P2 Corporate Reporting Exam techniques Lili Han Today, I’m going to talk to you about the learning support ACCA provides, both to students and also those who are teaching for ACCA qualifications. I’m going to look at student support first, then move on to the support we offer to learning providers – I think it will quickly become clear that there is quite a lot of overlap in the resources used by these two stakeholder groups. This is quite a high-level presentation, and will be a quick tour around the support we offer, to give you a better idea of what we do. We will then have some time for questions at the end, in case you would like more detail on any of the areas I’ve covered.

Content Introduction Illustration Learning support resources Let’s start with student support. These slide shows you what I’m going to talk about in the next few minutes

Introduction - Exam format - Consolidation - IAS

Introduction - exam format Section A (50 marks) Question 1  Compulsory 35 marks  numbers (‘Groups’) 15 marks  narrative Section B (25 marks/each) Question 2  Accounting standards (2 marks) Question 3  Accounting standards (2 marks) Question 4  Current issues (2 marks) Answer Two out of the three questions!!! Heading and Section 1' Simple English 1' Let’s start with student support. These slide shows you what I’m going to talk about in the next few minutes

Introduction - consolidation Q1 Group Consolidation -- Changes in group structure -- Complex groups -- Overseas subsidiary -- Group SCFs Let’s start with student support. These slide shows you what I’m going to talk about in the next few minutes

Introduction - IAS SFP NCA PPE (IAS 16, IAS 23, IAS 20) Intangibles (IAS 38) Impairment (IAS 36) Goodwill (IFRS 3) Investments (shares/debts) (IFRS 9) Investment in associates (IAS 28 (revised) Investment properties (IAS 40) CA Inventory (IAS 2) Receivables (IAS 39 – Impairment) Cash (IAS 7)

Introduction - IAS Equity (IAS 32) Share capital Share premium Irredeemable preference shares Equity element of convertible debt Retained earnings Revaluation surplus Other components of equity (fx gains/losses, act. Gains/losses) NCL Debentures/loan stock (IAS 39/IFRS 9) Deferred tax (IAS 12) Convertible debentures (IAS 32/39) Pension liability (IAS 19)

Introduction - IAS BASICS!!!! CL Tax payable (IAS 12) Leases (IAS 17)  including sale & leaseback Provisions (IAS 37)   SOCI Profit/loss (IS) Revenue (IFRS 15) Pension expense (IAS 19) SBP (IFRS 2) Fx gains/losses (IAS 21) Finance costs (IAS 19 and IAS 39) Tax (IAS 12) BASICS!!!! OCI Revaluation of PPE Gains and losses on FVTOCI Actuarial gains/losses  ‘Remeasurement’  

Illustration - IAS 37 - IFRS 5 - IAS 16 - IAS 23 And students love them too! We have run a number of student focus groups and trialling events around the globe and they’ve told us how excited they are about these exams. During exam trialling, proposed exam formats are attempted by exam ready students and post-trial focus groups held with a variety of stakeholders including students and learning providers. The data collected from trialling and the focus groups feeds into ACCA’s standard setting process, to amend, improve and finalise activities for the live exam.

Illustration - 1 Provision (IAS37) -Criteria (R) Reasonably reliable estimate There must be a reasonably reliable estimate available for the future costs (O) Obilgation There must be a present legal or constructive obligation at the year end. (T) Transfer Cash must be expected to transfer out in the future.

Illustration - 1 Russian Chemical Spill A company spills chemicals onto Russian land, causing damage that will cost $ 7m to clean. There is no environmental legislation but the company has clean green policies on its websites. Required: Discuss Financial Statement effects for the current year. (3 marks)

Illustration - 1 Suggested Answer 1 Criteria (R)-cost Reliably (O)-present Obligation (T)- economic benefit Transfer 2 Application R- $7m O- constructive obligation arising from past events T - transfer 3 Accounting treatment $7m must be provided. Dr P/L Cr Provision

Illustration - 2 Oil Rig A company starts using an oil rig at a cost as follows: $m Construction 200 Installation 100 The oil starts pumping at the year start. At this point the company sign a licence with the government agreeing to dismantle the rig when the oil runs out which is estimated to be 20 years. The cost of dismantling the rig is estimated at $120m and the discount rate is 10%. Required: Discuss Financial Statement effects for the current year. (7 marks)

Illustration - 2 Suggested Answer 1 Criteria (ROT) 2 Application (ROT) 3 Measurement (PV of provision=18) 4 Fixed asset (200+100+18=318) 5 Depreciation (318/20=16) 6 Unwinding (18*10%=1.8) 7 Financial statement effects SFP $m I/S $m PPE (200+100+18-16) 302 Dep 16 Provision (18+1.8) 19.8 Finance cost 1.8

Illustration - 3 - Criteria (S)-held for Sale (A)-Available for sale Held for sale (IFRS5) - Criteria (S)-held for Sale (A)-Available for sale (L)- Looking for potential buyers (E)- Expected to complete within 1 year

Illustration - 3 Rockby (held for sale) Plant with a carrying value of $5m at the year end ceased to be used because of a downturn in the economy. The company had decided at that time to maintain the plant in a workable condition in case of a change in economic conditions. Rockby subsequently sold the plant by auction six weeks later for $3m. Required: Discuss the effect of the above on the current financial statement. (7 marks)

Illustration - 3 Suggested Answer 1 Held for sale criteria (SALE) 2 Held for sale application (SALE) 3 Impairment indicator 4 Impairment review (CV>RV) 5 Measurement-Impairment=2 (go to p/l) - CV=5 - RV (higher of VIU =0 and NRV=3) 6 After balance sheet event criteria 7 Accounting treatment-non-adjusting

Illustration - 4 Discontinued operations (IFRS5) - Criteria An operation is discontinued if it is closed or sold during the year or held for sale at the year end. (S)-held for Sale (A)-Available for sale (L)- Looking for potential buyers (E)- Expected to complete within 1 year

Illustration - 4 Rockby (discontinued) Rockby has committed itself before its year end to a plan to sell a subsidiary, Bye. The sale is expected to be completed four months after the year end. The subsidiary Bye has net assets of $5m and goodwill of $1m. Bye is expected to make losses of $600,000 up to disposal. Rockby had entered negotiations to sell Bye at the year end and prepared the subsidiary for disposal at that time. Rockby expected to receive $4.4m for the company after selling costs. The value in use of Bye was estimated at $3.9m. Required: Discuss the effect of planned sale of Bye upon the current financial statements. (9 marks)

Illustration - 4 Suggested Answer 1 Discontinued operation 2 NCAHFS criteria (SALE) 3 Application 4 Impairment indicator - loss 5 Impairment review (CV>RV) 6 Measurement-Impairment=1.6 - CV=5+1=6 - RV (higher of VIU =3.9 and NRV=4.4) 7 Allocation 8 Accounting treatment 9 Disclosure

Illustration - 5 Cost (IAS 16) The initial cost of a tangible fixed asset is all the expenditure in bringing the asset to its present location and condition. Finance cost (IAS23) Under existing rules, finance related to the period of building a fixed asset is capitalised.

Illustration - 5 Supermarket A supermarket chain build their own supermarket. Costs are as follows: $m Materials 30 Labour 20 Legal costs related to planning permission 2 General legal costs 3 Apportioned management time 5 Also a 10% loan of $40m was taken out for the full year, but the building took only nine of those twelve months to complete. Required: Calculate and explain initial cost. (3 marks)

Illustration - 5 1 Cost 2 Finance cost Suggested Answer 1 Cost 2 Finance cost 3 Measurement (30+20+2+40*10%*9/12=55)

Learning support resource

Learning support resources ACCA approved tuition and learning materials Student Accountant and its APP Website – exam specific resources ACCA-X on Xuetang X BPP language programme ACCA learning community Student service wechat Let’s start with student support. These slide shows you what I’m going to talk about in the next few minutes

Exam specific resources Syllabus and study guide Examiners’ approach articles Technical articles, study support videos and podcasts Examiners’ reports Self-study guide & re-take guide Question practice: ACCA approved materials Specimen exams Practice tests

Insert supporting copy here, keep to a maximum of four lines Thank you! Insert supporting copy here, keep to a maximum of four lines Post lunch activity Stand in line in order of - height - time working with ACCA - birthday - birth year - teaching F1 to P7 and non-teaching 16/11/2018 ACCA supporting you