)3An organisation has de cide d to compare the be ne fits of promoting e xisting staff with those of appointing e xte rnal candidates and to assess whether the use of external recruitment consultants is appropriate.Required:(a)Describe the advantages of internal promotion.(5 marks)(b)Describe the advantages of external recruitment.(5 marks)(c)Briefly describe five factors to be taken into account when deciding whether to use recruitment consultants.(5 marks)(15 marks)4 A properly conducted appraisal interview is fundamental in ensuring the success of an organisation’s performanceappraisal system.Required:(a)Describe three approaches to conducting the appraisal interview.(5 marks)(b)Describe five main barriers to an effective appraisal interview.(10 marks)(15 marks) 5All managers need to understand the importance of motivation in the workplace.Required:(a)Explain the ‘content theory’ of motivation.(5 marks)(b)Explain what is meant by McGregor’s(i)Theory X;(5 marks)(ii)Theory Y.(5 marks)(15 marks)3[P.T.O.6Communication is important for all organisations and re quire s an unde rstanding of communication flows and channels.Required:(a)Briefly explain the main purposes of the three main formal communication channels in an organisation:(i)Downwards;(3 marks)(ii)Upwards;(3 marks) (iii)Lateral or horizontal.(3 marks)(b)Briefly explain the two types of informal communication known as the grapevine and rumour.(6 marks)(15 marks)End of Question Paper4。
ACCA_F7_2001年12月考试【试题答案】
A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mPart 2 Examination – Paper 2.5(INT)Financial Reporting (International Stream)Answers1(a)Consolidated Balance Sheet of Horsefield as at 31 March 2002:Non-current assets $000$000IntangibleProperty, plant and equipment (8,050 + 3,600)11,650Goodwill (1,170 – 468 (w (i)))702Licence (180 – 60) (w (iii))120________12,472InvestmentsAssociated company (w (v))705Others (4,000 + 910 – 3,240 (Sandfly) – 630 (Anthill) + 120 (fair value)) 1,1601,865______________14,337Current assetsInventory (830 + 340)1,170Accounts receivable (520 + 290 – 40 cash in transit)770Bank (240 + 40 cash in transit)2802,220______________T otal assets16,557________Equity and liabilitiesCapital and reserves:Ordinary shares of $1 each 5,000Accumulated profits (w (iii))8,203________13,203Minority interest (w (ii))364Non-current liabilities10% Loan notes (500 + 240)740Current liabilitiesAccounts payable (420 + 960)1,380Dividend payable to minority (w (iii))10T axation (220 + 250)470Proposed dividend – Horsefield 200Overdraft1902,250______________T otal equity and liabilities16,557________Workings (Note: all figures in $000)(i)Cost of controlInvestments (1,200× 90%× $3)3,240Ordinary shares (90%× 1,200)1,080Pre acq profit (w (iii))720Fair value adjustments (w (iv))270Goodwill1,170____________3,2403,240____________The goodwill relating to Sandfly of $1,170,000 is depreciated over a five-year life at $234,000 per annum for two years= $468,000.(ii)Minority interest Balance c/f364Ordinary shares (10%× 1,200)120Accumulated profits (w (iii))214Fair value adjustments (w (iv))30____________364364____________(iii)Accumulated profitsHorsefield Sandfly HorsefieldSandfly Unrealised profit in inventory (see below)3B/f 7,3002,200Depreciation – licence (180/6× 2 years (w (iv)))60Post acq profit – Sandfly 1,206Minority interest (10%× (2,200 – 60))214Proposed dividend (see below)90Pre-acq profit (90%× 800)720Post acq profit – Anthill (w (v))90Post acq profit (90%× (2,200 – 800 – 60)1,206Goodwill amortisation – Sandfly (w (i))468– Anthill (w (v))12Balance c/f 8,203________________________8,6862,2008,6862,200________________________A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mThe unrealised profit in the inventory sold to the associate is $65,000× 30/130× 2/3× 30% = $3,000.The proposed dividend of Sandfly must be allocated 10% ($10,000) to the minority, and shown as a creditor as it will be paid in the near future, and 90% ($90,000) credited to group reserves.(iv)Fair value adjustments Group share 90%270Investment property 120Minority 10%30Licence 180__________300300__________(v)Associated company – calculation of goodwillInvestment at cost (600× 30%× $3·50)630Net assets on acquisition (30%× 1,700 see below)(510)____Goodwill 120____This is depreciated for six months of a five-year life = $12,000The net assets at the date of acquisition will be equal to the shareholders’ funds at that date:Share capital 600Accumulated profit b/f 800Half of the profits for the year ($600,000× 1/2) 300______1,700______Associated company – carrying value in consolidated balance sheet Investment at cost 630Post acquisition profit (30%× (600× 1/2))90____720Amortisation of goodwill above (12)Unrealised profit in inventory(3)____705____(b)In order for an investment to be classified as an investment in associated company the investor must have ‘significantinfluence’ over the investee. Significant influence is presumed to exist where there is a holding of 20% or more of the voting power unless the investor can clearly demonstrate that this is not the case. Conversely a holding of less than 20% is presumed not to be an associate, unless it can be clearly demonstrated that the investor can exercise significant influence. The voting rights can be held directly or through subsidiaries. IAS 28 ‘Accounting for Investments in Associates’ excludes subsidiaries and joint ventures from the definition of an associate. Presumably this is for clarity as the definition of a subsidiary would also meet the definition of an associate, and whilst joint ventures are in many ways similar to associates, they are covered by a different International Standard and may require a different accounting treatment. Somewhat controversially IAS 28 says that a majority holding by one investor does not preclude another investor having significant influence. An investing company owning a majority holding in another company normally has control over the investee and would thus class it as a subsidiary.In normal circumstances it is difficult to see how a company could be controlled by one entity and be significantly influenced by a different entity unless ‘control’ was passive. The 20% test is not definitive and the following other evidence should be considered.Does the investing company:have representation on the Board of the investee;participate in the policy making processes (operational and financial);have material transactions with investee;interchange managerial personnel with the investee; or provide technical expertise to the investee?A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m2(a)Balance sheet of Deltoid as at 31 March 2002Non-current assets$000$000Property, plant and equipment (12,110 + 600 – 20 (w (i)) – 120 (w (iii)))12,570Current assets Inventory3,850T rade accounts receivable 2,450Bank 2506,550_____________T otal assets19,120_______Equity and liabilities:Capital and reserves:Ordinary shares of 50p each (2,000 + 500 bonus issue)2,500Conversion rights (equity element of convertible loan note (w (iv)))186_______2,686ReservesShare premium1,000Revaluation reserve (3,000 – 500 bonus issue)2,500Accumulated profits (note (i))3,4096,909_____________9,595Non-current liabilitiesEnvironmental provision – revised amount 2,150Finance lease (w (iii))3716% Convertible loan note (2,814 + 101 accrued interest (w (iv)))2,915Current liabilitiesT rade accounts payable 2,820Accrued interest (w (iii))24Finance lease (w (iii))105T axation1,1404,089_____________19,120_______Note: The directors have proposed a final dividend of $400,000 (w (v)).Workings:(i)Recalculation of accumulated profits:Retained profit for year to 31 March 2002 from question 2,000Additional depreciation of: plant (w (ii))(20)leased plant (w (iii))(120)(140)_____Add back: lease rentals (w (iii))150Addition finance costs:for loan notes (281 – 180 (w (iv)))(101)for leased plant (w (iii))(50)(151)_____Additional environmental provision (245 – 180)(65)______Restated retained profit for year1,794Retained profit b/f at 1 April 2001 from question2,500Prior year effect of error in environmental provision (2,150 – 1,200 – 65)(885)______Accumulated profit in balance sheet 3,409______(ii)Change of depreciation policy:current policy group policyYear to 31 March 2001 ((250 – 50)× 2,000/8,000)50(250× 20%)50Year to 31 March 2020 ((250 – 50)× 800/8,000))20(200× 20%)40The net effect of this is an increase in the depreciation charge of $20,000 for the current year only.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m(iii)Leased plant – this has been treated as an operating lease whereas it should be treated as a finance lease:$000Fair value/cost6001st payment 1 April 2001(75)_____525interest to 30 September 2001 (10% for 6 months)26_____5512nd payment 1 October 2001(75)_____capital outstanding at 31 March 2002476accrued interest to 31 March 2002 (10% for 6 months)24_____total outstanding at 31 March 20025003rd payment due 1 April 2002(75)_____425interest to 30 September 2002 (10% for 6 months)21_____4464th payment 1 October 2002(75)_____capital outstanding at 31 March 2003371_____Summarising:–the lease payments of $150,000 should be eliminated from expenses and replaced with a depreciation charge of$120,000 ($600,000× 20% pa)–interest of $50,000 ($26,000 paid, $24,000 accrued) should be included as a finance cost –current liabilities are $24,000 for accrued interest and $105,000 ($476,000 – $371,000) for the capital elementof the finance lease –non-current liabilities $371,000 for the capital element of the finance lease.(iv)The convertible loan note is a compound financial instrument and IAS 32 ‘Financial Instruments: Disclosure andPresentation’ requires that the debt element and the equity element of such instruments are accounted for separately.The amount of the issue proceeds attributable to the conversion rights is classed as equity. This amount is normally calculated as the ‘residue’ after the value of the debt has been calculated:cash flows factor at 10%present value $000year 1 interest 1800·91164year 2 interest 1800·83149year 3 interest 1800·75135year 4 interest, redemption premium and capital 3,4800·682,366______total value of debt component 2,814proceeds of the issue3,000______equity component (residual amount)186______The interest cost in the income statement should be increased from $180 to $281 (10% of 2,814) by accruing $101,and this accrual should be added to the carrying value of the debt.(v)Proposed dividend:At the current value of $2 per share the market capitalisation of the ordinary shares is $10 million (2·5× 2× $2), a 4% yield on this would be $400,000.(b)Basic earnings per share:Profit attributable to ordinary shareholders (w (i))$1,794,000Number of shares ranking for dividend (2·5 million × 2) 5 million Earnings per share 35·9 cents Diluted earnings per share:The potential dilution of the convertible loan note must be assessed. On an assumed conversion to ordinary shares there would be an increase in shares of 1·5 million (3 million × 50/100). The effect on earnings is that there will also be an increase based on the after tax finance costs saved. Although the finance costs are $281,000, only the actual interest paid of $180,000 is available for tax relief, thus the after tax increase in earnings will be $281,000 – ($180,000× 25%) =$236,000. The diluted earnings per share is:Earnings (1,794 basic earnings + 236 above)$2,030,000Number of shares (5 million + 1·5 million)6·5 million Diluted earnings per share 31·2 centsA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m3(a)(i)An impairment loss arises where the carrying value of an asset, or group of assets, is higher than their recoverable amounts. In effect the Standard requires that assets should not appear on a balance sheet at a value which is higher than they are ‘worth’. The recoverable amount of an asset is defined as the higher of its net realisable value (i.e. the amount at which it can be sold for net of direct selling expenses) or its value in use (i.e. its estimated future net cash flows discounted to a present value). IAS 36 ‘Impairment of Assets’ recognises that many assets do not produce independent cash flows and therefore the value in use may have to be calculated for a group of assets – a cash-generating unit.The Standard recognises that it would be too onerous for companies to have to test for impaired assets every year and therefore only requires impairment reviews when there is some indication that an impairment has occurred. The exception to this general principle is where goodwill or other intangible assets are being depreciated over a period of more than 20 years, in which case an impairment review is required at least annually. This also applies where any tangible non-current asset, other than land, has a remaining life of more than 50 years.(ii)Impairments generally arise where there has been an event or change in circumstances. It may be that something has happened to the assets themselves (e.g. physical damage) or there has been a change in the economic environment relating to the assets (e.g. new regulations may have come into force).The Standard gives several examples of indicators of impairment, which may be available from internal or external sources:(i)poor operating results. This could be a current operating loss or a low profit. One year’s losses in itself does notnecessarily mean there has been an impairment, but if this is coupled with previous losses or expected future losses then this is an indication of impairment;(ii) a significant decline in an asset’s market value (in excess of normal depreciation though use or the passage of time)or evidence of obsolescence (through market changes or technology) or physical damage;(iii)evidence of a reduction in the useful economic life or estimated residual value of assets;(iv)adverse changes in the market or economy such as the entrance of a major competitor, new statutory or regulatoryrules or any indicator of value that has been used to value an asset (e.g. on acquisition a brand may have been valued on a ‘multiple of sale revenues’. If subsequent sales were below expectations this may indicate an impairment.);(v) a commitment to a significant reorganisation or restructuring of the business;(vi)loss of key employees or major customers;(vii)increases in long-term interest rates (this could materially impact on value in use calculations thus affecting therecoverable amounts of assets);(viii)where the carrying amount of an enterprise’s net assets is more than its market capitalisation.(b)(i)On the acquisition of a subsidiary, the purchase consideration must be allocated to the fair value of its net assets with the residue being classed as goodwill (or negative goodwill if the assets have a greater fair value than the purchase consideration). IAS 22 ‘Business Combinations’ recognises that it is not always possible to accurately determine the value of some assets at the date of acquisition and therefore allows an ‘investigation period’ up to the end of the first full reporting period following the period of acquisition. As the revision to the value of Halyard’s assets was due to more detailed information becoming available, the fall in its asset values should be treated as an adjustment to provisional valuations made at the time of acquisition. In effect the net assets and goodwill should be restated to $7 million and $5million respectively; the fall of $1 million is not an impairment loss and should not be charged to the income statement.This revision will have the effect of increasing the amortisation of goodwill from $800,000 to $1 million per annum (based on a five-year life). The above assumes that the recoverable value of the company as a whole is greater than $12 million.The fall in value of Mainstay’s assets is the result of events that occurred after the acquisition (i.e. physical damage to the plant) and this does constitute an impairment loss. The plant and machinery should be written down to its recoverable amount and the loss charged to the income statement. On the assumption that the recoverable value of the company as a whole has not fallen, goodwill will not be affected.(ii)On the basis of the original estimates, Shiplake’s earth-moving plant was not impaired, the value in use of $500,000being greater than its carrying value. However due to the ‘dramatic’ increase in interest rates causing Shiplake’s cost of capital to increase, the value in use of the plant will have to be recalculated. As the discount rate has risen this will cause the value in use to fall. There is insufficient information to be able to quantify this fall. If the new discounted value is above the carrying value $400,000 there is still no impairment. If it is between $245,000 and $400,000, this will be the recoverable amount of the plant and it should be written down to this value. As the plant can be sold for $250,000 less selling costs of $5,000, $245,000 is the least amount that the plant should be written down to even if its revised value in use is below this figure.(iii)The treatment of the research and development costs in the year to 31 March 2001 was correct due to the element ofuncertainty at the date. The development costs of $75,000 written off in that same period should not be capitalised at a later date even if the uncertainties leading to its original write off are favourably resolved. The treatment of the development costs in the year to 31 March 2002 is incorrect. The directors’ decision to continue the development is logical as (at the time of the decision) the future costs are estimated at only $10,000 and the future revenues are expected to be $150,000. It is also true that the project is now expected to lead to an overall deficit of $135,000(120 + 75 + 80 + 10 – 150 (in $000)). However, at 31 March 2002 the unexpensed development costs of $80,000are expected to be recovered. Provided the criteria in IAS 38 ‘Intangible Assets’ are met these costs of $80,000 shouldA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mbe recognised as an asset in the balance sheet and ‘matched’ to the future earnings of the new product. Thus the directors’ logic of writing off the $80,000 development cost at 31 March 2002 because of an expected overall loss is flawed. The directors do not have the choice to write off the development expenditure.(iv)An impairment loss relating to an income generating unit should be allocated on the following basis:first to any obviously impaired assets (none in this example);then to goodwill;then to the remaining asset on a pro-rata basis;but no asset should be written down to less than its net realisable value. Applying this to the impairment loss of $130 million ($370m – $240m):Cost Impairment Restated value $000$000$000Goodwill 80,000(80,000)nil Franchise costs 50,000(20,000)30,000 Restored vehicles 90,000nil 90,000Plant 100,000(20,000)80,000Other net assets 50,000(10,000)40,000_________________________370,000(130,000)240,000_________________________Note: the franchise cost cannot be written down to less than its realisable value, the restored vehicles have a realisable value higher than their cost and should not be written down at all, the remaining impairment loss (after the goodwill and franchise write downs) of $30 million is apportioned pro-rata to the plant and the other net assets.4(a)A company that is a wholly owned subsidiary is a related party of its parent company. This means that the financial statements may have been affected by related party transactions. Such transactions may or may not be at ‘arm’s length’ i.e.on normal commercial terms. Even where related party transactions are at arm’s length, it is still important to realise that they are related party transactions. This is because it is quite possible that they would not have occurred but for the relationship.For example a parent company may purchase all of its motor vehicle fleet requirements from one of its subsidiaries on normal commercial terms. Whilst this may appear perfectly proper, it may mean that, but for the custom of its parent, the subsidiary’s sales and profits would have been much less. The types of transaction that may occur between related parties are:purchases and sales, possibly at favourable prices or advantageous settlement terms;provision of finance, again possibly at artificially low (favourable) rates of interest;equipment or other property may be provided under favourable terms;favourable agency arrangements;provision of services, such as sharing technical knowledge from research and development activities or allowing patented goods to be produced under licence; and guarantees for loans or overdrafts.All of the above would mean that there is hardly any area of financial reporting that could not be influenced by the presence of related party transactions with the possibility that this may cause severe distortion of the financial statements.Although there is a requirement to disclose related party relationships and transactions there are exemptions available to wholly owned subsidiaries.Apart from related party issues, a common error when dealing with individual subsidiaries is to assume that the liabilities of an individual subsidiary may be ‘covered’ by assets owned by other members of the group, or that the parent company will guarantee a subsidiary’s liabilities. This is not usually the case.(b)Ms A B Conrad Chief ExecutiveReport on the Financial Position of BreadlineIntroduction:The following report is based on the available financial statements of Breadline for the year to 31 December 2001, which include comparative figures for the year to 2000. The comments have been based on taking the financial statements at face value. T owards the end of the report under ‘causes of concern’ I have expressed matters that could seriously affect the position of Breadline as portrayed in its financial statements.Profitability:Breadline’s overall profitability has shown a creditable improvement from a ROCE of 41% to 47·1%. Calculation of the asset turnover and profit margins reveal that this improvement has arisen from increased profit margins (at both the gross and net level) as the asset turnover of Breadline has declined from 2·6 to 2·0 times.Liquidity:This is an area of concern as both the current ratio and the quick ratio (acid test) have deteriorated considerably from normal and acceptable positions in 2000 to worrying low levels of 1·1:1 (current) and 0·77:1 (quick) in 2001.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mLooking in more depth at the composition of these ratios:Inventory holding has gone from 18 days to 23 days. In general these are relatively low levels, but given the trade of Breadline (bakery), large inventory holdings would not be expected.The accounts receivable collection period shows a modest decline from 34 days in 2000 to 41 days in 2001; despite the worsening of this ratio it is still an efficient collection period.The accounts payable period: two figures have been calculated for this ratio. The figure for the payment of our own balance shows a very serious worsening of the payment period from 46 days (which was in line with our credit terms) in 2000 to an unacceptable period of 103 days for 2001. The payment period when our own balance is excluded also shows an increasing payment period from 45 days in 2000 to 53 days in 2001, however this is nothing like the increase for our own account.Although the increasing payment period is partly responsible for the worsening of the liquidity ratios of Breadline, it is the deterioration in the cash position that is the main cause. It has gone from a balance in hand of $250,000 in 2000 to an overdraft of $220,000 in 2001. Further evidence of a deteriorating cash flow position is the company having to raise a loan (of $500,000) in the current year.Gearing and financing:Gearing is not a significant issue for Breadline. The company had nil gearing in 2000 and the issue of the loan note (at the beginning of the current year) has created modest gearing of 12%.The company appears to have made an issue of shares during the year to the amount of $600,000 cash ($400,000 capital + $200,000 premium – see below). This is a significant amount representing 17% of net assets at the end of 2000.It would appear the composition of the accumulated profits at 31 December 2001 is made up of a brought forward balance of $1,700,000 plus $600,000 retained profit for the current year and the transfer of the revaluation reserve of $700,000 to realised profits (as the company’s freehold has now been sold). Thus it must be a cash issue of shares that has caused the increase in share capital and share premium.Causes of concern/further investigations:Sale of property:The company appears to have sold its freehold premises and leased it back as a leasehold property. The main reason for this conclusion is that our company is aware that Breadline traded from the same business address in both 2000 and 2001.There is no indication of how long the lease is, but even if it is for a long period, its cost ($2·5 million) is likely to have been less than the freehold was sold for as even a long lease would be worth less than the freehold. Therefore there must have been a large profit on the sale of at least $1,250,000. This should be $2,500,000 (minimum value of the freehold) less $1,250,000 (the carrying value of the freehold). This profit has been included in the income statement as a reduction of the cost of sales. This profit seems to be largely responsible for the improvement in Breadline’s margins and overall profitability.If the ROCE is calculated excluding this profit it would be 17·4% [(1,970 +10 – 1,250)/(3,700 + 500)× 100)], which is much worse than the previous year’s 41%. Normally this type and size of profit is separately disclosed either on the face of the income statement or in a note to the financial statements. It should not be considered as a reduction of the cost of sales.Clearly any prospective purchaser of Breadline cannot expect to repeat this type of profit in future periods.Issue of Loan note/Share capitalThe most striking feature of the issue of the loan note is the interest rate it carries. At only 2% this is well below the commercial rate of 8%. It is possible that the loan note has been issued to Breadline’s parent company, and the low interest rate is a feature of the related party relationship. If it is not a related party transaction, it may be that the low interest is compensated for by high premium on its redemption. If this is so the premium should be amortised over the life of the loan note to give a higher finance charge. One way or another it appears that the issue of the loan note has led to an artificially low finance cost and is another example of flattering profitability.The issue of the shares is even more perplexing. As Breadline is a 100% owned subsidiary of Wheatmaster, the shares must have been issued to Wheatmaster. It is not immediately obvious why this share issue occurred. The practical effect of the issue is that Breadline received $600,000 from its parent. What is interesting is that Breadline paid a dividend of $900,000to its parent company during the year. Given the size of Breadline’s overdraft, it may have had insufficient cash to pay the dividend without the receipt from the proceeds of the share issue. Thus the issue may have been a mechanism to enable Breadline to transfer some of its profits to its parent company.ConclusionThe apparent improvement in Breadline’s profitability seems largely due to related party issues and the sale and leaseback of the freehold property. Thus it is illusory rather than a genuine commercial improvement. The company’s liquidity is also poor and its most valuable asset (the freehold property) has now been replaced by a leasehold property of unknown duration. All of these may be symptoms of the parent company preparing to sell the business and attempting to improve the financial position of Breadline. There is insufficient information to conclude whether Breadline would be a good (or poor) acquisition,but it is important that such an evaluation is made based on ‘non-manipulated’ information.A more immediate concern is the deterioration in the payment period to our company. Breadline must be contacted immediately to find out why the account is so late in being paid. It would not be advisable to allow any further trading on credit until the account is within the stated credit terms. Enquiries should be made as to why our internal credit control procedures have allowed the situation to develop this far.D E FranksAssistant Financial Controller。
ACCA
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2014年12月ACCA F7考试真题答案
AnswersFundamentals Level – Skills Module, Paper F7Financial Reporting December 2014 Answers Section A1 AA change of classification in presentation in financial statements is a change of accounting policy (CAP) under IAS 8.2 3 CBHistorical cost annual depreciation = $90,000 ((500,000 x 90%)/5 years). After two years carrying amount would be $320,000 (500,000 – (2 x 90,000)). Current cost annual depreciation = $108,000 ((600,000 x 90%)/5 years).After two years carrying amount would be $384,000 (600,000 – (2 x 108,000)).4 CAlthough the invoiced amount is $180,000, $30,000 of this has not yet been earned and must be deferred until the servicing work has been completed.5 6 C(i) is an onerous contract and (iii) the provision is still required if there is no intention to sellBThe total profit on the contract is expected to be $1 million (5,000 – (1,600 + 2,400)).At 30 September 2014 the profit recognised would be $360,000 (1,000 x 1,800/5,000). Therefore the amount due from the customer would be:$’000Cost to dateProfit recognisedProgress billings1,600360(1,800)––––––Amount due from the customer 160––––––7 8 DAs the receivable is ‘sold’ with recourse it must remain as an asset on the statement of financial position; it is not derecognised.DThe normal selling price of damaged inventory is $300,000 (210/70%).This will now sell for $240,000 (300,000 x 80%), and have a NRV of $180,000 (240 – (240 x 25%)). The expected loss onthe inventory is $30,000 (210 cost – 180 NRV) and therefore the inventory should be valued at $970,000 (1,000 – 30).9 ACash flow is (in $ million):23·4 – 14·4 b/f + 2·5 dep + 3 disposal – 2 revaluation – 4 non-cash acquisition = 8·510 DThe investment no longer meets the definition of a subsidiary (ability to control) and therefore would not be consolidated.Year ended 30 September Cash flow Discount rate Discountedcash flows$’000465430 $’000500500at 8%0·930·860·79201420152016 10,500 8,295–––––––Value of debt component 9,190Difference – value of equity option component 810–––––––Proceeds 10,000–––––––12 AGoodwill should be written off in full and the remaining loss is allocated pro rata to property plant and equipment and the product patent.B/f $ Loss$Post loss$Property, plant and equipment GoodwillProduct patent 200,00050,00020,000(45,455)(50,000)(4,545)154,545nil15,455Net current assets (at NRV) 30,000 nil 30,000––––––––––––––––––––––––300,000 (100,000) 200,000––––––––––––––––––––––––1314 BCorrect for the reason given in the question.CAt 30 September 2014:Carrying amount = $37·5 million (45,000 – 6,000 b/f – 1,500 for 6 months; no further depreciation when classified as held for sale).Recoverable amount = $36·8 million ((42,000 x 90%) – 1,000).Therefore included at $36·8 million (lower of carrying amount and fair value less cost to sell).151617 AA not-for-profit entity is not likely to have shareholders or ‘earnings’.AIs the correct treatment for a bargain purchase (negative goodwill).BExtraction provision at 30 September 2014 is $2·5 million (250 x 10). Dismantling provision at 1 October 2013 is $20·4 million (30,000 x 0·68).This will increase by an 8% finance cost by 30 September 2014 = $22,032,000. Total provision is $24,532,000.18 DAlthough the estimated NRV is lower than it was (due to fire damage), the entity will still make a profit on the inventory and thus it is not an indicator of impairment.20Rental of excavation equipment $13,500 (18 x 9/12)Depreciation of finance leased plant $68,000 (340/5 years) Finance cost $25,000 ((340 – 90) x 10%) Total $106,500 DAs it is a new type of transaction, comparability with existing treatments is not relevant. Section B (a) 1For comparisonHydan adjusted 21·7% 1·75 times28·6% Hydanas reported47·1% 2·36 times35·7% Sector average22·0% 1·67 times30·0% Return on equity (ROE)Net asset turnover Gross profit margin Net profit margin9·3%20·0%12·0%Hydan’s adjusted ratios:On the assumption that after the purchase of Hydan, the favourable effects of the transactions with other companies owned by the family would not occur, the following adjustments to the statement of profit or loss should be made: $’000 Cost of sales (45,000/0·9) Directors’ remunerationLoan interest (10% x 10,000)50,000 2,500 1,000These adjustments would give a revised statement of profit or loss: Revenue 70,000 Cost of sales(50,000) ––––––– Gross profit 20,000 (7,000) (2,500) Operating costsDirectors’ remuneration Loan interest (1,000) ––––––– Profit before tax 9,500 Income tax expense (3,000) ––––––– Profit for the year6,500 ––––––– In the statement of financial position:Equity would be the purchase price of Hydan (per question)30,000 10,000 The commercial loan (replacing the directors’ loan) would now be debt From these figures the adjusted ratios above are calculated as: Return on equity Net asset turnover Gross profit margin Net profit margin((6,500 /30,000) x 100) 21·7% 1·75 times28·6% (70,000/(30,000 + 10,000))((20,000)/70,000) x 100) ((6,500/70,000) x 100)9·30% (b) An analysis of Hydan’s ratios based on the financial statements provided reveals a strong position, particularly in relatio n toprofitability when compared to other businesses in this retail sector. Hydan has a very high ROE which is a product of higher-than-average profit margins (at both the gross and net profit level) and a significantly higher net asset turnover. Thus, on the face of it, Hydan is managing to achieve higher prices (or reduced cost of sales), has better control of overheads and is using its net assets more efficiently in terms of generating revenue.However, when adjustments are made for the effects of its favourable transactions with other companies owned by the family, the position changes somewhat. The effect of purchasing its inventory from another family owned supplier at favourable market prices means that its reported gross profit percentage of 35·7% is flattered; had these purchases been made at market prices, it would fall to 28·6% which is below the sector average of 30·0%. The effects of the favourable inventory purchases carry through to net profit. Based on Xpand’s estimate of future directors’ remuneration, it would seem the existing directors of Hydan are not charging commercial rates for their remuneration. When Xpand replaces the board of Hydan, it will have to increase directors’ remuneration by $1·5 million. Additionally, when the interest free directors’ loans are replaced with a commercial loan, with interest at 10% per annum, this would reduce net profit by a further $1 million. The accumulation of these adjustments means that the ROE which Xpand should expect would be 21·7% (rather than the reported 47·1%) which is almost exactly in line with the sector average of 22·0%.In a similar vein, when the asset turnover is calculated based on the equity purchase price and the commercial loan (equating to net assets), it falls from 2·36 times to 1·75 times which is above, but much closer to, the sector average of 1·67 times.In summary, Hydan’s adjusted results would still be slightly ahead of the sector averages in most areas and may well justif y the anticipated purchase price of $30 million; however, Hydan will be nowhere near the excellently performing company suggested by the reported figures and Xpand needs to exercise a degree of caution in its negotiations.2 (a) Kandy – Schedule of retained earnings of Kandy as at 30 September 2014$’000Retained earnings per trial balanceAdjustments re:17,500Note (i)Add back issue costs of loan note (w (i)) Loan finance costs (29,000 x 9% (w (i))) Note (ii)1,000 (2,610)Depreciation of buildings (w (ii)) Depreciation of plant and equipment (w (ii)) Note (iii) (2,600) (3,000)Income tax expense (w (iii)) (800)––––––Adjusted retained earnings 9,490––––––(b) Kandy – Statement of financial position as at 30 September 2014Assets $’000$’000 Non-current assetsProperty, plant and equipment (44,400 + 21,000 (w (ii))) Current assets (per trial balance)65,400 68,700 ––––––––Total assets 134,100––––––––Equity and liabilitiesEquityEquity shares of $1 eachRevaluation surplus (12,000 – 2,400 (w (ii) and (iii))) Retained earnings (from (a))40,000 9,6009,490 19,090 ––––––––––––––––59,090Non-current liabilitiesDeferred tax (w (iii)) 6% loan note (w (i))4,40029,810 34,210 ––––––––Current liabilitiesPer trial balance Current tax payable38,4002,400 40,800 ––––––––––––––––Total equity and liabilities 134,100––––––––Workings (monetary figures in brackets in $’000)(i) Loan noteThe issue costs should be deducted from the proceeds of the loan note and not charged as an expense. The finance cost of the loan note, at the effective rate of 9% applied to the carrying amount of the loan note of $29 million (30,000 – 1,000), is $2,610,000. The interest actually paid is $1·8 million. The difference between these amounts of $810,000 (2,610 – 1,800) is added to the carrying amount of the loan note to give $29,810,000 (29,000 + 810)for inclusion as a non-current liability in the statement of financial position.(ii) Non-current assetsLand and buildingsThe gain on revaluation and carrying amount of the land and buildings will be:$’000Carrying amount at 1 October 2013 (55,000 – 20,000) Revaluation at that date (8,000 + 39,000) 35,000 47,000 –––––––Gain on revaluation 12,000–––––––Buildings depreciation for the year ended 30 September 2014 (39,000/15 years) Carrying amount at 30 September 2014 (47,000 – 2,600) (2,600)–––––––44,400 –––––––$’000Plant and equipmentCarrying amount at 1 October 2013 (58,500 – 34,500)Depreciation for year ended 30 September 2014 (12½% reducing balance) 24,000 (3,000) ––––––– Carrying amount at 30 September 2014 21,000 –––––––(iii) TaxationIncome tax expenseProvision for year ended 30 September 2014 Less over-provision in previous year Deferred tax (see below)2,400 (1,100) (500) –––––––800 ––––––– Deferred taxProvision required at 30 September 2014 ((10,000 + 12,000) x 20%) Provision at 1 October 20134,400 (2,500) ––––––– Movement in provision1,900 Charge to revaluation of land and buildings (12,000 x 20%) (2,400) ––––––– Balance – credit to profit or loss(500) ––––––– 3 (a) PlastikConsolidated statement of profit or loss and other comprehensive income for the year ended 30 September 2014 $’000 Revenue (62,600 + (30,000 x 9/12) – (300 x 9 months intra-group sales)) Cost of sales (w (i))82,400 (61,320) ––––––– Gross profit21,080 (2,900) (5,350) Distribution costs (2,000 + (1,200 x 9/12))Administrative expenses (3,500 + (1,800 x 9/12) + 500 goodwill impairment) Finance costs (200 + 135 (w (v)))(335) ––––––– Profit before tax12,495 Income tax expense (3,100 + (1,000 x 9/12)) (3,850) ––––––– Profit for the year8,645 Other comprehensive incomeGain on revaluation of property (1,500 + 600) 2,100 ––––––– Total comprehensive income 10,745 ––––––– Profit for year attributable to:Equity holders of the parent (balance) Non-controlling interest (w (ii))8,465 180 ––––––– 8,645 ––––––– Total comprehensive income attributable to: Equity holders of the parent (balance)10,445 Non-controlling interest (180 above + (600 x 20%))300 ––––––– 10,745 –––––––(b) Plastik – Consolidated statement of financial position as at 30 September 2014$’000AssetsNon-current assetsProperty, plant and equipment (w (iii)) Intangible asset: goodwill (w (iv))37,100 5,200 ––––––– 42,300 ––––––– Current assetsInventory (4,300 + 1,200 – 120 URP (w (i)))Trade receivables (4,700 + 2,500 – 1,200 intra-group) Bank 5,380 6,000 300 ––––––– 11,680 ––––––– Total assets53,980 –––––––Equity and liabilitiesEquity attributable to owners of the parentEquity shares of $1 each ((10, 000 + 4,800) w (iv)) Other component of equity (share premium) (w (iv)) Revaluation surplus (2,000 + (600 x 80%)) Retained earnings (w (v)) 14,800 9,600 2,480 6,765 ––––––– 33,645 Non-controlling interest (w (vi)) Total equity4,800 ––––––– 38,445 ––––––– Non-current liabilities10% loan notes (2,500 + 1,000 – 1,000 intra-group) 2,500 ––––––– Current liabilitiesTrade payables (3,400 + 3,600 – 800 intra-group) Current tax payable (2,800 + 800)Deferred consideration (1,800 + 135 w (v)) Bank (1,700 – 400 cash in transit) 6,200 3,600 1,935 1,300 ––––––– 13,035 ––––––– Total equity and liabilities53,980 –––––––(c) IFRS 3 Business Combinations addresses the recognition of separable intangibles assets. Both of the items which the directorsof Plastik have identified in the acquisition of Dilemma should be recognised as separate intangible assets on the acquisition of Dilemma. Both IFRS 3 Business Combinations and IAS 38 Intangible Assets require in-process research in a business combination to be separately recognised at its fair value provided this can be reliably measured ($1·2 million in this case). The recognition of customer list as an intangible asset is a specific illustrative example given in IFRS 3 (IE 24) and should also be recognised at its fair value of $3 million.Workings (note figure in brackets are in $’000)$’000$’000 (i)Cost of sales Plastik45,800 18,000 (2,700) 120 Subtrak (24,000 x 9/12)Intra-group purchases (300 x 9 months) URP in inventory (600 x 25/125) Additional depreciation on property100 ––––––– 61,320 ––––––– (ii) Non-controlling interests in Subtrak’s profit or lossSubtrak’s profit as reported2,000 ––––––– 9/12 post-acquisition =Deduct: Additional depreciation on propertyGoodwill impairment 1,500 (100) (500) –––––––Adjusted post-acquisition profit x 20% non-controlling interest900 ––––––– 180 –––––––$’000$’000 (iii) Non-current assetsPlastik SubtrakFair value increase at acquisition Additional depreciation on property Fair value increase since acquisition18,700 13,900 4,000 (100) 600 ––––––– 37,100 –––––––(iv) Goodwill in SubtrakInvestment at costShares (9,000 x 80% x 2/3 x $3)Deferred consideration (9,000 x 80% x 27·5 cents x 1/1·1) Non-controlling interest (9,000 x 20% x $2·50)14,400 1,800 4,500 ––––––– 20,700Net assets (equity) of Subtrak at 30 September 2014 Less post-acquisition profits (2,000 x 9/12) Fair value adjustment: property (12,500) 1,500 (4,000) –––––––Net assets at date of acquisition (15,000) ––––––– 5,700 Goodwill on consolidationImpairment as at 30 September 2014(500) ––––––– 5,200 –––––––Note: The 4·8 million (9,000 x 80% x 2/3) shares issued by Plastik at $3 each would be recorded as share capital of $4·8 million (4,800 x $1) and share premium of $9·6 million (4,800 x $2). (v) Retained earnings Plastik6,300 720 (135) Subtrak’s post -acquisition adjusted profit (900 (w (ii)) x 80%) Finance costs on deferred consideration (1,800 x 10% x 9/12) Unrealised profit in inventory (w (i))(120) ––––––– 6,765 ––––––– Alternative calculationPlastik’s retained earnings at 30 September 2014 Less Plastik’s profit for the year6,300 (8,000) Consolidated profit for the year from part (a)8,465 ––––––– 6,765 –––––––(vi) Non-controlling interest in statement of financial positionAt date of acquisition (w (iv)) 4,500 Post-acquisition from statement of profit or loss and other comprehensive income 300––––––– 4,800 –––––––Fundamentals Level – Skills Module, Paper F7Financial Reporting December 2014 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.MarksSection A2 marks per question 40Section B1 (a)(b) 1½ marks per ratio 6 1 mark per valid point. A good answer must emphasise the differentinterpretation when using adjusted figures 9Total for question 152 (a)(b) Schedule of retained earnings as at 30 September 2014retained earnings per trial balanceissue costsloan finance costsdepreciation charges½1121½6 income tax expenseStatement of financial positionproperty, plant and equipmentcurrent assets2½½2 equity sharesrevaluation surplusdeferred tax 1 6% loan notecurrent liabilities (per trial balance)current tax payable1½½19Total for question 15Marks3(a) Consolidated statement of profit or loss and other comprehensive income:revenue cost of sales distribution costsadministrative expenses (including goodwill impairment) finance costs1½ 2½ ½ 1 1 income tax expense½ 1 1 gain on revaluation of propertiesnon-controlling interest: profit for the yeartotal comprehensive income1 10(b) Consolidated statement of financial position:property, plant and equipment goodwill 2 2½ 1 inventorytrade receivables 1 bankequity shares½ 1 other component of equity (share premium) revaluation surplus retained earningsnon-controlling interest 10% loan notes 1 1 1½ 1 1 trade payables 1 taxationdeferred consideration bank overdraft½ 1 1 17 (c) Recognition of: researchcustomer list2 13 Total for question30。
ACCA_F7_2006年06月考试【试题答案】
A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mPart 2 Examination – Paper 2.5(INT)Financial Reporting (International Stream)June 2006 Answers1(a)HydanConsolidated income statement year ended 31 March 2006$’000$’000Revenue (98,000 + 35,200 – 30,000 intra-group sales)103,200Cost of sales (w (i))(77,500)––––––––Gross profit25,700Operating expenses (11,800 + 8,000 + 375 goodwill (w (ii)))(20,175)Interest receivable (350 – 200 intra-group (4,000 x 10% x 6/12))150Finance costs(420)––––––––5,255Income tax expense (4,200 – 1,000 tax relief)(3,200)––––––––Profit for the period 2,055––––––––Attributable to:Equity holders of the parent 3,455Minority interest (w (iv))(1,400)––––––––2,055––––––––Consolidated balance sheet as at 31 March 2006Non-current assets:Property, plant and equipment (18,400 + 9,500 + 1,200 – 300 depreciation adjustment)28,800Goodwill (3,000 – 375 (w (ii)))2,625Investment (16,000 – 10,800 – 4,000 loan)1,200–––––––32,625Current assets (w (v))24,000–––––––T otal assets56,625–––––––Equity attributable to holders of the parent Ordinary shares of $1 each 10,000Share premium5,000Retained earnings (w (iii))17,525–––––––32,525Minority interest (w (iv))3,800–––––––T otal equity36,325Non-current liabilities 7% bank loan6,000Current liabilities (w (v))14,300–––––––T otal equity and liabilities56,625–––––––Workings in $’000(i)Cost of salesHydan 76,000Systan31,000Intra-group sales (30,000)URP in inventories200Additional depreciation re fair values300–––––––77,500–––––––(ii)Goodwill/Cost of control in Systan:Investment at cost (2,000 x 60% x $9) 10,800Less – ordinary shares of Systan2,000– share premium500– pre-acquisition reserves (6,300 + 3,000 post acq loss)9,300– fair value adjustment1,200–––––––13,000x 60%(7,800)––––––Goodwill on consolidation3,000––––––Goodwill is impaired by 12·5% of its carrying amount =375––––––A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m(iii)Consolidated reserves:Hydan’s reserves20,000Systan’s post acquisition losses (see below) (3,500 x 60%)(2,100)Goodwill impairment (w (ii))(375)–––––––17,525–––––––The adjusted profits of Systan are:Per question6,300Adjustments – URP in inventories (4,000 x 5%)(200)– additional depreciation(300)(500)––––––––––––5,800–––––––(iv)Minority interest in income statementSystan’s post acquisition loss after tax 3,000Adjustments from (w (iii))500––––––Adjusted losses3,500x 40% = 1,400Minority interest in balance sheetOrdinary shares and premium of Systan 2,500Adjusted profits (w (iii))5,800Fair value adjustments1,200––––––9,500x 40% = 3,800(v)Current assets and liabilities Current assets:Hydan 18,000Systan7,200URP in inventories (200)Intra-group balance(1,000)–––––––24,000–––––––Current liabilities:Hydan 11,400Systan3,900Intra-group balance(1,000)–––––––14,300–––––––(b)Although Systan’s revenue has increased since its acquisition by H ydan, its operating performance appears to have deteriorated markedly. Its gross profit margin has fallen from 25% (6m/24m) in the six months prior to the acquisition to only 11·9% (4·2m/35·2m) in the post-acquisition period. The decline in gross profit is worsened by a huge increase in operating expenses in the post-acquisition period. These have gone from $1·2 million pre-acquisition to $8 million post-acquisition.T aking into account the effects of interest and tax a $3·6 million first half profit (pre-acquisition) has turned into a $3 million second half loss (post-acquisition). Whilst it is possible that some of the worsening performance may be due to market conditions, the major cause is probably due to the effects of the acquisition. As the question states Hydan has acquired a controlling interest in Systan and thus the two companies are related parties. Since the acquisition most of Systan’s sales have been to Hydan. This is not surprising as Systan was acquired to secure supplies to Hydan. The terms under which the sales are made are now determined by the management of H ydan, whereas they were previously determined by the management of Systan. The question says sales to Hydan yield a consistent gross profit of only 5%. This is very low and much lower than the profit margin on sales to Hydan prior to the acquisition and also much lower than the few sales that were made to third parties in the post acquisition period. It may also be that Hydan has shifted the burden of some of the group operating expenses to Systan – this may explain the large increase in Systan’s post acquisition operating expenses. The effect of these (transfer pricing) actions would move profits from Systan’s books into those of Hydan. The implications of this are quite significant. Initially there may be a tendency to think the effect is not important as on consolidation both companies’results are added together, but other parties are affected by these actions. The most obvious is the significant (40%) minority interest, they are effectively having some of their share of Systan’s profit and balance sheet value taken from them. It may also be that the management and staff of Systan may be losing out on profit related bonuses. Finally, any party using Systan’s entity financial statements, for whatever purpose, would be basing any decisions they make on potentially misleading information.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m2(a)Darius income statement for the year ended 31 March 2006$’000$’000Revenue (w (i))221,800Cost of sales (w (i))(156,200)–––––––––Gross profit65,600Operating expenses (22,400)Investment income1,200Loss on investment property (16,000 – 13,500 w (ii))(2,500)Financing cost (5,000 – 3,200 ordinary dividend (w (v))(1,800)–––––––––Profit before tax40,100Income tax expense (w (iii))(6,400)–––––––––Profit for the period 33,700–––––––––(b)Statement of recognised income and expense for the year ended 31 March 2006Unrealised surplus on land and building 21,000Profit for the period33,700–––––––T otal recognised income and expense for the period 54,700–––––––(c)Darius balance sheet as at 31 March 2006Non-current assetsProperty, plant and equipment (w (iv))87,100Investment property (w (ii))13,500––––––––100,600Current assetsInventories (10,500 – 300 (w (i)))10,200T rade receivables (13,500 + 1,500 JV)15,00025,200–––––––––––––––T otal assets125,800––––––––Equity and liabilities:Ordinary shares of 25c each 20,000Reserves:Revaluation 21,000Retained earnings (w (v))48,00069,000–––––––––––––––89,000Non-current liabilities Deferred tax (w (iii))3,600Redeemable preference shares of $1 each 10,00013,600–––––––Current liabilitiesT rade payables (11,800 + 2,500 JV)14,300Bank overdraft 900Current tax payable 8,00023,200–––––––––––––––T otal equity and liabilities 125,800––––––––Workings in $’000(i)RevenuePer question213,800Joint venture revenue8,000––––––––221,800––––––––Cost of sales:Per question143,800Closing inventories adjustment (see below)300Joint venture costs5,000Depreciation (w (iv))– building3,200– plant3,900––––––––156,200––––––––The damaged inventories will require expenditure of $450,000 to repair them and then have an expected selling price of $950,000. This gives a net realisable value of $500,000, as their cost was $800,000, a write down of $300,000is required.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m(ii)The fair value model in IAS 40 Investment property requires investment properties to be included in the balance sheet at their fair value (in this case taken to be the open market value). Any surplus or deficit is recorded in income.(iii)T axation:Provision for year8,000Deferred tax (see below)(1,600)––––––6,400––––––T axable temporary differences are $12 million. At a rate of 30% this would require a balance sheet provision for deferred tax of $3·6 million. The opening provision is $5·2 million, thus a credit of $1·6 million will be made in the income statement.(iv)Non-current assetsLand and buildingDepreciation of the building for the year ended 31 March 2006 will be (48,000/15 years)3,200–––––––Plant and equipment Per trial balance 36,000Joint venture plant12,000–––––––48,000Accumulated depreciation 1 April 2005(16,800)–––––––Carrying amount prior to charge for year31,200Depreciation year ended 31 March 2006 at 12·5%(3,900)–––––––Carrying amount at 31 March 200627,300–––––––Summarising:cost/valuation accumulated depreciation carrying amountLand and building 63,0003,20059,800Plant and equipment 48,00020,70027,300––––––––––––––––––––––Property, plant and equipment 111,00023,90087,100––––––––––––––––––––––(v)Retained earnings Balance b/f 17,500Profit for period33,700Ordinary dividends paid (20,000 x 4 x 4c)(3,200)–––––––48,000–––––––3(a)The purpose of the Framework is to assist the various bodies and users that may be interested in the financial statements of an entity. It is there to assist the IASB itself, other standard setters, preparers, auditors and users of financial statements and any other party interested in the work of the IASB. More specifically:–to assist the Board in the development of new and the review of existing standards. It is also believed that the Framework will assist in promoting harmonisation of the preparation of financial statements and also reduce the number of alternative accounting treatments permitted by IFRSs–national standard setters that have expressed a desire for local standards to be compliant with IFRS will be assisted by the Framework–the Framework will help preparers to apply IFRS more effectively if they understand the concepts underlying the Standards, additionally the Framework should help in dealing with new or emerging issues which are, as yet, not covered by an IFRS–the above is also true of the work of the auditor, in particular the Framework can assist the auditor in determining whether the financial statements conform to IFRS–users should be assisted by the Framework in interpreting the performance of entities that have complied with IFRS.It is important to realise that the Framework is not itself an accounting standard and thus cannot override a requirement of a specific standard. Indeed, the Board recognises that there may be (rare) occasions where a particular IFRS is in conflict with the Framework. In these cases the requirements of the standard should prevail. The Board believes that such conflicts will diminish over time as the development of new and (revised) existing standards will be guided by the Framework and the Framework itself may be revised based on the experience of working with it.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m(b)Definitions – assets:The IASB’s Framework defines assets as ‘a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity’. The first part of the definition puts the emphasis on control rather than ownership. This is done so that the balance sheet reflects the substance of transactions rather than their legal form. This means that assets that are not legally owned by an entity, but over which the entity has the rights that are normally conveyed by ownership, are recognised as assets of the entity. Common examples of this would be finance leased assets and other contractual rights such as aircraft landing rights. An important aspect of control of assets is that it allows the entity to restrict the access of others to them. The reference to past events prevents assets that may arise in future from being recognised early.– liabilities:The IASB’s Framework defines liabilities as ‘a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits’. Many aspects of this definition are complementary (as a mirror image) to the definition of assets, however the IASB stresses that the essential characteristic of a liability is that the entity has a present obligation. Such obligations are usually legally enforceable (by a binding contract or by statute), but obligations also arise where there is an expectation (by a third party) of an entity assuming responsibility for costs where there is no legal requirement to do so. Such obligations are referred to as constructive (by IAS 37 Provisions,contingent liabilities and contingent assets ). An example of this would be repairing or replacing faulty goods (beyond any warranty period) or incurring environmental costs (e.g. landscaping the site of a previous quarry) where there is no legal obligation to do so. Where entities do incur constructive obligations it is usually to maintain the goodwill and reputation of the entity. One area of difficulty is where entities cannot be sure whether an obligation exists or not, it may depend upon a future uncertain event. These are more generally known as contingent liabilities.Importance of the definitions of assets and liabilities:The definitions of assets and liabilities are fundamental to the Framework. Apart from forming the obvious basis for the preparation of a balance sheet, they are also the two elements of financial statements that are used to derive the equity interest (ownership) which is the residue of assets less liabilities. Assets and liabilities also have a part to play in determining when income (which includes gains) and expenses (which include losses) should be recognised. Income is recognised (in the income statement) when there is an increase in future economic benefits relating to increases in assets or decreases in liabilities, provided they can be measured reliably. Expenses are the opposite of this. Changes in assets and liabilities arising from contributions from, and distributions to, the owners are excluded from the definitions of income and expenses.Currently there is a great deal of concern over ‘off balance sheet finance’. This is an aspect of what is commonly referred to as creative accounting. Many recent company failure scandals have been in part due to companies having often massive liabilities that have not been included on the balance sheet. Robust definitions, based on substance, of assets and liabilities in particular should ensure that only real assets are included on the balance sheet and all liabilities are also included. In contradiction to the above point, there have also been occasions where companies have included liabilities on their balance sheets where they do not meet the definition of liabilities in the Framework. Common examples of this are general provisions and accounting for future costs and losses (usually as part of the acquisition of a subsidiary). Companies have used these general provisions to smooth profits i.e. creating a provision when the company has a good year (in terms of profit) and releasing them to boost profits in a bad year. Providing for future costs and losses during an acquisition may effectively allow them to bypass the income statement as they would become part of the goodwill figure.(c)(i)Whilst it is acceptable to value the goodwill of $2·5 million of T rantor (the subsidiary) on the basis described in the question and include it in the consolidated balance sheet, the same treatment cannot be afforded to Peterlee’s own goodwill. The calculation may indeed give a realistic value of $4 million for Peterlee’s goodwill, and there may be no difference in nature between the goodwill of the two companies, but it must be realised that the goodwill of Peterlee is internal goodwill and IFRSs prohibit such goodwill appearing in the financial statements. The main basis of this conclusion is one of reliable measurement. The value of acquired (purchased) goodwill can be evidenced by the method described in the question (there are also other acceptable methods), but this method of valuation is not acceptable as a basis for recognising internal goodwill.(ii)Accruing for future costs such as this landscaping on an annual basis may seem appropriate and was common practice until recently. H owever, it is no longer possible to account for this type of future cost in this manner, therefore the directors’ suggestion is unacceptable. IAS 37 Provisions, contingent liabilities and contingent assets requires such costs to be accounted for in full as soon as they become unavoidable. The Standard says that the estimate of the future cost should be discounted to a present value (as in this example at $2 million). The accounting treatment is rather controversial; the cost should be included in the balance sheet as a provision (a credit entry/balance), but the debit is to the cost of the asset to give an initial carrying amount of $8 million. This has the effect of ‘grossing up’ the balance sheet by including the landscaping costs as both an asset and a liability. As the asset is depreciated on a systematic basis ($800,000 per annum assuming straight-line depreciation), the landscaping costs are charged to the income statement over the life of the asset. As the discount is ‘unwound’ (and charged as a finance cost) this is added to the balance sheet provision such that, at the date when the liability is due to be settled, the provision is equal to the amount due (assuming estimates prove to be accurate).(iii)The directors’ suggestion that the convertible loan should be recorded as a liability of the full $5 million is incorrect. Thereason why a similar loan without the option to convert to equity shares (such that it must be redeemed by cash only)carries a higher interest rate is because of the value of the equity option that is contained within the issue proceeds of the $5 million. If the company performs well over the period of the loan, the value of its equity shares should rise andA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mthus it would (probably) be beneficial for the loan note holders to opt for the equity share alternative. IAS 32 and 39dealing with financial instruments require the value of the option is to be treated as equity rather than debt. The calculation of value of the equity is as follows:$’000Year 1 400 x 0·91364Year 2 400 x 0·83332Year 3 5,400 x 0·754,050––––––Present value of the cash flows 4,746Proceeds of issue(5,000)––––––Difference is value of equity254––––––Initially the loan would be shown at $4,746,000. The Income statement would show:$’000$’000Loan interest paid ($5m x 8%)400Accrued finance costs (balance)75475(i.e. $4·746m x 10%)––––At 31 March 2006 the loan would have a carrying amount of $4,821,000 ($4,746,000 + $75,000)4(a)Boston – Cash Flow Statement for the year ended 31 March 2006:Cash flows from operating activities Note: figures in brackets are in $’000$’000$’000Profit before tax 65Adjustments for:depreciation of non-current assets 35loss on sale of hotel 12interest expense10––––122increase in current assets (155 – 130)(25)decrease in other current liabilities (115 – 108)(7)––––Cash generated from operations90Interest paid (see note)(10)Income taxes paid (30)––––Net cash flow from operating activities50Cash flows from investing activities:purchase of non-current assets (see below)(123)sale of non-current assets (40 – 12)28––––Net cash used in investing activities (95)Cash flows from financing activities Issue of ordinary shares (20 + 20)40Issue of loans (65 – 40)25––––Net cash from financing activities65–––Net increase in cash and cash equivalents20Cash and cash equivalents at beginning of period (5)–––Cash and cash equivalents at end of period 15–––Workings$’000Non-current assets – carrying amount Balance b/f 332Disposal(40)Depreciation for year (35)Balance c/f(380)–––––Cost of assets acquired(123)–––––Note: interest paid may also be presented as a cash flow from financing activities.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m(b)Report on the financial performance of Boston for the year ended 31 March 2006To: The Board of Boston From: A N Other Date:Profitability (note figures are rounded to 1 decimal place)The most striking feature of the current year’s performance is the deterioration in the ROCE, down from 25·6% to only 18·0%.This represents an overall fall in profitability of 30% ((25·6 – 18·0)/25·6 x 100). An examination of the other ratios provided shows that this is due to a decline in both profit margins and asset utilisation. A closer look at the profit margins shows that the decline in gross margin is relatively small (42·2% down to 41·4%), whereas the fall in the operating profit margin is down by 2·8%, this represents a 15·7% decline in profitability (i.e. 2·8% on 17·8%). This has been caused by increases in operating expenses of $12m and unallocated corporate expenses of $10m. These increases represent more than half of the net profit for the period and further investigation into the cause of these increases should be made. The company is generating only $1·20 of sales per $1 of net balance sheet assets this year compared to a figure of $1·40 in the previous year. This decline in asset utilisation represents a fall of 14·3% ((1·4 – 1.2)/1·4 x 100).Liquidity/solvencyFrom the limited information provided a poor current ratio of 0·9:1 in 2005 has improved to 1·3:1 in the current year. Despite the improvement, it is still below the accepted norm. At the same time gearing has increased from 12·8% to 15·6%.Information from the cash flow statement shows the company has raised $65 million in new capital ($40m in equity and $25m in loans). The disproportionate increase in the loans is the cause of the increase in gearing, however, at 15·6% this is still not a highly geared company. The increase in finance has been used mainly to purchase new non-current assets, but it has also improved liquidity, mainly by reversing an overdraft of $5 million to a bank balance in hand of $15 million. A common feature of new investment is that there is often a delay between making the investment and benefiting from the returns. This may be the case with Boston, and it may be that in future years the increased investment will be rewarded with higher returns. Another aspect of the investment that may have caused the lower return on assets is that the investment is likely to have occurred part way through the year (maybe even near the year end). This means that the income statement may not include returns for a full year, whereas in future years it will.Segment issuesSegment information is intended to help the users to better assess the performance of an enterprise by looking at the detailed contribution made by the differing activities that comprise the enterprise as a whole. Referring to the segment ratios it appears that the carpeting segment is giving the greatest contribution to overall profitability achieving a 48·6% return on its segment assets, whereas the equivalent return for house building is 38·1% and for hotels it is only 16·7%. The main reason for the better return from carpeting is due to its higher segment net profit margin of 38·9% compared to hotels at 15·4% and house building at 28·6%. Carpeting’s higher segment net profit is in turn a reflection of its underlying very high gross margin (66·7%). The segment net asset turnover of the hotels (1·1 times) is also very much lower than the other two segments (1·3 times). It seems that the hotel segment is also responsible for the group’s fairly poor liquidity ratios (ignoring the bank balances) the segment current liabilities are 50% greater than its current assets ($60m compared to $40m); the opposite of this would be a more acceptable current ratio.These figures are based on historical values. Most commentators argue that the use of fair values is more consistent and thus provides more reliable information on which to base assessments (they are less misleading than the use of historical values).If fair values are used all segments understandably show lower returns and poorer performance (as fair values are higher than historical values), but the figures for the hotels are proportionately much worse, falling by a half of the historic values (as the fair values of the hotel segment are exactly double the historical values). Fair value adjusted figures may even lead one to question the future of the hotel activities. H owever, before jumping to any conclusions an important issue should be considered. Although the reported profit of the hotels is poor, the market values of its segment assets have increased by a net $90 million. New net investment in hotel capital expenditure is $64 million ($104m – $40m disposal); this leaves an increase in value of $26 million. The majority of this appears to be from market value increases (this would be confirmed if the statement of recognised income and expense was available). Whilst this is not a realised profit, it is nevertheless a significant and valuable gain (equivalent to 65% of the group reported net profit).ConclusionAlthough the company’s overall performance has deteriorated in the current year, it is clear that at least some areas of the business have had considerable new investment which may take some time to bear fruit. This applies to the hotel segment in particular and may explain its poor performance, which is also partly offset by the strong increase in the market value of its assets. Yours A N otherAppendixFurther segment ratiosCarpeting Hotels House buildingReturn on net assets at fair values (35/97 x 100)36·1%8·3%30·2%Asset turnover on fair values (times) (90/97)0·90·51·1Note: workings have been shown for the figures for the carpeting segment only, the other segments’ figures are based on equivalent calculations.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m5(a)Income statement for the year ended 31 March 2006A lfa Beta Ceta Total $m $m $m $m Revenue 82·04·814·8Cost of sales (7)(3·5)(4·0)(14·5)––––––––––––––––––Profit/(loss)1(1·5)0·80·3––––––––––––––––––Balance sheet as at 31 March 2006Gross amounts due from customers (see below)2·44·87·2Gross amounts due to customers (see below)(1·3)(1·3)Gross amounts from and to customers:Contract cost incurred12·53·54·020·0Recognised profits less (losses)2·5(1·5)0·81·8Provision for losses to date (1·5)(1·5)Payments received (12·6)(1·8)(nil)(14·4)––––––––––––––––––Due from customers2·44·87·2–––––––––Due to customers (contract liability)(1·3)(1·3)–––––––––Workings (in $m):Alfaat 31 March 2005at 31 March 2006Year ended 31 March 2006Work invoiced (5·4/90%)6·0(12·6/90%)14·0 8Cost of sales (balancing figure)(4·5)(11·5)(7)–––––––––––Profit (see below)1·52·51–––––––––––Percentage complete (6/20 x 100)30%(14/20 x 100)70%Attributable profit ($5m x 30%)1·5(($5m x 70%) – $1m rectification)2·5Prior to the rectification costs (which must be charged to the year in which they are incurred), the estimated total profit on the contract is $5 million ($20m – $15m).BetaDue to the increase in the estimated cost Beta is a loss-making contract and the whole of the loss must be provided for as soon as it is can be anticipated. The loss is expected to be $1·5 million ($7·5m – $6m). The sales value of the contract at 31 March 2006 is $2 million ($1·8/90%), thus the cost of sales must be recorded as $3·5 million. As costs to date are $2 million, this means a provision of $1·5 million is required.CetaBased on the costs to date at 31 March 2006 of $4 million and the total estimated costs of $10 million, this contract is 40%complete. The estimated profit is $2 million ($12m – $10m); therefore the profit at 31 March 2006 is $0·8 million ($2m x 40%). This gives an imputed sales (and receivable) value of $4·8 million.(b)(i)Savoir – EPS year ended 31 March 2004:The issue on 1 July 2003 at full market value needs to be weighted:40m x 3/12 =10m New shares8m ––––48m x 9/12 =36m ––––46m ––––Without the bonus issue this would give an EPS of 30c ($13·8m/46m x 100).The bonus issue of one for four would result in 12 million new shares giving a total number of ordinary shares of 60 million. The dilutive effect of the bonus issue would reduce the EPS to 24c (30c x 48m/60m). The comparative EPS (for 2003) would be restated at 20c (25c x 48m/60m).。
ACCA2013年12月考试真题答案
Professional Level – Essentials Module, Paper P1Governance, Risk and Ethics December 2013 Answers 1(a)(i)Concepts of sustainabilityIn the context of the case, SOW meant sustainability in the environmental sense of the word. This means that resourcesshould not be taken from the environment or emissions should not be made into the environment, at a rate greater thancan be corrected, replenished or offset. In the case of the Hiaka pipeline, this means that its impact on the environmentshould not exceed the ability to replace used resources or clean up spills or emissions as they occur.The government of Exland used the term to mean the sustainability of its economy and the economic sustainability ofHEC itself which is such an influence on the national economy. The fact that Exland gets 90% of its oil from one singlesource (HEC) means that it is disproportionately dependent on the Hiaka pipeline. In all developed and developingeconomies, oil underpins economic growth and hence the wellbeing of citizens. This applies to jobs, health, educationand other essential aspects of Exland’s infrastructure. Without a regular and reliable source of oil from HEC, andassuming that Exland is unable to find other sources of oil at reasonable cost, the Exland economy would be badlydamaged with a number of unfortunate social consequences.(ii)Tensions between the conceptsThe balance between environmental conservation and economic development is a longstanding one, and one whichapplies to all parts of the world in which business activity takes place. A lot of business activity takes place at a net costto the environment and so the sustainability of one (environment or economy) may be achieved only at a net cost tothe other. Some believe that a lot of business activity can be made more environmentally sustainable but the economiccosts of this, possibly by accepting a lower rate of economic growth with its associated effects, are often unpopular.The economies of both Hiakaisland and also Exland are very dependent on the Hiaka pipeline. The thousands of jobson Hiakaisland depend on it, the economy of Exland is underpinned by the oil and the business transaction with Exlandis also an important source of foreign currency for the government of Wyland. These benefits all depend upon theeconomic arguments having ascendency over the claims of SOW.Reasons why many are unconvinced by the case for environmental sustainability include the issues of measurementand time perspective. Essentially, economic value can be measured whilst environmental value is more difficult.Economic consequences can be seen over the short term whilst environmental consequences may not be visible formany years.Some socio-political structures are thought to militate against longer-term perspectives such as the need toprovide short-term shareholder returns (as HEC’s shareholders have traditionally demanded) and the length of electoralcycles. In the case scenario, SOW would probably claim to have a longer-term perspective whilst the government ofExland and HEC will have shorter-term perspectives: Exland because its government needs to be re-elected every fouryears and HEC because it is a public company whose shares are traded on the Wyland stock exchange. The expectationsfor strong annual returns have, in the opinion of the market analyst, been unhelpful in allowing the company to workwith longer-term perspectives.The extraction of oil is ultimately unsustainable because it requires the exploitation of a non-renewable energy source.In other words, once it is gone, it is gone. The view of HEC’s board that it should be ‘as sustainable as is economicallypossible’ is unlikely to satisfy SOW and may be seen effectively as no commitment to environmental sustainability at all.Some countries have taken steps to reduce the net impact of business activity including investing in renewable energy(e.g. wind and water power) and both Wyland and Exland could reduce their dependence upon oil by diversifying theirenergy sources to help to increase environmental sustainability. A lack of dependence on a single energy source (e.g.oil) can also make the country more economically robust, thereby helping its long-term economic sustainability.[Tutorial note:Allow a range of expressions of these tensions.](b)Assessment of the risks and suitable risk strategiesRisk 1 (risk of terrorist attack). Probability is low, with a likelihood of an attack thought to be 10% at some point in the next ten years. The impact of such an event would be very high, however, as it would involve severe spillage and complete supply disruption. This would mean that oil would not be delivered to the port at Hiakatown and this would cause a loss of oil to supply to Exland.With any risk assessed as low probability but high impact, the usual strategy to adopt is to transfer or share the risk. At the same time, however, the company and the government of Wyland would be advised to take necessary measures to reduce the probability by instituting suitable security measures such as increased monitoring of the pipeline (perhaps by electronic surveillance or similar). An insurer may share the risk with HEC and, because of the strategic importance of the pipeline to the regional economy and to Exland, the Wyland government may contribute to this effort.Risk 2 (geological movement and/or earthquake) has an assessed ten-year probability of 5% which is probably considered quite low. The impact that such an event would have, though, would be potentially very high. As has happened elsewhere in the world, seismic activity can cause serious and often catastrophic failure of civil engineering installations. This can result in loss of life and, in the case of the Hiaka pipeline, ‘severe long-term supply disruption’. This would be damaging to the Hiakaisland economy and also to the Exland economy.The strategy for this is also to transfer or share. Given the relatively low probability (5% in ten years equates to 0·5% probability in any given year), it should be possible to get an insurer to share the risk for a suitable premium.Risk 3, the technical failure of a joint in the pipeline, was also assessed as having a low probability of occurring. At the same time, the impact of such a failure, presumably because of the technical design of the joints in the pipeline, is quite low. There is the potential for a disruption to supply but only by a few hours and with no leakage of oil.The strategy for this risk (being low probability and low impact) is probably to accept it. Given that the costs of reducing the risk (perhaps by replacing the joints with more robust ones) would exceed the value of the potential losses, there is no reasonable case for any other course of action. In addition, careful and ongoing maintenance of the pipeline may help to reduce this risk.Risk 4 is the risk of animal or natural damage to the pipeline. Because of its exposed northern situation, it is likely that much of the pipeline will be exposed to extremes of weather and it is seemingly possible for large animals also to have some effects on the pipeline over time. The ten-year probability for an event such as this was calculated at 60% and, indeed, the case mentions that one such event happened recently, thus demonstrating the vulnerability to this risk. Given the design and construction of the pipeline, however, the impact of any of these risks occurring is quite low, given as ‘causing superficial damage to pipeline but no disruption to supply’.The strategy for a risk assessed as high probability but low impact is to reduce it as far as possible. In the case of risk 4, this might mean, for example, reinforcing the pipeline at its most vulnerable points to extreme weather, erecting defences to deter animals where they are most present, or adopting similar risk reducing measures.Subjective risk assessmentSubjective risk assessment is distinguished from objective risk assessment by how the figures for probability and impact are arrived at. If these figures can be determined accurately and with reference to some certainty, it will be more objective than when an estimate is based more on a ‘best guess’ basis. Subjective assessments must be treated with more caution than estimates based on more objective data.In the case of Gerry Jupp’s estimates, the case does not say how his figures are arrived at, but it is likely, given that the pipeline is ten years old, that it may be based partly on past performance and partly on a ‘best guess’ about future events.The estimate of the probability of extreme weather events can be partly predicted based on past weather behaviour but estimation of the probability of terrorist events are likely to be much more subjective.The outcome of this is that data generated objectively is likely to be more reliable and useful than those based on more subjective probability or impact determinations.(c)Labour market conditionsThe price paid for any good or service (including labour) is related to the equilibrium point between supply and demand. An excess of supply or a reduction in demand will tend to suppress prices whilst a reduction in supply (say of a key skill in the labour market) or an increase in demand for those skills will tend to increase the market price.In the case of the levels of rewards for chief executives, supply into that market is influenced by the number of suitable people offering themselves for employment and the levels of skills offered by those people. At the same time, organisations buying in the market will seek to match applicants (suppliers) with their own skills requirements. Because there are mismatches between supply and demand, the price rises and falls over time and between countries and regions, just like any other good or service being traded.Because Hiakaisland is a remote location, it may be difficult to recruit to senior positions in the company. Given that highly qualified and suitably experienced people can potentially work anywhere, they may choose employment openings based partly on non-job related factors such as quality of life issues, climate, levels of infrastructure development, schools for children, etc. In that sense, Hiakaisland must compete with other locations, and HEC must compete with other employers to attract high quality people to work for it and accordingly must sometimes pay a market premium.Critical evaluation – arguments forThe first argument in favour of paying the ‘global’ market rate for Mr Hoo is that the company needs to have a highly skilled and capable person in charge of its operations and there is unlikely to be a supply of such labour locally prepared to work for a lower rate. As the supplier of a key export and a major employer in Wyland, the regional economy of Hiakaisland depends upon the company’s success whilst the people of neighbouring Exland depend upon it for 90% of their oil needs.The costs of recruiting an underqualified or inadequately experienced CEO may be much higher than the reward package paid.In highly skilled areas such as the market for chief executives, labour markets can be global, meaning that organisations may buy people from all over the world and sellers (applicants) may go anywhere in order to find suitable work. This results in a competitive situation for both applicants and employers, meaning that a global equilibrium price (level of reward) can seem high in some countries compared to local labour rates (as in Hiakaisland). If there is no suitable applicant prepared to work for a level of reward commensurate with local rates of pay, the company is compelled to pay the going ‘global’ rate whether it wants to or not, possibly including a local market premium.Critical evaluation – arguments againstWhere senior management is ‘parachuted in’ at such a high level of reward compared to local rates, it can make the chief executive in question appear to be grasping and greedy. This, in turn, can be bad for cohesion and loyalty in the workplace.It may also affect the motivation of employees and their willingness to co-operate with management initiatives at times. There is an argument that there should be a fixed multiple between the highest and lowest paid in any organisation. This enables the organisation to demonstrate its commitment to fairness, and to respect local sensibilities about rates of pay. By Mr Hooaccepting a fixed multiple, the company could strengthen its reputation locally and this might create a strategic advantage, especially where the local press and trade unions are concerned.Because living costs are significantly lower on Hiakaisland than in some of the large cities on the Wyland mainland, the ’real income’ on Hiakaisland of a global equilibrium CEO salary is likely to be disproportionately high. In order to enjoy a comfortable life on Hiakaisland, Mr Hoo does not need a salary equivalent to those living in other, more expensive, places.If rewards are not adjusted for local prices, this not only creates the unrest as reported in the case scenario, but also creates additional costs to the employer and hence poorer value for the shareholders.With the CEO having such a high salary compared to local rates, it may make it difficult for Mr Hoo to argue convincingly for cost restraint or in negotiations with employees or trade unions with regard to their rewards. With his own rewards perceived to be disproportionately high by local labour standards, Mr Hoo may be seen as being hypocritical by those he is in negotiations with and this may affect their willingness to negotiate in good faith or to accept his demands. The idea of a social contract is important in many organisations where all parties must believe themselves to have a ‘fair’ deal. This can be difficult when one person is seen to have a larger ‘slice’ compared to others and this, in turn, can affect cohesion and motivation.(d)(i)Hiaka EnergyAddress line 1Address line 2Address line 3Date Minister of IndustryAddress line 1Address line 2Address line 3Dear Minister,Thank you for your recent letter on the subject of internal controls at Hiaka Energy Company (HEC) following the Gojo incident. You may be aware that I have just recently taken over as the chief executive officer (CEO) of HEC. In this letterI would like to explain the plans I have for introducing more stringent internal controls and how I believe that a formalinternal audit function in the company should help to address issues like that which arose in Gojo in the future.T urning first to the difficulties in the recent past, you will be aware of the rough and dramatic terrain over which the Hiaka pipeline has been constructed. At 1,000 km long, this was a very substantial civil engineering project and required a great deal of technical expertise in its construction. It passes through hundreds of kilometres of a remote area in which accessing the pipeline is difficult. This can mean that a visual monitoring of the pipeline and its surroundings, perhaps for threats like rock slides, can be difficult.Despite this challenge, the company does implement maintenance encampments at strategic positions along the length of the pipeline. In taking over from the previous CEO, I have regrettably learned that conditions on these bases are not as comfortable for workers as I would like and as the workers deserve. One of the consequences is that work in these locations is not seen as attractive, morale is sometimes low and it is difficult to recruit people for this work. This can result in a lack of motivation and perhaps less attention to technical detail than is required in providing the highest levels of internal control.Recent years have also witnessed some poor industrial relations between workers and management. You will be aware of the importance of a high level of trust in an organisation and I suspect these problems may have had an effect on the effectiveness of our internal controls. This is not to excuse a lack of attention to internal controls, but it may go some way to explain why things have deteriorated to the extent that they have.In order to provide the levels of maintenance required along the length of the pipeline, HEC has relied for some time on foreign labour acquired from beyond the borders of Wyland. A number of languages are spoken by these people, and it is sometimes difficult to convey detailed technical messages to people when they are uncertain in the language of Wyland. Clear and unambiguous information is necessary in the effective implementation of internal controls and this has not always been possible in the past because of these language problems.(ii)In addressing these problems, however, I am pleased to convey to you that I have recently gained the support of the board to establish a full internal audit function at HEC reporting directly to the board of directors. I see a number of benefits from this once it is established and operating effectively. I hope this will reassure the Wyland government and our other stakeholders.Internal audit functions, such as the one envisaged for HEC, have traditionally had four general roles: to address and assure the quality and effectiveness of internal control systems, of risk management, of technical and legal compliance issues and also of the value for money returned to our shareholders and others. I personally see these roles as interconnected and believe that a great deal of benefit will result in the future.With regard to the effectiveness of internal controls, HEC faces a unique challenge with the physical size and geographical spread of its operations. With such a complex operation and so many stakeholders in the successful delivery of energy from Hiakaisland, internal audit will provide an effective control over these operations. The same applies to the risks which HEC faces. Our new risk manager, Gerry Jupp, has already begun the task of registering andassessing the risks, but internal audit will systematise this and ensure that these are subjected to regular and thoroughinternal audit. This will provide assurance that there are no omissions and that each risk is assessed and recorded asrequired by the internal audit procedures.As an energy company working under Wyland law, HEC is subject to both national regulations and technical rules. Ournew internal audit function will provide assurance that each requirement is taken into account and that the levels ofcompliance are monitored and corrected as necessary. This also applies to the contractual terms of our supply agreementwith the government of Exland. Finally, our new internal audit department will help the company to achieve value formoney. This is not only important for the shareholders but we are aware that sound financial management is a key partof corporate governance and that we also want to achieve value for our customers and employees. Ensuring thatprocurements and other asset purchases are best value, for example, will help us to achieve this. Had such an effectiveinternal audit function been in place at the time of its construction, the pipeline could have been constructed withinbudget and on time rather than being late and over budget as was actually the case.I hope I have been able to address some of your concerns about HEC and that the company continues to enjoy goodrelations with the Wyland government.With all best wishes,Yours sincerely,Gavin HooChief executive2(a)Distinguish between rules and principlesRules and principles are the two general approaches taken to the regulation of corporate governance practice. The United States and Sarbanes-Oxley is the only major example of a rules-based approach, with most countries preferring to regulate governance behaviour through the observation of general principles.In a rules-based approach such as Sarbanes-Oxley (‘Sarbox’ or ‘Sox’), the legal enforceability of the Act requires total compliance in all details. This places a substantial compliance cost upon affected companies and creates a large number of compliance advice consultancies to help companies ensure compliance. It is the judiciary rather than investors which monitors and punishes transgression and this means that there is no theoretical distinction drawn between major or minor compliance failures. This is sometimes seen, therefore, to be clumsy or un-nuanced as a means of enforcement.In a principles-based jurisdiction, listed companies are required by the stock exchange (rather than the law) to meet certain standards of compliance. These standards are usually expressed in a corporate governance code. Companies are required, by the stock exchange’s listing rules, to comply in detail with all provisions in the code but may, if unable to do so, report to the shareholders the ways in which compliance is not fully achieved, the reasons for the lack of compliance and when the company expects to be back in full compliance. The shareholders may then assess the transgression and take appropriate action themselves. Such action can be in the form of direct complaints to management or investor relations, or reducing their holdings of those shares, thereby reducing company value. In other words, the market rather than the state enforces and regulates compliance and this is thought by some to be a more efficient enforcement mechanism.Disadvantages of Sarbanes-Oxley and rules-based approachesThe first disadvantage is that costs are incurred in ensuring and demonstrating compliance. It can be convincingly argued that a substantial proportion of this cost adds very little value to shareholders, especially in small companies, and resources are diverted to demonstrating minor areas of compliance which could be used more effectively elsewhere (such as in company operations). Because compliance on the ‘big’ issues is accorded equal weight in law to compliance with ‘small’ issues, costs are disproportionately incurred in demonstrating compliance in some non-critical areas.Second, compliance is seen to be an inflexible ‘box ticking’ exercise and this can sometimes mean that companies lose perspective of what are the most important aspects of governance and what can sometimes be a less important provision to comply with. Disproportionate amounts of management time can be used in ensuring compliance in an area which may be less important to shareholders, but which is nevertheless an important ‘box’ to have ticked.Third, infringements and transgressions are punished by the state through its judiciary and not by those most directly affected by such transgressions: the shareholders. Those in favour of principles-based approaches argue that there is a greater economic efficiency in having governance monitored by those with the strongest stake in gains and losses (the shareholders), rather than the (in comparison) inefficient and undiscerning agents of the state. In many cases, agents of the state are unable to distinguish between major and minor infringements, merely noticing that a ‘box’ is ‘unticked’ and pursuing punishment asa result.(b)AgencyIn the context of corporate governance, agency refers to the relationship between the principal and an agent. The principal appoints an agent to act on his or her behalf in order to maximise the outcome sought by the principal. In the case of a business organisation with a separation of ownership and control, this relationship comprises shareholders (principals) and directors (agents). As agents, directors’ responsibilities should be primarily concerned with maximising the long-term returns to shareholders and providing timely, accurate and truthful information to shareholders in terms of reporting. The production of reports on internal controls is an important part of this reporting.Benefits of ‘maintaining a system of internal control over financial reporting’First, the system is important for ensuring that information can be accessed as necessary for management decision-making purposes, for reporting, or as part of an audit trail. Information needs to be reliable whenever it is used, either for internal management purposes or for shareholders, and a robust system to produce reporting information is necessary for that. This includes the benefit of the timely delivery of reports.Second, the case describes the importance of accurate ‘evidential matter’ in the preparation of reports. This may be important in providing an audit trail and to demonstrate that the systems and reporting are compliant with GAAP or other relevant systems of accounting rules (such as IFRS). These make it more likely that the reports will be truthful and reliable, both of which are important information qualities for shareholders. The evidential matter is likely to be able to demonstrate that the contents of the external report have been arrived at by using outputs from measurement systems compliant with relevant standards and this will satisfy external auditors, and, in turn, shareholders.Third, the report on internal control (IC) is capable of providing assurance to investors that the company is being well run and that it has effective internal controls capable of supporting a strategy which can maximise the long-term returns needed.As agents of the shareholders’ interests, directors must demonstrate they are responsible stewards of shareholder value. A report on the adequacy of internal controls in place in the company is a convincing way of achieving this.Fourth, because code compliance is mandatory in a rules-based jurisdiction (Sarbanes-Oxley in the case scenario), the maintenance of an effective system of internal control allows management to clearly demonstrate its compliance with the effective laws governing corporate governance. Because there are legal and reputational penalties for any compliance failures (even small ones), the clear and unambiguous signalling of compliance is important to shareholders and the availability of legal sanctions for non-compliance provides greater deterrents and provides greater assurance about the effectiveness of internal controls to shareholders.(c)Arguments for the exemptionFirst, smaller companies generally exist in less complicated environments than larger companies (i.e. with fewer potential risks and less dynamic risks) and are consequently less exposed than larger companies to some losses. Size confers political visibility and a wider range of stakeholder claims upon the organisation. Furthermore, there is less risk to society and to investors from individual smaller company losses. Whereas a large company with inadequate internal controls and/or poor IC reporting may cause thousands of job losses, large losses to share portfolios and individual investors, there is likely to be less overall risk to society and to general investors if a small company slightly misreports the adequacy of its internal controls. It is also likely that small companies do not have widely distributed share ownership, in many cases having the owners being managers. This may mean that shareholders may not need or want the full levels of disclosure of such monitoring compared to larger companies with more distributed share ownership and a greater ‘distance’ between ownership and management.Second, there are also likely to be disproportionate costs (compared to output volumes) of putting systems in place for gathering the necessary ‘evidential matter’. Even when infrastructure is installed, management time is required to prepare evidence of compliance. The preparation and publication of the s.404 report itself can also be disproportionately expensive for a small company because of the fixed costs of report preparation which apply regardless of the variable costs of volumes actually produced.The third reason for exempting smaller companies is that the fixed costs of the infrastructure systems which need to be put into place are disproportionately high for a small company. For a larger company which can allocate the overheads of this investment over a high number of outputs, such costs are manageable or even negligible. For a smaller company with fewer outputs, fixed cost allocation per unit may be seen as unfairly high, especially when cash flow is already very tight and the scope for investment in systems for compliance are very limited.Fourth, the costs of compliance could be a barrier to growth for smaller companies and a disincentive to entrepreneurship.Many believe that any regulation seen as unnecessarily bureaucratic or which does not enjoy the broad support of those affected by it can discourage value creation. This might mean, for example, that affected companies do not grow as quickly as they might, that they may make lower profits and thereby create fewer jobs.3(a)Roles of a nominations committeeNominations committees have five general roles, all of which are concerned with the recommendation of appointments to the board of directors. The first role is to establish the appropriate balance between executive and non-executive directors (NEDs).In some countries, this is influenced by regulation. In the UK, the UK corporate governance code specifies that a half of the whole board should be NEDs. The second role is to ensure that the board contains the requisite skills, knowledge and experience to effectively lead the company and provide leadership. Any identified gaps in these requirements should be filled by new appointments. Third, the nominations committee is concerned with the continuity of required skills, the retention of directors and succession planning. Fourth, it is responsible for determining the most desirable board size given the skill needs, cost constraints and strategies of the company. Finally, the committee is likely to be concerned with issues of diversity and to ensure that the company’s board is adequately representative of the society in which it operates.How to approach the task at HWLIn appointing new directors to the board of HWL, the challenge is finding directors who share the values of the charity and who are also prepared to serve at a market discount. The pressure from Marian Ngogo is to find competent people who match both of these criteria and this is likely to be a substantial challenge.At HWL, the nominations committee could help in several ways with this.。
ACCA课程详细介绍
F9介绍各种投资分析的工具，资产评估的知识，金融衍生工具等。在这门课风险和收入的正比例关系被强化，我一直反复提醒自己return=risk，说得直白点就是收入越高，风险越大。F9和F7的学习方式差不多，先快速的浏览一遍教材，知道大概的内容，当然，遇到具体题目照样不知道怎么做。看FTC的练习册时，前10道好像用处不大，浏览一下就好了。接着是discount cash flow，这道题的做题模式也比较固定，多做几遍题目就没问题了。但是需要理解各种计算项目可行性的model的优缺点，比如有的没有考虑货币的时间价值，有的没有考虑到更远未来的可能存在的现金流（payback period），但是折现法的discount rate 比较难以估计，以及所有model都存在的对未来现金流的估算可能存在偏差的问题等等。然后是working capital management，个人感觉知识点比较混乱，或者说庞杂吧，看过有印象就行。接着是算capital risk（return=risk），以及评估公司价值，这些都是一脉相承的，一个接一个的看下来吧。刚开始很难以理解，当突然懂时，一下子就会豁然开朗，但是这个过程很痛苦。而且这些model 的计算和适用的方式比较固定，得记住。股票市场的有效性那三种论述，以及一些其他的经济学理论，比如MM理论，都很抽象的东西，啃下来，不行的话就背下来吧。F9对我来说最难的是对冲问题了，那些理论我至今没有弄懂，有很多衍生工具也似懂非懂的，以后得找时间来重新看看。汇率的买卖要十分小心，稍不注意就搞反了。所以建议刚开始就做关于对冲汇率那道题，尽管理论很复杂，但是人家不会考那么深，考题还是很easy的，所以要趁自己头脑还清醒时赶紧拿分。F9计算和论述各占一半吧，我们要习惯跟考官瞎扯，只要能得分就写，能写多少算多少，如果三个小时一直在写，然后还没有做完（做完了当然更好），那过的希望就很大了。
ACCA
考试课程：共14门，F1-F9，P1-P3为必选，P4-P7任选两门[1]（教材和考试均用英语）5.考试申请程序入学资格b) 教育部认可的高等院校在校生，顺利通过第一年的所有课程考试且年龄在18岁以上，即可报名成为ACCA 正式学员。
报名截止日期：每年十二月十五日 ( 参加翌年之六月份考试）每年七月三十一日 ( 参加同年之十二月份考试)3, 注册时须提交的证件：(请根据个人情况有选择地准备。
若有疑问，请至电ACCA 上海办事处或 ACCA 其它就近办事处垂讯。
) · 身份证原件、复印件、*翻译件。
· 学历／学位证明（高校在校生需提交学校出具的在校证明函及第一年所有课程考试合格的成绩单）原件、复印件、*翻译件。
· 如是管理、计算机、法律专业或MBA请提交成绩单（加盖学校公章）原件、复印件、*翻译件。
(请根据个人情况有选择地准备。
若有疑问，请至电ACCA 北京办事处、上海办事处或 ACCA 其它就近办事处垂讯。
)4、考试科目申请ACCA学生会在每次考试前1-2个月左右会接到ACCA英国的考试报名通知，学生可根据有关规则和个人准备情况选择参加考试科目和考试地点。
考试科目F1会计师与企业 Accountant in Business (AB)F2管理会计 Management Accounting (MA)F3 财务会计 Financial Accounting (FA)F4公司法与商法 Corporate and Business Law (CL) F5业绩管理 Performance Management (PM)F6税务 Taxation (TX)F7/财务报告 Financial Reporting (FR)F8/审计与认证业务Audit and Assurance (AA)F9/财务管理 Financial Management (FM)P1/ 专业会计师 Professional Accountant (PA)P2/公司报告 Corporate Reporting (CR)P3/商务分析 Business Analysis (BA)）P4/高级财务管理 Advanced Financial Management (AFM)P5/高级业绩管理 Advanced Performance Management (APM)P6/高级税务 Advanced Taxation (ATX)P7/高级审计与认证业务Advanced Audit and Assurance (AAA)考试规则：a) 考试于每年的6月及12月举行。
accaf7考试内容是什么？F7考点解析
accaf7考试内容是什么？F7考点解析acca f7考试内容是什么？F7考点解析ACCA F7《财务报告》涵盖了财务会计、财务报表、公司合并报表、分析并解读财务报表等内容。
F7《财务报告》是对F3《财务会计》的延伸，也是SBR的直接基础。
通过学习F7，可以掌握如何运⽤会计准则和概念框架编制财务报表，分析并解读财务报表。
为了帮助⼤家应对考试，⾼顿⼩编（zgacca）给⼤家整理⼀些ACCA F7考试技巧：Section A(每题2分,共15题，）,sectionB（共3道长题，每题5⼩题，共15题)。
在四⽉考官见⾯会中,考官介绍说section B的题⽬是计算与⽂字混搭。
每道⼤题中的五个⼩题相互不会有关联。
考官甚⾄⿎励考⽣先做简单⽂字部分。
个⼈预计sectionB会根据以前的⼤准则题进⾏改编,⽐如:flightline,Telepath,Shawler等都是曾经⽐较经典题⽬。
SectionA,B题⽬会覆盖整个syllabus,出镜可能⽐较⾼：■environmental provision满⾜capitalizedas PPE/intangible,求期末相关总expense(即depreciation+interest expense);■区分capital expenditure和revenue expenditure;■capitalization of planned overhaul expense;■repayment of government grant(两种⽅法下都必须掌握！）；■capitalization of borrowing costs onqualifying asset(注意capitalization开始的时点是三个条件全满⾜后，若相关⼯作暂停，capitalization必须暂停，完⼯时capitalization终⽌，和资产有没有被使⽤⽆关。
interest income降低CV of asset必须发⽣在capitalization period）；■PPE和investment property互转（特别是PPE转成investmentproperty以公允价值计量）；■capitalization of development expense(重要考点！PIRATE满⾜前的expenses直接进⼊P/L，完⼯后开始计提amortization增加当期expense);■计算recoverable value(higher of FVLCOS and value in use)to decide the amount of impairment;■allocation of impairment in cash generatingunit(必会！）；■reclassification requirements for NCAs heldfor sale and the definition of discontinued operation;■conceptual framework有可能考哪些treatments满⾜fair representation以及principle-based standard setting system的advantages;■区分change in accounting policy(recognition,presentation andmeasurement)and change in accounting estimate;■measurement of biological asset;■as sets outside the scope of IAS41;■finance lease obligation table(withdeposit,both payment in advance and in arrears),straight line amortization ofoperating lease expense with premium or incentive;■sale and finance lease back by using deferred income appro ach.■Five steps of recognizing revenue（specially variableconsideration,financing components and allocation of discount）；■revenue recognized over time;■consignment sales(when the control of asset transferred to dealer);■sale and repurchase(essence=secu red loan);■bill and hold arrangement;■four steps of construction contract;■calculation of exchange profit or loss on monetary items;■EPS calculation under rights issue（注意rights issue bonus fraction的计算）and comparative EPS of previous year;■under full market issue combined with bonus(注意bonus fraction计算）；■DEPs with convertible bond or share option(注意number offree shares的计算）；■financial liability measured at amortized cost;■split of equity and debt elements of convertible bond(注意similar bond without conversion回报率⼀定会⾼）;■measurement of financial asset；■factored receivable(如果坏账风险没有转移给保理⼈，则本质：secured loan);■合并报表，现⾦流量表和报表解析也会出现在section a特别是special organization 之ratio选择；■Group's profit or loss on disposal of subsidiary应该会出现在六⽉考试中！SectionC：如果是⾮合并报表就会搭配合并报表解析，反之亦然准备⾮合并报表：考官在今年四⽉见⾯会中指出考调整retained earnings或者当期net profit的可能性⽐考整个损益表的可能性⼤，剩下SFP或者SOCIE则会考整表。
ACCA PaperF7相关问题及应试技巧详解
（ ） 一 基本按 考试 大纲命题 试 题 的命题 范 围以考 试大纲为
解析 ， 基本覆盖 了考试大 纲所规定 的考试 内容 。 生要在规定 的考 考 试时间 内， 完成大量 的试题 ， 仅要求考生牢 固掌握专业知识 ， 不 而 且要对教材 内容达到相当熟悉的程 度。 如此多题 目分布在 １ ７章的 教材中 ， 以说指定教材 中的每一章都有考题 ， 可 因此考生一定要按 大纲规定范围全面复习准备 ， 放弃盲 目猜题 、 押题 的侥幸心理。 （ ） 二 注重新 点， 体现及时掌握 新知识 、 内容 ， 新 实现知识更新
点是今年教材新增章节的 内容 。 目考核相对简单 ， 题 只要理解相关
公式 即可做 出正确解答 。
的要 求 ２０ 年 《 ０８ 财务成本管理 》 考题虽然覆盖面宽 ， 但考试对新
增 内容非 常重视 ， 本年教材新增 内容主要体现在两个 章节 ， 即第十 六 章和第 十七章 ， 主观题 中涉及 了两个本年教材新增 加的知识点 ，
一
力是尤 为重要 的。这就要求教师不但要有较高的英语 水平 ， 能清 楚、 熟练地表达授课 内容与解 释专业术语 ， 也要有 较为丰富的教学
经验 ， 学生喜欢这 门课程 ， 让 从而喜欢会计专业。 因此 ， 于教师来 对 说， 要求是非 常的高 ， 而师资恰恰又是 Ａ Ｃ Ｃ Ａ教学 的瓶颈。
为众多 的跨 国公 司和专业 机构所推崇 。Ａ Ｃ Ｃ Ａ的考试 课程分为基 础 阶段与专业阶段两部分 ，基础阶段又分为知识课程和技能课程
两部分 。 知识课程 主要涉及财务会计 和管理会计方 面的核心知识 ， 为后面进行技能阶段的详细学习搭建了平 台； 技能课程共六 门 ， 广 泛地 涵盖 了一 名会计 师所 涉及 的知识 领域 及必 须掌 握 的技 能 ， Ｐ ｐｒ ７Ｆｎｎ ｉ ｅ ｏ ｉｇ 以下简称 Ｆ 就属 于技能课 程 中 的 ａｅ ｉａ ｃ ｌ ｐ ｒｎ （ Ｆ ａＲ ｔ ７）
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A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mA C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mPart 2 Examination – Paper 2.5(INT)Financial Reporting (International Stream)December 2006 Answers1(a)Cost of control in Sunlee:Consideration$’000$’000Shares (20,000 x 80% x 3/5 x $5)48,000LessEquity shares 20,000Pre acq reserves18,000Fair value adjustments (4,000 + 3,000 + 5,000)12,000–––––––50,000x 80%(40,000)–––––––Goodwill 8,000–––––––(b)Carrying amount of Amber 30 September 2006 (prior to impairment loss):At cost$’000Cash (6,000 x $3)18,0006% loan notes (6,000 x $100/100)6,000–––––––24,000LessPost acquisition losses (20,000 x 40% x 3/12)(2,000)–––––––22,000–––––––(c)Hosterling GroupConsolidated income statement for the year ended 30 September 2006$’000Revenue (105,000 + 62,000 – 18,000 intra group)149,000Cost of sales (see working)(89,000)––––––––Gross profit60,000Distribution costs (4,000 + 2,000)(6,000)Administrative expenses (7,500 + 7,000)(14,500)Finance costs (1,200 + 900)(2,100)Impairment losses:Goodwill (1,600)Investment in associate (22,000 – 21,500)(500)Share of loss from associate (20,000 x 40% x 3/12)(2,000)––––––––Profit before tax 33,300Income tax expense (8,700 + 2,600)(11,300)––––––––Profit for the period 22,000––––––––Attributable to:Equity holders of the parent19,600Minority Interest ((13,000 – 1,000 depreciation adjustment) x 20%)2,400––––––––22,000––––––––Note: the dividend from Sunlee is eliminated on consolidation.Working $’000Cost of sales Hosterling 68,000Sunlee 36,500Intra group purchases (18,000)Additional depreciation of plant (5,000/5 years)1,000Unrealised profit in inventories (7,500 x 25%/125%)1,500––––––––89,000––––––––A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m2(a)Tadeon – Income statement – Year to 30 September 2006$’000$’000Revenue277,800Cost of sales (w (i))(144,000)–––––––––Gross profit133,800Operating expenses (40,000 + 1,200 (w (ii)))(41,200)Investment income2,000Finance costs – finance lease (w (ii))(1,500)– loan (w (iii))(2,750)(4,250)––––––––––––––––Profit before tax90,350Income tax expense (w (iv))(36,800)–––––––––Profit for the period 53,550–––––––––(b)Tadeon – Balance Sheet as at 30 September 2006Non-current assets$’000$’000Property, plant and equipment (w (v))299,000Investments at amortised cost 42,000–––––––––341,000Current assets Inventories33,300T rade receivables 53,50086,800––––––––––––––––T otal assets427,800–––––––––Equity and liabilities Capital and reserves:Equity shares of 20 cents each fully paid (w (vi))200,000ReservesShare premium (w (vi))28,000Revaluation reserve (w (v))16,000Retained earnings (w (vii))42,15086,150––––––––––––––––286,150Non-current liabilities 2% Loan note (w (iii))51,750Deferred tax (w (iv))14,800Finance lease obligation (w (ii))10,50077,050–––––––Current liabilities T rade payables18,700Accrued lease finance costs (w (ii))1,500Finance lease obligation (w (ii))4,500Bank overdraft1,900Income tax payable (w (iv))38,00064,600––––––––––––––––T otal equity and liabilities427,800–––––––––Workings (note figures in brackets are in $’000)(i)Cost of sales:$’000Per trial balance118,000Depreciation (12,000 + 5,000 + 9,000 w (v))26,000––––––––144,000––––––––(ii)Vehicle rentals/finance lease:The total amount of vehicle rentals is $6·2 million of which $1·2 million are operating lease rentals and $5 million is identified as finance lease rentals. The operating rentals have been included in operating expenses.Finance lease$’000Fair value of vehicles20,000First rental payment – 1 October 2005(5,000)–––––––Capital outstanding to 30 September 200615,000Accrued interest 10% (current liability)1,500–––––––T otal outstanding 30 September 200616,500–––––––A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mIn the year to 30 September 2007 (i.e. on 1 October 2006) the second rental payment of $6 million will be made, of this $1·5 million is for the accrued interest for the previous year, thus $4·5 million will be a capital repayment. The remaining $10·5 million (16,500 – (4,500 + 1,500)) will be shown as a non-current liability.(iii)Although the loan has a nominal (coupon) rate of only 2%, amortisation of the large premium on redemption, gives aneffective interest rate of 5·5% (from question). This means the finance charge to the income statement will be a total of $2·75 million (50,000 x 5·5%). As the actual interest paid is $1 million an accrual of $1·75 million is required. This amount is added to the carrying amount of the loan in the balance sheet.(iv)Income tax and deferred taxThe income statement charge is made up as follows:$'000Current year’s provision 38,000Deferred tax (see below)(1,200)–––––––36,800–––––––There are $74 million of taxable temporary differences at 30 September 2006. With an income tax rate of 20%, this would require a deferred tax liability of $14·8 million (74,000 x 20%). $4 million ($20m x 20%) is transferred to deferred tax in respect of the revaluation of the leasehold property (and debited to the revaluation reserve), thus the effect of deferred tax on the income statement is a credit of $1·2 million (14,800 – 4,000 – 12,000 b/f).(v)Non-current assets/depreciation:Non-leased plantThis has a carrying amount of $96 million (181,000 – 85,000) prior to depreciation of $12 million at 121/2% reducing balance to give a carrying amount of $84 million at 30 September 2006.The leased vehicles will be included in non-current assets at their fair value of $20 million and depreciated by $5 million (four years straight-line) for the year ended 30 September 2006 giving a carrying amount of $15 million at that date.The 25 year leasehold property is being depreciated at $9 million per annum (225,000/25 years). Prior to its revaluation on 30 September 2006 there would be a further year’s depreciation charge of $9 million giving a carrying amount of $180 million (225,000 – (36,000 + 9,000)) prior to its revaluation to $200 million. Thus $20 million would be transferred to a revaluation reserve. The question says the revaluation gives rise to $20 million of the deductible temporary differences, at a tax rate of 20%, this would give a credit to deferred tax of $4 million which is debited to the revaluation reserve to give a net balance of $16 million. Summarising:cost/valuationaccumulated depreciationcarrying amount$,000$,000$,00025 year leasehold property 200,000nil 200,000Non-leased plant 181,00097,00084,000Leased vehicles20,0005,00015,000––––––––––––––––––––––––401,000102,000299,000––––––––––––––––––––––––(vi)Suspense accountThe called up share capital of $150 million in the trial balance represents 750 million shares (150m/0·2) which have a market value at 1 October 2005 of $600 million (750m x 80 cents). A yield of 5% on this amount would require a $30 million dividend to be paid.A fully subscribed rights issue of one new share for every three shares held at a price of 32c each would lead to an issue of 250 million (150m/0·2 x 1/3). This would yield a gross amount of $80 million, and after issue costs of $2 million,would give a net receipt of $78 million. This should be accounted for as $50 million (250m x 20 cents) to equity share capital and the balance of $28 million to share premium.The receipt from the share issue of $78 million less the payment of dividends of $30 million reconciles the suspense account balance of $48 million.(vii)Retained earnings$,000At 1 October 200518,600Year to 30 September 200653,550less dividends paid (w (vi))(30,000)–––––––42,150–––––––3(a)Most forms of off balance sheet financing have the effect of what is, in substance, debt finance either not appearing on the balance sheet at all or being netted off against related assets such that it is not classified as debt. Common examples would be structuring a lease such that it fell to be treated as an operating lease when it has the characteristics of a finance lease,complex financial instruments classified as equity when they may have, at least in part, the substance of debt and ‘controlled’entities having large borrowings (used to benefit the group as a whole), that are not consolidated because the financial structure avoids the entities meeting the definition of a subsidiary.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mThe main problem of off balance sheet finance is that it results in financial statements that do not faithfully represent the transactions and events that have taken place. Faithful representation is an important qualitative characteristic of useful information (as described in the Framework for the preparation and presentation of financial statements ). Financial statements that do not faithfully represent that which they purport to lack reliability. A lack of reliability may mean that any decisions made on the basis of the information contained in financial statements are likely to be incorrect or, at best, sub-optimal.The level of debt on a balance sheet is a direct contributor to the calculation of an entity’s balance sheet gearing, which is considered as one of the most important financial ratios. It should be understood that, to a point, the use of debt financing is perfectly acceptable. Where balance sheet gearing is considered low, borrowing is relatively inexpensive, often tax efficient and can lead to higher returns to shareholders. However, when the level of borrowings becomes high, it increases risk in many ways. Off balance sheet financing may lead to a breach of loan covenants (a serious situation) if such debt were to be recognised on the balance sheet in accordance with its substance.H igh gearing is a particular issue to equity investors. Equity (ordinary shares) is sometimes described as residual return capital. This description identifies the dangers (to equity holders) when an entity has high gearing. The dividend that the equity shareholders might expect is often based on the level of reported profits. The finance cost of debt acts as a reduction of the profits available for dividends. As the level of debt increases, higher interest rates are also usually payable to reflect the additional risk borne by the lender, thus the higher the debt the greater the finance charges and the lower the profit. Many off balance sheet finance schemes also disguise or hide the true finance cost which makes it difficult for equity investors to assess the amount of profits that will be needed to finance the debt and consequently how much profit will be available to equity investors. Furthermore, if the market believes or suspects an entity is involved in ‘creative accounting’ (and off balance sheet finance is a common example of this) it may adversely affect the entity’s share price.An entity’s level of gearing will also influence any decision to provide further debt finance (loans) to the entity. Lenders will consider the nature and value of the assets that an entity owns which may be provided as security for the borrowings. The presence of existing debt will generally increase the risk of default of interest and capital repayments (on further borrowings)and existing lenders may have a prior charge on assets available as security. In simple terms if an entity has high borrowings,additional borrowing is more risky and consequently more expensive. A prospective lender to an entity that already has high borrowings, but which do not appear on the balance sheet is likely to make the wrong decision. If the correct level of borrowings were apparent, either the lender would not make the loan at all (too high a lending risk) or, if it did make the loan,it would be on substantially different terms (e.g. charge a higher interest rate) so as to reflect the real risk of the loan. Some forms of off balance sheet financing may specifically mislead suppliers that offer credit. It is a natural precaution that a prospective supplier will consider the balance sheet strength and liquidity ratios of the prospective customer. The existence of consignment inventories may be particularly relevant to trade suppliers. Sometimes consignment inventories and their related current liabilities are not recorded on the balance sheet as the wording of the purchase agreement may be such that the legal ownership of the goods remains with the supplier until specified events occur (often the onward sale of the goods).This means that other suppliers cannot accurately assess an entity’s true level of trade payables and consequently the average payment period to suppliers, both of which are important determinants in deciding whether to grant credit. (b)(i)Debt factoring is a common method of entities releasing the liquidity of their trade receivables. The accounting issue that needs to be decided is whether the trade receivables have been sold, or whether the income from the finance house for their ‘sale’ should be treated as a short term loan. The main substance issue with this type of transaction is to identify which party bears the risks (i.e. of slow and non-payment by the customer) relating to the asset. If the risk lies with the finance house (Omar), the trade receivables should be removed from the balance sheet (derecognised in accordance with IAS 39). In this case it is clear that Angelino still bears the risk relating to slow and non-payment. The residual payment by Omar depends on how quickly the receivables are collected; the longer it takes, the less the residual payment (this imputes a finance cost). Any balance uncollected by Omar after six months will be refunded by Angelino which reflects the non-payment risk.Thus the correct accounting treatment for this transaction is that the cash received from Omar (80% of the selected receivables) should be treated as a current liability (a short term loan) and the difference between the gross trade receivables and the amount ultimately received from Omar (plus any amounts directly from the credit customers themselves) should be charged to the income statement. The classification of the charge is likely to be a mixture of administrative expenses (for Omar collecting receivables), finance expenses (reflecting the time taken to collect the receivables) and the impairment of trade receivables (bad debts).(ii)This is an example of a sale and leaseback of a property. Such transactions are part of normal commercial activity, often being used as a way to improve cash flow and liquidity. However, if an asset is sold at an amount that is different to its fair value there is likely to be an underlying reason for this. In this case it appears (based on the opinion of the auditor)that Finaid has paid Angelino $2 million more than the building is worth. No (unconnected) company would do this knowingly without there being some form of ‘compensating’ transaction. This sale is ‘linked’ to the five year rental agreement. The question indicates the rent too is not at a fair value, being $500,000 per annum ($1,300,000 –$800,000) above what a commercial rent for a similar building would be.It now becomes clear that the excess purchase consideration of $2 million is an ‘in substance’ loan (rather than sales proceeds – the legal form) which is being repaid through the excess ($500,000 per annum) of the rentals. Although this is a sale and leaseback transaction, as the building is freehold and has an estimated remaining life (20 years) that is much longer than the five year leaseback period, the lease is not a finance lease and the building should be treated as sold and thus derecognised.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mThe correct treatment for this item is that the sale of the building should be recorded at its fair value of $10 million, thus the profit on disposal would be $2·5 million ($10 million – $7·5 million). The ‘excess’ of $2 million ($12 million – $10 million) should be treated as a loan (non-current liability). The rental payment of $1·3 million should be split into three elements; $800,000 building rental cost, $200,000 finance cost (10% of $2 million) and the remaining $300,000 is a capital repayment of the loan.(iii)The treatment of consignment inventory depends on the substance of the arrangements between the manufacturer andthe dealer (Angelino). The main issue is to determine if and at what point in time the cars are ’sold’. The substance is determined by analysing which parties bear the risks (e.g. slow moving/obsolete inventories, finance costs) and receive the benefits (e.g. use of inventories, potential for higher sales, protection from price increases) associated with the transaction.Supplies from MonzaAngelino has, and has actually exercised, the right to return the cars without penalty (or been required by Monza to transfer them to another dealer), which would indicate that it has not ‘bought’ the cars. There are no finance costs incurred by Angelino, however Angelino would suffer from any price increases that occurred during the three month holding/display period. These factors seem to indicate that the substance of this arrangement is the same as its legal form i.e. Monza should include the cars in its balance sheet as inventory and therefore Angelino will not record a purchase transaction until it becomes obliged to pay for the cars (three months after delivery or until sold to customers if sooner).Supplies from CapriAlthough this arrangement seems similar to the above, there are several important differences. Angelino is bearing the finance costs of 1% per month (calling it a display charge is a distraction). The option to return the cars should be ignored because it is not likely to be exercised due to commercial penalties (payment of transport costs and loss of deposit). Finally the purchase price is fixed at the date of delivery rather than at the end of six months. These factors strongly indicate that Angelino bears the risks and rewards associated with ownership and should recognise the inventory and the associated liability in its financial statements at the date of delivery.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o m4(a)Cash Flow Statement of Minster for the Year ended 30 September 2006:Cash flows from operating activities $000$000Profit before tax 142Adjustments for:Depreciation of property, plant and equipment 255Amortisation of software (180 – 135)45300––––Investment income (20)Finance costs40––––462Working capital adjustmentsDecrease in trade receivables (380 – 270)110Increase in amounts due from construction contracts (80 – 55)(25)Decrease in inventories (510 – 480)30Decrease in trade payables (555 – 350)(205)(90)––––––––Cash generated from operations372Interest paid (40 – 12 re unwinding of environmental provision)(28)Income taxes paid (w (ii))(54)––––Net cash from operating activities290Cash flows from investing activitiesPurchase of – property, plant and equipment (w (i))(410)– software(180)– investments (150 – (15 + 125))(10)Investment income received (20 – 15 gain on investments)5––––Net cash used in investing activities (595)Cash flows from financing activitiesProceeds from issue of equity shares (w (iii))265Proceeds from issue of 9% loan note 120Dividends paid (500 x 4 x 5 cents)(100)––––Net cash from financing activities285––––Net decrease in cash and cash equivalents(20)Cash and cash equivalents at beginning of period (40 – 35) (5)––––Cash and cash equivalents at end of period(25)––––Note: interest paid may be presented under financing activities and dividends paid may be presented under operating activities.Workings (in $’000)(i)Property, plant and equipment:carrying amount b/f940non-cash environmental provision 150revaluation35depreciation for period (255)carrying amount c/f(1,280) ––––––difference is cash acquisitions (410)––––––(ii)T axation:tax provision b/f (50)deferred tax b/f(25)income statement charge (57)tax provision c/f 60deferred tax c/f 18––––difference is cash paid (54)––––(iii)Equity sharesbalance b/f(300)bonus issue (1 for 4)(75)balance c/f500–––––difference is cash issue125–––––A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mShare premium balance b/f(85)bonus issue (1 for 4)75balance c/f150–––––difference is cash issue140–––––Therefore the total proceeds of cash issue of shares are $265,000 (125 + 140).(b)Report on the financial position of Minster for the year ended 30 September 2006To: From: Date:Minster shows healthy operating cash inflows of $372,000 (prior to finance costs and taxation). This is considered by many commentators as a very important figure as it is often used as the basis for estimating the company’s future maintainable cash flows. Subject to (inevitable) annual expected variations and allowing for any changes in the company’s structure this figure is more likely to be repeated in the future than most other figures in the cash flow statements which are often ‘one-off’cash flows such as raising loans or purchasing non-current assets. The operating cash inflow compares well with the underlying profit before tax $142,000. This is mainly due to depreciation charges of $300,000 being added back to the profit as they are a non-cash expense. The cash inflow generated from operations of $372,000 together with the reduction in net working capital of $90,000 is more than sufficient to cover the company’s taxation payments of $54,000, interest payments of $28,000 and the dividend of $100,000 and leaves an amount to contribute to the funding of the increase in non-current assets. It is important that these short term costs are funded from operating cash flows; it would be of serious concern if, for example, interest or income tax payments were having to be funded by loan capital or the sale of non-current assets.There are a number of points of concern. The dividend of $100,000 gives a dividend cover of less than one (85/100 = 0·85)which means the company has distributed previous year’s profits. This is not a tenable situation in the long-term. The size of the dividend has also contributed to the lower cash balances (see below). There is less investment in both inventory levels and trade receivables. This may be the result of more efficient inventory control and better collection of receivables, but it may also indicate that trading volumes may be falling. Also of note is a large reduction in trade payable balances of $205,000.This too may be indicative of lower trading (i.e. less inventory purchased on credit) or pressure from suppliers to pay earlier.Without more detailed information it is difficult to come to a conclusion in this matter.Investing activities:The cash flow statement shows considerable investment in non-current assets, in particular $410,000 in property, plant and equipment. These acquisitions represent an increase of 44% of the carrying amount of the property, plant and equipment as at the beginning of the year. As there are no disposals, the increase in investment must represent an increase in capacity rather than the replacement of old assets. Assuming that this investment has been made wisely, this should bode well for the future (most analysts would prefer to see increased investment rather than contraction in operating assets). An unusual feature of the required treatment of environmental provisions is that the investment in non-current assets as portrayed by the cash flow statement appears less than if balance sheet figures are used. The balance sheet at 30 September 2006 includes $150,000 of non-current assets (the discounted cost of the environmental provision), which does not appear in the cash flow figures as it is not a cash ‘cost’. A further consequence is that the ‘unwinding’ of the discounting of the provision causes a financing expense in the income statement which is not matched in the cash flow statement as the unwinding is not a cash flow. Many commentators have criticised the required treatment of environmental provisions because they cause financing expenses which are not (immediate) cash costs and no ‘loans’ have been taken out. Viewed in this light, it may be that the information in the cash flow statement is more useful than that in the income statement and balance sheet.Financing activities:The increase in investing activities (before investment income) of $600,000 has been largely funded by an issue of shares at $265,000 and raising a 9% $120,000 loan note. This indicates that the company’s shareholders appear reasonably pleased with the company's past performance (or they would not be very willing to purchase further shares). The interest rate of the loan at 9% seems quite high, and virtually equal to the company’s overall return on capital employed of 9·1%(162/(1,660 + 120)). Provided current profit levels are maintained, it should not reduce overall returns to shareholders. Cash position:The overall effect of the year’s cash flows has worsened the company’s cash position by an increased net cash liability of $20,000. Although the company’s short term borrowings have reduced by $15,000, the cash at bank of $35,000 at the beginning of the year has now gone. In comparison to the cash generation ability of the company and considering its large investment in non-current assets, this $20,000 is a relatively small amount and should be relieved by operating cash inflows in the near future.A C C A 博客：b l o g .52a c c a .c o mA C C A 书店：s h o p .52a c c a .c o mSummaryThe above analysis shows that Minster has invested substantially in new non-current assets suggesting expansion. T o finance this, the company appears to have no difficulty in attracting further long-term funding. At the same time there are indications of reduced inventories, trade receivables and payables which may suggest the opposite i.e. contraction. It may be that the new investment is a change in the nature of the company’s activities (e.g. mining) which has different working capital characteristics. The company has good operating cash flow generation and the slight deterioration in short term net cash balance should only be temporary. Yours …………………..5(a)(i)IFRS 5 Non-current assets held for sale and discontinued operations defines non-current assets held for sale as those assets (or a group of assets) whose carrying amounts will be recovered principally through a sale transaction rather than through continuing use. A discontinued operation is a component of an entity that has either been disposed of, or is classified as ‘held for sale’ and:(i)represents a separate major line of business or geographical area of operations (ii)is part of a single co-ordinated plan to dispose of such, or (iii)is a subsidiary acquired exclusively for sale.IFRS 5 says that a ‘component of an entity’ must have operations and cash flows that can be clearly distinguished from the rest of the entity and will in all probability have been a cash-generating unit (or group of such units) whilst held for use. This definition also means that a discontinued operation will also fall to be treated as a ‘disposal group’ as defined in IFRS 5. A disposal group is a group of assets (possibly with associated liabilities) that it is intended will be disposed of in a single transaction by sale or otherwise (closure or abandonment). Assets held for disposal (but not those being abandoned) must be presented separately (at the lower of cost or fair value less costs to sell) from other assets and included as current assets (rather than as non-current assets) and any associated liabilities must be separately presented under liabilities. The results of a discontinued operation should be disclosed separately as a single figure (as a minimum)on the face of the income statement with more detailed figures disclosed either also on the face of the income statement or in the notes.The intention of this requirement is to improve the usefulness of the financial statements by improving the predictive value of the (historical) income statement. Clearly the results from discontinued operations should have little impact on future operating results. Thus users can focus on the continuing activities in any assessment of future income and profit.(ii)The timing of the board meeting and consequent actions and notifications is within the accounting period ended 31 October 2006. The notification of staff, suppliers and the press seems to indicate that the sale will be highly probable and the directors are committed to a plan to sell the assets and are actively locating a buyer. From the financial and other information given in the question it appears that the travel agencies’ operations and cash flows can be clearly distinguished from its other operations. The assets of the travel agencies appear to meet the definition of non-current assets held for sale; however the main difficulty is whether their sale and closure also represent a discontinued operation.The main issue is with the wording of ‘a separate major line of business’ in part (i) of the above definition of a discontinued operation. The company is still operating in the holiday business, but only through Internet selling. The selling of holidays through the Internet compared with through high-street travel agencies requires very different assets,staff knowledge and training and has a different cost structure. It could therefore be argued that although the company is still selling holidays the travel agencies do represent a separate line of business. If this is the case, it seems the announced closure of the travel agencies appears to meet the definition of a discontinued operation.。