CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
Intro
Topic
Time
allocated
Review the aims and objectives of the paper on
page (v). This paper is a progression of F7 and
therefore some of the material you will have
covered in earlier studies. The level of knowledge
and the method and complexity of examining the
topic at P2 is much greater than at F7. Significant
home study will be essential to ensure a pass.
Familiarise yourself with the key areas of the
syllabus and format of the exam.
10 mins
Date
completed
Syllabus
Do not waste too much time in learning definitions
it is highly unlikely that the examiner will require
you to quote definitions. The only definition that is
worth learning is that of FAIR VALUE, it is highly
likely that knowledge of this area would be
required somewhere in the exam. You should be
aware that the IASB issued IFRS 13 on Fair Value
Measurement in 2011, this is an examinable
document in 2012.
1
GAAP and the IASB
This session is generally background reading,
much of which you should be familiar with from
your F7 studies. However, do pay particular
attention to the section relating to ‘Big GAAP,
Little GAAP’, this topic did feature in the
December 2010 exam after the examiner had
previously written an article on the subject.. Be
aware that IFRICs and SICs have now been
excluded from examinable documents.
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
45 mins
1
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Book quiz
Time
allocated
30 mins
(1) What are the sources of GAAP? (1.2)
(2) What is IFAC and what is its stated mission?
(2.1)
(3) What are the objectives of the IASB? (3.2)
(4) What steps do the IASB take to ensure
consistent interpretation of IFRS’s? (4.4)
(5) What are some of the burdens placed upon
small companies when complying with IFRS?
(5.1)
(6) What are the three major differences between
full IFRS and IFRS for SMEs? (5.5.4 – 5.5.6)
(7) Identify the approach adopted by IFRIC when
they consider issuing a new pronouncement?
(6.2)
2
International issues
This session looks at how IFRS fits into the global
accounting framework and considers the steps
being taken towards international harmonisation
of accounting. It is a subject that could be
examined as part of the current issues affecting
accounting.
30 mins
Book quiz
15 mins
(1) Identify 10 environmental factors which
influence accounting? (1.2)
(2) Identify 5 benefits that harmonisation would
have for multi-national entities? (2.1)
(3) Identify 5 barriers to harmonisation? (3)
(4) Outline the aim of the IOSCO project
undertaken by the IASB? (4.2)
(5) What directives have the European Union
issued to help in the harmonisation project?
(5.1)
2
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
3
Topic
Time
allocated
Date
completed
Conceptual Framework.
This is an important topic, both in real life and
from an examination point of view. You need to
pay particular attention to the definitions of
elements given in the framework (§1.4.1) and the
recognition criteria of when these elements should
be recognised in the financial statements (§1.4.2).
It is highly likely that you will need to consider
these elements somewhere within the exam, as this
area will feature on a regular basis. This session
includes some of the new documentation issued
by the IASB and could be the subject of the
examiners current issues question. It also includes
a section on corporate reconstruction, which was
added to the syllabus for 2011. The session also
considers the updated Framework document that
the IASB issued in 2010 and also looks at IFRS 13
Fair Value Measurement which was issued in 2011.
1 hour
Book quiz
30 mins
(1) What is the objective of financial statements? (1.2)
(2) Explain the qualitative characteristic of
faithful representation. (2.4)
(3) Define an asset? (1.4.1)
(4) What are the two recognition criteria? (1.4.2)
(5) What is meant by the term “Economic
Phenomena”, which is used in the
Framework? (2.1)
(6) How have accountants been creative in their
methods of accounting? (3.3)
(7) What methods are available to the accountant
when valuing an asset? (4.1)
(8) When assessing the fair value of non-financial
assets what is meant by “highest and best
market”? (5.3)
(9) When assessing fair value where is the best
place to get a level 1 input valuation? (5.5.1)
(10) What are the 3 Es considered under value for
money? (6.2)
(11) What is the typical order of ranking for
stakeholders in the winding up of an entity. (7.5).
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
3
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Attempt Q1 (Substance over form)
Time
allocated
16 mins
Other Qs you may attempt: Q4 (Creative
accounting).
4
Reporting Financial Performance
This session looks at those standards that have an
impact predominantly on the statement of
comprehensive income, and in the main will have
been covered in you previous studies. IAS 1, 2, 11,
18 and IFRS 5 are all considered along with IAS 34
which deals with Interim Reporting issues. Pay
particular attention to the issues relating to IAS 18
Revenue, and IFRS 5 Discontinued Operations as
these two standards are examined on a regular
basis. IAS 34 is not expected to be examined to any
great depth.
1 hour
Book quiz
30 mins
(1) What are the objectives of IAS 1? (2.1)
(2) Can assets be offset against liabilities on the
statement of financial position? (2.3.7)
(3) What items must be presented in the
statement of financial position? (2.4.2)
(4) What items must be presented in profit or
loss? (2.5.1)
(5) What is the function of the SOCIE? (2.6)
(6) Explain the concept of reclassification (2.5.3)
(7) What is a discontinued operation? (3.2)
(8) When should revenue be recognised in
respect of the sale of goods? (4.2)
(9) What may be the impact on revenue
recognition for a construction company as a
result of the ED on revenue recognition? (4.5)
(10) What are the minimum components of interim
financial reports? (6.2.1)
Attempt Q7 (Meld)
Other Qs you may attempt: Q6 (Revenue
recognition).
4
27 mins
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
5
Topic
Time
allocated
Date
completed
IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
This standard focuses on accounting policies and
the treatment required if a company changes a
policy. Most voluntary changes in accounting
policy must now be done retrospectively. It also
identifies the treatment once errors have been
found (retrospective adjustment) and the
treatment for any changes in estimate (prospective
adjustment).
The topic has featured heavily in a past exam
question, but as with IAS 1 it is an area where
presumed knowledge needs to be taken into the
exam.
45 mins
Book quiz
15 mins
(1) What are changes in accounting estimates?
(2.2)
(2) What other sources of guidance does the
standard suggest that management use when
developing appropriate accounting policies
for items where there is no standard? (3.1)
(3) Under what circumstances is it acceptable to
change an accounting policy? (3.3)
(4) Identify 4 situations where estimates are used
to value assets or liabilities. (4.1)
(5) The treatment for correction of prior period
errors as provided by IAS 8 is that they should
be adjusted retrospectively. Where this is not
practicable, what may companies do instead?
(5.2)
6
Non-current Assets
All of this session is a refresher from your F7
studies and does not introduce any new issues.
However, these topics should not be ignored as
they do feature on a regular basis in the exam. If
you cannot remember some of the points raised in
this session then it is advisable to refer back to
your previous studies and refresh yourself with
the relevant issues
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
1 hour
5
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Book quiz
Time
allocated
30 mins
(1) What costs may be included within the cost of
P,P & E on initial recognition? (1.2)
(2) How are the three categories of subsequent
costs accounted for under IAS 16? (1.4)
(3) Why do some accountants favour the nondepreciation of certain assets? (1.5.2)
(4) How is the movement in the fair value of
investment properties accounted for under the
fair value model? (2.3.2)
(5) How should NCA held for disposal be valued
in the statement of financial position? (3.2)
(6) What are the recognition criteria for Intangible
Assets? (4.1)
(7) Which intangible assets may be subsequently
measured using the revaluation model? (4.3.2)
(8) How should borrowing costs be accounted
for? (5.1)
(9) What two methods of accounting does IAS 20
allow for capital based grants? (6.1)
Attempt Q9 (Fam)
25 mins
Other Qs you may attempt: Q10 (Sponger).
7
IAS 36 Impairment of Assets
This standard considers the impairment (fall in
value) of assets both tangible and intangible. It
looks at factors that may indicate that an
impairment has occurred, the calculation of the
recoverable amount of an asset to compare against
an assets carrying amount and the accounting for
an impairment both in terms of the loss and any
future reversal. It also introduces the concept of a
Cash Generating Unit (CGU) which looks at a
group of assets when it is not possible to consider
impairment of a single asset. Carefully work
through all of the illustrations and examples in this
session. Also return to this session once you have
studied session 18 on accounting for goodwill. It
is expected that this area will feature on a regular
basis.
6
2 hours
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
Topic
Book quiz
Time
allocated
Date
completed
30 mins
(1) What is meant by the recoverable amount of
an asset? (1.2)
(2) Which intangible assets should be tested
annually for impairment? (2.2)
(3) What categories of “costs” are included in
costs of disposal, for the purposes of
calculating “fair value less costs of
disposal.”?(3.2)
(4) What cash flows should be included within
the value in use calculations? (3.3.1)
(5) What is a cash generating unit? (4)
(6) How should an impairment loss be allocated
between the assets of a cash generating unit? (5.2)
(7) When may the impairment loss relating to
goodwill be reversed? (6.2.3)
Attempt Q15 (Starsky)
8
14 mins
Financial Instruments
This is a very important topic both in terms of the
exam and real life. You will be familiar with the
subject from your F7 studies but at this level the
questions are likely to be significantly more
involved. It is an area that has featured very
heavily in previous exams and the examiner has
written a number of articles recently in the student
accountant, so ensure you have read these articles.
Work through §9 and 10 on hedging, very
carefully making sure you are comfortable with
illustrations 6 and 7 on hedge accounting. IFRS 9 is
now the examinable document in respect of
classification and measurement of financial assets
and financial liabilities, make sure you are up-to
date on the requirements of this new standard by
working through §6 and §7.
2 hour
Now read the examiners articles on financial
instruments, but do bear in mind that IFRS 9 was
issued after the articles were written.
http://www.accaglobal.com/students/acca/exa
ms/p2/technical_articles
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
7
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Book quiz
(1) What are the four accounting standards that
deal with financial instruments? (1.3)
(2) Define a financial asset? (3.1)
(3) Why are preference shares generally treated
as a financial liability? (3.1)
(4) Identify the 3 categories of financial asset?
(6.3)
(5) What is a compound instrument, and give an
example? (4.5.1)
(6) If an entity purchases its own equity shares in
the market, what are those shares called and
how are they presented in the entity’s
statement of financial position? (4.6)
(7) What is an embedded derivative and how is it
accounted? (6.4)
(8) Which financial assets are tested for
impairment and when? (6.6)
(9) Define hedging? (9)
(10) What are the three types of hedging
relationships? (10.1.1)
(11) How should the gain or loss on the hedging
instrument in a cash flow hedge be dealt
with? (10.3)
8
Time
allocated
30 mins
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
9
Topic
Time
allocated
This is an important standard. It is a specific
standard that covers the concept of substance vs
form. One of the main reasons the standard was
introduced was due to the creativity of
accountants who would not include the leased
asset and corresponding liability in the statement
of financial position. You need to know the
accounting treatments of both finance and
operating leases paying attention to the impact
that the two accounting treatments will have on
the financial statements. Also be aware of the
accounting rules for sale and leaseback
transactions. Carefully work through the
examples and illustrations in this session. Also be
aware that the P2 syllabus covers lease accounting
by both the lessee and the lessor. The examiner
tested the impact of the ED issued by the IASB in
the June 2010 exam.
1 hour
Book quiz
30 mins
Date
completed
Leases
(1) What is the definition of an operating lease?
(1.5)
(2) IAS 17 lists several examples of terms within a
lease agreement that indicate that the
agreement would be a finance lease. State 5
such indicators? (2.3)
(3) How does IAS 17 require the lease of land and
buildings to be accounted for? (2.6.3)
(4) At what value should the lessee record the
asset acquired under a finance lease in its
statement of financial position? (3.1)
(5) How should an operating lease be accounted
for in accordance with IAS 17? (4.1)
(6) In the books of the lessor, at what value is the
receivable in respect of a finance lease
recorded? (5.2)
(7) A company sells an asset to a bank and then
leases it back. The proceeds from the sale of
the asset are higher than the net book value at
the date of disposal. The leaseback is a finance
lease. How should the profit on sale be
recorded in the books of the company? (7.2)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
9
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Time
allocated
Book quiz (con’t)
(8) Under a sale and operating leaseback, if an
asset is sold above its fair value, which is
above its carrying value, how should the
profit be dealt with? (7.3)
10
IFRS 8 Operating Segments
This is one of the IASBs newer standards which
considers the disclosures required by an entity in
respect of its operating segments. The standard
caused a good deal of debate when first issued by
the IASB and not all accountants were in favour of
the standard. The standard was examined shortly
after its issue and it is not expected to feature on a
regular basis in the exam. Work through the
illustrations which identify a number of the
disclosures required by an entity with operating
segments.
45 mins
Book quiz
30 mins
(1) Which companies are required to apply IFRS
8? (1.1)
(2) Why is the chief operating decision maker
important in respect of IFRS 8? (1.2.2)
(3) What are the quantitative thresholds when
considering a reportable segment? (1.3.3)
(4) What is the core principle when considering
the disclosure requirements of IFRS 8? (2.1)
(5) What disclosures are required in respect of the
assets of an operating segment? (2.3.2)
(6) What reconciliations are required when
reporting segmental information? (2.5)
(7) Is an entity required to disclose information
relating to its customers, and if so what?
(2.7.3)
(8) Research under US GAAP seems to show
what in respect of operating segments? (3.2)
10
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
11
Topic
Time
allocated
Date
completed
IAS 19 Employee Benefits
This is an extremely complex standard that is not
included in the F7 syllabus, therefore most
students are seeing this area for the first time as it
is not an area that many people come across in
their working environment. The standard was
revised in 2011 and is examinable in its new
format for the first time in 2012. Major changes
have been introduced into the standard, especially
relating to the accounting for defined benefits
pension schemes. Any resit students must cover
this session in full as the changes to the accounting
treatment are quite major. Take time to
understand the 2 types of pension schemes
identified in §4 and 5 and then thoroughly work
through illustration 2 and example 1 very carefully
and try to understand where all the figures are
generated from and how they are used in
calculation the expense and the asset or liability to
be recognised.. It is a topic that features on a
regular basis in the exam, and as the standard has
been revised it is likely to appear in the near
future..
2 hours
Book quiz
30 mins
(1) What falls within the scope of employee
benefits? (1.3)
(2) How does IAS 19 define ‘defined benefit
plans’? (1.4)
(3) How should short-term employee benefits be
accounted for? (2.2)
(4) How are defined contribution schemes
accounted for? (4.2)
(5) Which party bears the risk in a defined benefit
scheme? (5.1)
(6) In respect of a defined benefit scheme, if the
fund has a net asset position to be recognised
then what restriction is placed on the amount
of the asset to be recognised? (5.3.1)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
11
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Time
allocated
Book quiz (con’t)
(7) What restrictions are there in respect of a
company recognising actuarial losses of a
scheme through other comprehensive
income? (5.3)
(8) What are the three components that make up
the defined benefit cost that appears in the
statement of comprehensive income? (5.3.2)
(9) Briefly explain what is ‘past service cost’?
(5.3.4)
12
IAS 12 Income Taxes
This is a very important topic and features on a
regular basis in the exam. You will be familiar
with the subject from your F7 studies but at this
level you should expect to be examined on the
more complex issues of deferred tax, particularly
those relating to group issues. Thoroughly work
through the examples and illustrations in this
session, ensuring that you are comfortable with
the concept of accounting for deferred taxes.
2 hours
Book quiz
30 mins
(1) Identify and define the two types of
temporary differences? (1.3)
(2) Briefly explain what is withholding tax? (1.5)
(3) What perspective does IAS 12 follow in
respect of accounting for deferred tax? (3.1)
(4) When should a deferred tax asset be
recognised in the financial statements? (4.2)
(5) Where may the three places that the double
entry for the movement on the deferred tax
balance be made? (4.3)
(6) Which tax rate should be applied to
temporary differences? (5.1)
(7) Should a parent recognise a deferred tax
liability in respect of the investment in a
subsidiary? (6.3.2)
(8) When dealing with unrealised profit in a
group situation whose tax rate should be used
when calculating deferred tax? (6.4)
12
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
Topic
Time
allocated
Date
completed
Book quiz (con’t)
(9) When may an entity offset its deferred tax
asset and liability balances? (7.1)
Attempt Q18 (Kerensky)
13
36 mins
IAS 37 Provisions, Contingent Liabilities and
Contingent Assets
This is a very important standard that could
feature as a discursive or an application question.
You need to know the definitions of a provision
and a contingent liability (§1.3) and that a
provision is recognised in the financial statements
whereas a contingent liability is only disclosed.
One of the reasons for the introduction of the
standard was to try and curb some of the abuses
that were occurring in the area of provisions such
as profit smoothing and profit manipulation. It is
another topic that features frequently in the exams,
normally as part of a composite question.
1 hour
Book quiz
30 mins
(1) What is an obligating event? (1.3)
(2) What is a constructive obligation? (1.3)
(3) What are the three conditions which must be
satisfied for a provision to be recognised in
the statement of financial position? (2.1)
(4) At what amount should a provision be
initially measured? (3.1)
(5) How often should the value of the provision
be re-measured? (3.4)
(6) What is the maximum amount that a
provision can be set up for a future operating
loss? (4.1)
(7) Under what circumstances might an
obligation for future restructuring exist at the
end of the reporting period (and so qualify as
a provision)? (4.3)
(8) Give three example of an adjusting event. (6.1)
(9) How should a proposed dividend be
accounted for? (6.3)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
13
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Attempt Q16 (Genpower)
14
Time
allocated
45 mins
IAS 24 Related Parties
This standard is a very important standard in real
life as it requires disclosure of parties that are
related to each other and whether any transactions
between the parties took place. Although the
standard, and session, are quite short it does have
a major role to play in accounting. It is a standard
that comes up in the exam on a fairly regular basis
and has featured as the major part of a question
under the previous syllabus.
30 mins
Book quiz
15 mins
(1) Define a related party in accordance with IAS
24. (1.2)
(2) What parties are deemed not to be related?
(1.3)
(3) What pricing methods are available in respect
of related party transactions? (2.2)
(4) Identify 5 possible situations where related
party transactions may lead to disclosures.
(3.1)
(5) Does IAS 24 allow the aggregation of
transactions concerning related parties? (3.4)
Attempt Q48 (Connect)
15
IFRS 2 Share-based Payment
This standard considers the accounting treatment
of share-based transactions, including the issue of
share options. An entity is required to account for
share options issued to employees by charging the
cost to profit or loss for the period and at the same
time recognising a separate component of equity
for the credit entry. Carefully work through the
examples in the session, it is unlikely that you will
be required to calculate the fair value of an option
at the grant date. The examiner is very keen to
examiner this area and quite often links the topic
with that of deferred taxes. You may skim read the
disclosure requirements in §6.
14
45 mins
1½ hours
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
Topic
Book quiz
Time
allocated
Date
completed
30 mins
(1) What is a share-based payment transaction?
(2.1)
(2) What are the three types of share-based
payment transactions identified by IFRS 2?
(2.2)
(3) How is the fair value of services received
measured in an equity settled transaction?
(4.2)
(4) If share options are issued to employees
without vesting conditions, on what date are
the services performed by those employees
recognised in the statement of comprehensive
income? (4.3.1)
(5) Fair value of equity instruments may be based
on a valuation model if no market price exists.
What variables as a minimum must this
valuation model take into account? (4.5)
(6) What does the abbreviation SARs stand for in
respect of IFRS 2? (4.6)
(7) What impact will the modification to the
terms of a share option agreement have upon
the financial statements?(4.7)
(8) What is the maximum credit that can be made
to profit or loss in respect of deferred tax
relating to share options? (5.2)
16
Group accounts – Regulatory framework
Revise thoroughly. The circumstances where
subsidiaries are excluded from consolidation are
especially important. Pay particular attention to
Special Purpose Entities it is an area that looks at
the concept of control rather than ownership, one
of the problems with Enron was that they had
special purpose entities. The examiner is quite
keen to include theoretical issues relating to group
accounts in the exam so it is not an area that
should be treated lightly.
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
30 mins
15
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Book quiz
Time
allocated
15 mins
(1) How is control defined? (1.1)
(2) What value can the investment in subsidiary
be carried at in the parent’s books? (1.2)
(3) When does IAS 27 allow a subsidiary to be
excluded from consolidation? (2.3)
(4) How should potential voting rights be
considered when assessing the ability to
control? (2.2)
(5) Must the parent and subsidiaries reporting
dates be the same? (3.2.2)
(6) When is a parent exempt from producing
consolidated accounts? (4.1)
17
Group accounts – Revision of the basics
Revise thoroughly. The ability to consolidate
quickly and accurately is essential for this
examination. Note that you are unlikely to come
up against a simple consolidation. Questions at
this level will almost certainly be taken from the
subject matter of Sessions 18 –23 inclusive. Work
through the consolidated statement of financial
position example ensuring that your knowledge
gained at F7 is still up to date.
1 hour
Book quiz
15 mins
(1) What is the only method of consolidation
allowed under IFRS 3? (1.4)
(2) Before performing the consolidation, what
adjustments should be made to the financial
statements of the subsidiaries? (3)
(3) How may the non-controlling interest in the
assets of subsidiaries be valued under IFRS 3?
(4)
(4) What is the double entry when dealing with
unrealised profit in respect of goods sold
between group companies? (5.3)
Attempt Q24 (Hample)
16
45 mins
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
18
Topic
Time
allocated
Date
completed
Group accounts – Goodwill
IFRS 3 when first issued in 2004 changed
dramatically the accounting for goodwill, the
standard was revised in 2008 leading to further
changes in the calculation of goodwill. The issue of
goodwill is very contentious, many methods of
accounting for goodwill have been adopted over
the past 30 years. Be able to discus the various
accounting treatments for goodwill that have been
used over the past 30 years. Carefully consider the
impact of illustrations 3 and 4, the examiner seems
keen on examining the calculation of the
impairment loss related to goodwill. If necessary
refer back to session 7 on impairment of assets.
1½ hours
Now read the examiners article on this subject.
http://www.accaglobal.com/students/acca/exa
ms/p2/technical_articles
Book quiz
30 mins
(1) How is goodwill defined? (1.2)
(2) At what value is deferred consideration
measured? (2.1)
(3) Where the acquisition of a subsidiary is paid
for by issuing shares to the shareholders of the
subsidiary company, how should the costs of
issuing the shares be treated? (2.3)
(4) How are contingent liabilities of the
subsidiary accounted for? (3.1.2)
(5) What is the period of time allowed by IFRS 3
for assessing fair value of net assets acquired?
(3.4.2)
(6) When calculating the fair value of the assets of
a new subsidiary at the date of acquisition,
how is goodwill in the statement of financial
position of the subsidiary treated? (4.1)
(7) How often must goodwill be tested for
impairment? (5.1)
(8) Briefly explain the method of calculating any
impairment loss for a partially owned
subsidiary? (5.2)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
17
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Time
allocated
Book quiz (con’t)
(9) If on initial calculation of goodwill, it appears
that the fair value of the acquired assets less
liabilities of the subsidiary exceeds the cost of
acquisition, what should the acquirer do? (5.3)
Attempt Q25 (a) Holding.
19
15 mins
Group accounts – More complex groups
This session introduces the problem of subsubsidiaries and sub-associates. There is nothing
new to learn in this session apart from how to
apply the workings and techniques to these
relationships. Work carefully through the
examples and ensure you know when to use what
percentage against the various possible
relationships.
1 hour
Book quiz
15 mins
(1) Where the parent owns 70% of a subsidiary
which itself owns 60% of a sub-subsidiary
what would the non-controlling interest % of
the sub-subsidiary be? (3.1)
(2) What are the two possible techniques to be
used for consolidating a sub-subsidiary?
(3.1/2)
(3) At what point in time would a parent gain
control of its sub-subsidiary? (3.5)
Attempt Q26 (H, S and T)
18
22 mins
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
20
Topic
Time
allocated
Date
completed
Group accounts – Changes in shareholdings
This session focuses on the disposal of
shareholding and the acquisition of shares on a
piecemeal basis, buying shares bit by bit.
2 hours
The accounting for disposal of shares and
piecemeal acquisitions has changed as a result of
IFRS 3 being revised in 2008. Work very carefully
through all of the examples until you are
comfortable with the accounting transactions.
Note that no profit or loss is recognised unless the
control (50%) barrier is breached, either in a
disposal or piecemeal acquisition. If control is
unaffected then any difference in the transaction is
taken directly to equity.
Now read the examiners article on this subject.
http://www.accaglobal.com/students/acca/exa
ms/p2/technical_articles
Book quiz
30 mins
(1) How is the profit or loss on the disposal of
shares calculated in the parent’s single entity
accounts? (1.2)
(2) When a disposal takes the shareholding from
80% to 60%, how much of the subsidiaries
revenue should be included in consolidated
profit or loss? (2.2)
(3) When control of a subsidiary is lost what
adjustments will be required in the
consolidated accounts? (2.3.2)
(4) How will the disposal of a subsidiary be
classified in the consolidated financial
statements? (2.4)
(5) In a step acquisition how is any previous
shareholding valued once control is achieved?
(3.1)
(6) How is goodwill calculated when the status of
the investment moves from associate to
subsidiary? (3.3)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
19
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Time
allocated
Book quiz (con’t)
(7) When moving from a 60% to 80%
shareholding and the NCI are valued at fair
value, what will be the effect on the amount
recognised within equity? (3.4)
Attempt Q30 (Harley)
21
25 mins
Associates and Joint Ventures
This session has been updated to reflect that joint
ventures are now accounted for in the same
manner, equity accounted. The use of
Proportionate Consolidation has been withdrawn
by the IASB as it has replaced IAS 31 with IFRS 11
on joint arrangements.
30 mins
IFRS 11 recognises both joint operations and joint
ventures and also prescribes the accounting
treatment of a joint venture.
Equity accounting itself has not changed as a
result of the new and revised standards, so the
techniques are the same as those used in F7. All
that has really changed is the entities that must use
equity accounting.
Book quiz
(1) Define the equity method of accounting? (1.2)
(2) What evidence may indicate that significant
influence exists? (1.3)
(3) Under equity accounting how is the
investment in the associate measured in the
consolidated financial statements? (3.3/3.4)
(4) How much revenue of the associate is
included within the consolidated profit or
loss? (3.4)
(5) How does the impairment test of goodwill in
an associate differ from that of goodwill in a
subsidiary? (3.7)
(6) Is there a need to recognise unrealised profits
on transactions between parent and associate?
(4.3)
20
15 mins
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
Topic
Attempt Q29 (Assocks)
22
Time
allocated
Date
completed
18 mins
IAS 21 The Effects of Changes in Foreign
Exchange Rates
This session looks at the accounting for single
transactions that are denominated in a foreign
currency and for foreign subsidiaries. Ensure that
you are comfortable with what drives an entities
functional currency as noted in §3.2. Work through
examples 1 and 2 on foreign denominated
transactions before moving onto foreign
subsidiaries. Carefully work through example 3
which covers the basic principles of consolidating
a foreign subsidiary. §5 deals with a disposal of a
foreign subsidiary, don’t get too involved in this
example as it is right on the edge of the syllabus,
although the examiner has tested the basics of the
issue in a previous exam..
2 hours
Book quiz
30 mins
(1) Define presentation currency in accordance
with IAS 21? (1.4)
(2) At what value will a foreign currency
transaction be initially recognised at? (2.1.1)
(3) What happens at the end of the reporting
period to any monetary balances that are
denominated in a foreign currency? (2.1.2)
(4) What should an entity consider when
determining its functional currency? (3.2)
(5) At what exchange rate should assets and
liabilities, of a foreign subsidiary, be
translated at in the consolidated financial
statements. (4.1)
(6) How is the foreign exchange difference
calculated? (4.4)
(7) How is goodwill arising on the acquisition of
a foreign subsidiary treated? (4.5)
(8) How is any cumulative exchange difference
treated on the disposal of a foreign
subsidiary? (5)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
21
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Attempt Q34 (Bertie)
Time
allocated
14 mins
Other Qs you may attempt: Q35 (Terry).
23
IAS 7 Statement of Cash Flows
2 hours
Some of this session will be familiar to you from
your F7 studies. Consolidated cash flow is new at
this level and is a fairly common question which
tends to appear in section A of the exam. Any
question will feature group cash flow. It must be
learnt thoroughly. Work through the examples
relating to consolidation issues carefully. This
topic featured as Q1 in the December 2010 exam.
Book quiz
15 mins
(1) What is meant by cash equivalents? (1.4)
(2) When calculating cash flows from operations
using the indirect method, which profit line is
normally taken as the starting point? (3.3)
(3) What are the advantages of using the indirect
method of presenting cash flows? (3.4.3)
(4) What sub-total do the two methods of
presenting cash flows arrive at? (5.1/5.2)
(5) What additional cash flows may appear in a
consolidated statement of cash flows that would
not appear in a single entity statement? (6.1)
(6) What cash flows will be included in
identifying the cash paid on the acquisition of
a subsidiary? (6.4)
Attempt Q39 (Ladway)
24
Analysis and Interpretation
This session considers ratio analysis and earnings
per share under the same heading. Both are areas
that were part of the F7 syllabus and should
therefore be familiar to you. The examiner is
unlikely to set a straightforward ratio question and
has also said that he will not set too demanding a
question on earnings per share. Revise the issues
from your earlier studies but do note that this
session does look further into the interpretation of
a financial reports.
22
45 mins
1 hours
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
Topic
Book quiz
Time
allocated
Date
completed
15 mins
(1) Why should employees be interested in
analysing financial statements? (2.3)
(2) What limitations are there when carrying out
a ratio analysis? (3.2)
(3) Other than ratios what sources of information
are available for analysts? (3.6)
(4) What impact will the revaluation of NCA
have on key ratios compared to valuing at
historic cost? (3.4)
(5) How is the share figure calculated in the basic
EPS, when there has been a rights issue made
during the year? (6.2.4)
(6) What changes will there be when calculating
the diluted EPS if there is convertible debt in
issue? (7.2)
Attempt Q42 (Webster)
25
45 mins
IFRS 1 First-time Adoption
This standard is very important for those
companies adopting IFRS for the first time as it
explains the procedures required for setting up an
opening IFRS statement of financial position. The
examiner stated in 2011 that he expects to examine
the standard more frequently than has been the
case for the past 5 years. It did feature in the June
2011 and may well be included again in the near
future. Briefly read though this session but do not
get too involved in the measurement principles.
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
30 mins
23
BOOK ASSIGNMENT – CORPORATE REPORTING (P2)
Study
System
Session
Topic
Book quiz
Time
allocated
15 mins
(1) What is the objective of IFRS 1? (1.2)
(2) Define deemed cost in accordance with IFRS
1? (1.4)
(3) Identify 6 exemptions from the requirements
of other IFRSs that IFRS 1 allows? (2.2)
(4) What are the 4 mandatory exceptions to
retrospective application? (2.6)
(5) What reconciliations does IFRS 1 require in an
entities first financial statements under IFRS?
(3.2)
(6) What impact will a move to IFRS have upon
treasury managers? (4.2.2)
26
Ethics and the accountant
Read through this session but also take account of
the fact that ethics appears throughout the ACCA
syllabus so you may need to remember knowledge
from a previous subject that you have taken such
as P1. It seems that the examiner will test this
subject on a regular basis to the extent of a
maximum of 10 marks, so far the area has been
examined in the compulsory Q1. Look at the issue
from a practical perspective and consider what
areas, such as creative accounting, could cause
conflict for an accountant.
30 mins
Book quiz
15 mins
(1) What stakeholders have an interest in an
entity? (1.3)
(2) What ethical issues may an accountant
encounter during their career? (1.4)
(3) What are the two methods of managing ethics
that the session considers? (2)
(4) What are the objectives of the accountancy
profession? (3.2)
(5) What are the five fundamental principles
embodied within the ACCA code of ethics
and conduct? (4.2)
(6) What stages are involved in the resolution of
any ethical conflict? (4.5)
24
Date
completed
CORPORATE REPORTING (P2) – BOOK ASSIGNMENT
Study
System
Session
27
Topic
Time
allocated
Date
completed
Environmental reporting
This is another session where knowledge from
other subjects within the ACCA syllabus may well
be relevant. Read through the notes but also
during your studies try to pay attention to what is
happening in the world outside. There is much
debate in the international press on global
warming and companies have a role to play in the
minimisation of this global warming effect. It is an
area that has been examined as part of compulsory
Q1 to the extent of a maximum of 10 marks. Just a
basic amount of common sense would enable you
to earn 50% of the marks to this question fairly
easily.
30 mins
Book quiz
30 mins
(1) What standard may require some form of CSR
disclosures by certain companies? (1.1)
(2) What are the possible reasons that an entity
may adopt environmental accounting within
their systems? (1.3)
(3) If an environmental pollution charge was
introduced by governments, how might an
entity account for it? (1.4)
(4) What are the three categories of performance
indicators identified within the GRI
guidelines? (2.3)
(5) What are the arguments in favour of an entity
adopting some form of CSR? (3.2)
(6) How do Dupont demonstrate a commitment
to employee health? (3.4.4)
(7) What is the purpose of Management
Commentary? (4.2.2).
(8) What does the Cadbury report code of best
practice say about an Audit Committee?
(4.3.2)
(9) Under Sarbanes-Oxley what are the
requirements for the signing officer? (4.4.2)
©2012 DeVry/Becker Educational Development Corp. All rights reserved.
25