You are on page 1of 20

DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO.

Financial Pillar

F1 – Financial Operations
24 May 2012 – Thursday Morning Session
Instructions to candidates
You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, highlight and/or make notes on the question paper. However, you will not be allowed, under any circumstances, to open the answer book and start writing or use your calculator during this reading time. You are strongly advised to carefully read ALL the question requirements before attempting the question concerned (that is all parts and/or subquestions). ALL answers must be written in the answer book. Answers written on the question paper will not be submitted for marking. You should show all workings as marks are available for the method you use. ALL QUESTIONS ARE COMPULSORY. Section A comprises 10 sub-questions and is on pages 3 to 6. Section B comprises 6 sub-questions and is on pages 8 to 10. Section C comprises 2 questions and is on pages 12 to 15. The country ‘Tax Regime’ for the paper is provided on page 2. Maths tables and formulae are provided on pages 17 and 18. The list of verbs as published in the syllabus is given for reference on page 19. Write your candidate number, the paper number and examination subject title in the spaces provided on the front of the answer book. Also write your contact ID and name in the space provided in the right hand margin and seal to close. Tick the appropriate boxes on the front of the answer book to indicate the questions you have answered.

 The Chartered Institute of Management Accountants 2012

F1 – Financial Operations

COUNTRY X - TAX REGIME FOR USE THROUGHOUT THE EXAMINATION PAPER

Relevant Tax Rules for Years Ended 31 March 2007 to 2012 Corporate Profits Unless otherwise specified, only the following rules for taxation of corporate profits will be relevant, other taxes can be ignored: • • • Accounting rules on recognition and measurement are followed for tax purposes. All expenses other than depreciation, amortisation, entertaining, taxes paid to other public bodies and donations to political parties are tax deductible. Tax depreciation is deductible as follows: o o 50% of additions to property, plant and equipment in the accounting period in which they are recorded; 25% per year of the written-down value (i.e. cost minus previous allowances) in subsequent accounting periods except that in which the asset is disposed of; No tax depreciation is allowed on land.

o • • •

The corporate tax on profits is at a rate of 25%. No indexation is allowable on the sale of land. Tax losses can be carried forward to offset against future taxable profits from the same business.

Value Added Tax Country X has a VAT system which allows entities to reclaim input tax paid. In country X the VAT rates are: Zero rated Standard rated Exempt goods 0% 15% 0%

May 2012

2

Financial Operations

Question One 1. (2 marks) 1.SECTION A – 20 MARKS [You are advised to spend no longer than 36 minutes on this section] ANSWER ALL TEN SUB-QUESTIONS IN THIS SECTION Instructions for answering Section A: The answers to the ten sub-questions in Section A should ALL be written in your answer book. XZ’s sales (inclusive of VAT where applicable) for the three months to 31 March 2012 were: $ A B 63. so that the markers know which sub-question you are answering. A and B. A is standard rated for VAT purposes and B is zero rated. All purchases have incurred VAT at standard rate. Calculate the amount of VAT that XZ is due to pay for the three months to 31 March 2012. For multiple choice questions.400 XZ’s purchases for the three months to 31 March 2012 were $32. (2 marks) TURN OVER Financial Operations 3 May 2012 .2 XZ sells two types of product.333 exclusive of VAT.250 24. You do not need to start a new page for each sub-question. Under the OECD model tax convention an entity will generally have residence for tax purposes in …………………………………………………………………………………. .150 87.1 Complete the following sentence. you need only write the sub-question number and the letter of the answer option you have chosen. Your answers should be clearly numbered with the sub-question number and then ruled off.

5 A customer purchases goods for $115. D an indirect tax with effective incidence. D Independence.000 for the year to 31 March 2012.6 Which ONE of the following is NOT a fundamental ethical principle indentified in CIMA’s code of ethics? A Professional competence. The entity is assessed as owing $15.000 tax for the year. D Final approval of interpretations by the IFRS Interpretations Committee.1. (2 marks) 1. (2 marks) May 2012 4 Financial Operations . D Consumption tax. B Income tax. (2 marks) 1.3 An entity earns a profit of $60. B Publish IFRSs.4 List TWO possible powers that a tax authority may be granted to enable it to enforce tax regulations. inclusive of VAT. (2 marks) 1. B an indirect tax with formal incidence. C Wealth tax. C Integrity. B Professional behaviour. Which ONE of the following types of tax would best describe the tax due? A Capital tax.7 Which ONE of the following would NOT be regarded as a responsibility of the IASB? A Responsibility for all IFRS technical matters. From the customer’s point of view the VAT could be said to be: A a direct tax with formal incidence. C a direct tax with effective incidence. (2 marks) 1. C Overall supervisory body of the IFRS organisations.

000 liability and the probable receipt of cash from the case against the sub-contractor recognised as a current asset. How should these items be treated in TY’s financial statements? A A provision should be made for the $20. The cost of disposal was estimated to be $50. TY used a sub-contractor to install the roof and regards the sub-contractor’s work as faulty. TY has been informed by legal advisers that it will probably lose the case brought against it by the school and will probably win the case against the sub-contractor.8 TY is the main contractor employing sub-contractors to assist it when required.1. the roof has been leaking and some sections are now unsafe. D A provision should be made for the $20. The school is suing TY for $20. Despite this.000 liability should be disclosed as a note.000 liability and the probable receipt of cash from the case against the sub-contractor disclosed as a note.000 liability and the case against the subcontractor ignored. TY has recently completed a contract replacing a roof on the local school. According to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.000 to repair the roof. The asset had a carrying value of $900 and a fair value of $800. C No provisions should be made but the $20.000. (2 marks) 1. which ONE of the following values should be used for the asset in BN’s statement of financial position as at 31 March 2012? A $750 B $800 C $850 D $900 (2 marks) Financial Operations 5 May 2012 . B A provision should be made for the $20. a total of $22. TY has raised a court action against the sub-contractor claiming the cost of the school’s action plus legal fees.9 BN has an asset that was classified as held for sale at 31 March 2012.

End of Section A May 2012 6 Financial Operations . Answers or notes to Section A written on the question paper will not be submitted for marking. The licence requires that at the end of the mine’s useful life.000) using a discount factor of 8%.000 B $463.000 in ten years’ time (present value at 1 April 2011 $463.000 D $1. all buildings must be removed from the site and the site landscaped.000. Contingent Liabilities and Contingent Assets how much should MN include in provisions in its statement of financial position as at 31 March 2012? A $100.10 MN obtained a government licence to operate a mine from 1 April 2011.000 (2 marks) (Total for Section A = 20 marks) Reminder All answers to Section A must be written in your answer book.000.000 C $500.1. According to IAS 37 Provisions. MN estimates that the cost of this decommissioning work will be $1.

Section B starts on the next page TURN OVER Financial Operations 7 May 2012 .

] ANSWER ALL SIX SUB-QUESTIONS IN THIS SECTION – 5 MARKS EACH Question Two (a) Required: Explain the main benefits. Use the information given above to: (ii) Identify the most likely reason for the increase of $200.000 in the income statement represents. of including a statement of cash flows in published financial statements. (Total for sub-question (a) = 5 marks) (b) The draft financial statements for the year ended 31 March 2012 for TX include the following: $000 Statement of comprehensive income (extract) Income tax expense Notes to the accounts: Over provision for the year to 31 March 2011 Estimate of tax due for the year to 31 March 2012 Increase in deferred tax provision for the year to 31 March 2012 850 (50) 700 200 850 Statement of cash flows (extract) Tax paid in the year to 31 March 2012 600 Required: (i) Explain how deferred tax arises.SECTION B – 30 MARKS [You are advised to spend no longer than 9 minutes on each sub-question in this section. (iii) Explain what the over provision of $50. to users of the accounts.000 in the deferred tax provision for the year to 31 March 2012. (Total for sub-question (b) = 5 marks) May 2012 8 Financial Operations .

000. Required: Calculate the estimated amount of corporate income tax that PQ is due to pay for the year ended 31 March 2012. (Total for sub-question (c) = 5 marks) (d) Required: (i) Explain the difference between an excise duty and a single stage sales tax. Country X has a double taxation treaty with Country Z that provides for double taxation relief using the tax credit method. (2 marks) (Total for sub-question (d) = 5 marks) (ii) TURN OVER Financial Operations 9 May 2012 .000 (net of withholding tax at 15%) during the year to 31 March 2012. PQ’s property. PQ received interest of $85.(c) PQ is resident in Country X. from the revenue authority’s point of view.000 for the year. for the application of excise duty.000 and amortisation of intangible assets of $14. plant and equipment qualified for tax depreciation of $98. (3 marks) Describe the characteristics of commodities that make them most suitable. PQ holds a number of bonds and bank deposits in Country Z. PQ’s summary income statement for the year ended 31 March 2012 was as follows: $000 567 (253) 314 85 (12) 387 Revenue Cost of sales and other expenses Finance income Finance cost Profit before tax Other expenses include depreciation of $92.

Required: Prepare a short briefing note that highlights the benefits of an external audit to ABC. which is listed on the local stock exchange. (3 marks) (ii) Explain the criteria that must be met for income to be recognised in an entity’s financial statements.(e) The International Accounting Standards Board’s (IASB) Framework for the Preparation and Presentation of Financial Statements (Framework) identifies five key elements of financial statements. Required: (i) Define income and equity in accordance with the IASB Framework. A new chief executive has recently been appointed and has queried the benefits to ABC of having an external audit carried out each year. (2 marks) (Total for sub-question (e) = 5 marks) (f) You are a trainee accountant working for ABC. (Total for sub-question (f) = 5 marks) (Total for Section B = 30 marks) End of Section B Section C starts on page 12 May 2012 10 Financial Operations .

Section C starts on the next page TURN OVER Financial Operations 11 May 2012 .

747 $000 280 (i) (ii) (ii) (iii) (iv) (v) May 2012 .000 and the deferred tax provision should be increased by $15. 12 Financial Operations 2. This plant and equipment is estimated to have no residual value. The tax due for the year ended 31 March 2012 is estimated at $52. fully paid at 1 April 2011 Patent Plant and equipment at cost Provision for deferred tax at 1 April 2011 Provision for buildings depreciation at 1 April 2011 Provision for plant and equipment depreciation at 1 April 2011 Retained earnings at 1 April 2011 Sales revenue Share premium Trade payables Trade receivables $000 180 27 56 554 90 55 10 186 960 7 550 (vii) (ii) (iii) (iv) (v) (vi) 90 480 75 33 234 121 1.000. DFG management have therefore decided that from 1 April 2011 the expected useful life of this type of plant and equipment should be changed to a total of six years from acquisition. The cost of land included in land and buildings is $260. redeemable 2020) Administrative expenses Amortisation of patent at 1 April 2011 Cash and cash equivalents Cost of sales Distribution costs Equity dividend paid 1 September 2011 Income tax Inventory at 31 March 2012 Land and buildings at cost Loan interest paid Ordinary Shares $1 each.000.747 Additional information: (i) The income tax balance in the trial balance is a result of the under provision of tax for the year ended 31 March 2011.000. Depreciation is charged on buildings using the straight line method at 3% per annum. There were no sales of non-current assets during the year ended 31 March 2012. The plant and equipment affected was purchased on 1 April 2007 and had an original cost of $120.5%. However some plant and equipment has been wearing out and needing to be replaced on average after six years. Buildings depreciation is treated as an administrative expense.200 110 61 135 2.] ANSWER BOTH QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Three DFG’s trial balance at 31 March 2012 is shown below: Notes 5% Loan notes (issued 2010.SECTION C – 50 MARKS [You are advised to spend no longer than 45 minutes on each question in this section. All plant and equipment depreciation should be charged to cost of sales. Up to 31 March 2011 all plant and equipment was depreciated using the straight line method at 12.

At 31 March 2012 the patent was found to have the following values: • Value in use $50. Do not prepare a statement of accounting policies.000 was a 10% deposit for an order of $150. DFG has been advised that it will probably lose the case and that the claim for $35. The $15. Due to recent world economic difficulties DFG has carried out an impairment review of its patent. (vii) (viii) Required: (a) Briefly explain how items (vi) and (vii) should be treated by DFG in its financial statements for the year ended 31 March 2012.000 On 1 July 2011 one of DFG’s customers started litigation against DFG. DFG is still waiting for the results of the new customer’s credit reference and at 31 March 2012 has not despatched any goods.000 received from a new overseas customer. (19 marks) Notes to the financial statements are not required.000 • Fair value less cost to sell $47.000 worth of goods. On 1 April 2008 DFG purchased a patent for a secret recipe and manufacturing process for one of its products. (6 marks) (b) Prepare DFG’s statement of comprehensive income and statement of changes in equity for the year to 31 March 2012 AND a statement of financial position at that date in accordance with the requirements of International Financial Reporting Standards. (Total for Question Three = 25 marks) Section C continues on page 14 TURN OVER Financial Operations 13 May 2012 . but all workings must be clearly shown.(vi) The sales revenue for the year to 31 March 2012 includes $15. claiming damages caused by an allegedly faulty product.000 will probably succeed.

Question Four The draft statements of financial position at 31 March 2012 and statements of comprehensive income for the year ended 31 March 2012 for three entities. plant and equipment Investments: Loan to River 156.320 101 62 2.715 600 385 985 300 Stream $000 670 0 0 670 87 90 0 14 191 861 520 125 645 0 (iv) (iii) (vi) (vii) (viii) 1.500 413 3.500 (865) 635 (124) 511 (80) 431 (118) 313 River $000 693 (308) 385 (70) 315 (40) 275 (20) 255 Stream $000 227 (84) 143 (35) 108 (12) 96 (16) 80 Revenue Cost of sales Gross profit Expenses Finance cost Income tax expense Profit for the year May 2012 14 Financial Operations .913 (iii) 0 (ix) (viii) 393 0 0 393 4.716 River $000 767 0 0 767 320 570 0 58 948 1. Loch.306 340 15 75 430 1.000 Ordinary shares in Stream at cost Current Assets Inventory Trade receivables Current a/c with River Cash and cash equivalents Total Assets Equity and Liabilities Equity shares of $1 each Retained earnings Non-current liabilities Loan from Loch Current liabilities Trade payables Loan interest payable Current a/c with Loch Total Equity and Liabilities Loch $000 1.306 3.193 300 223 1.590 4.107 1. River and Stream are given below: Statements of Financial Position as at 31 March 2012: Notes Non-current Assets Property.715 216 0 0 216 861 Statements of Comprehensive Income for the year ended 31 March 2012 Loch $000 1.

in accordance with the requirements of International Financial Reporting Standards. River posted a cheque to Loch for $26. The fair value of Stream’s net assets was the same as its carrying value at that date. At the date of acquisition these buildings had a remaining useful life of 12 years. however Loch has not yet recorded the acquisition in its accounting records. During September 2011 Loch sold River goods for $220. Loch occasionally trades with River. River’s retained earnings were $130. (Total for Question Four = 25 marks) End of Question Paper Maths Tables and Formulae are on Pages 17 and 18 Financial Operations 15 May 2012 .000. Loch uses a mark-up of 50% on cost. Loch’s accounting policy is to depreciate buildings using the straight line basis with no residual value.Additional information: (i) (ii) Loch holds shares in two other entities.000 on 29 March 2012 which did not arrive until 7 April 2012. River had accrued the loan interest due at the year end but Loch had not accrued any interest income. Loch exercises significant influence over all aspects of Stream’s financial and operating policies.00 each. but all workings must be clearly shown. Loch purchased its shareholding in Stream on 1 April 2011 for $223. Loch acquired all of River’s equity shares on 1 April 2011 in a share for share exchange.000 loan interest was due and had not been paid.000. Loch carried out an impairment review of the goodwill arising on acquisition of River and found that as at 31 March 2012 the goodwill had been impaired by $20. On the 1 April 2011 Loch’s shares had a market value of $2.000 on 1 April 2011. At 31 March 2012 all the goods remained in River’s closing inventory.000. The excess of fair value over carrying value was attributed to buildings owned by River. On 1 April 2011 Loch advanced River a 10 year loan of $300. plant and equipment on 1 April 2011 exceeded its carrying value by $144. At 31 March 2012 $15.000 when Stream’s retained earnings were $45. The fair value of River’s property. (3 marks) (b) Prepare the consolidated statement of comprehensive income for Loch for the year ended 31 March 2012 AND a consolidated statement of financial position for Loch as at 31 March 2012. (22 marks) Notes to the financial statements are not required. River and Stream. The agreed purchase consideration was $950.000.000. (iii) (iv) (v) (vi) (vii) (viii) (ix) Required: (a) Prepare the journal entry to record the purchase of River in Loch’s accounting records.000.

This page is blank May 2012 16 Financial Operations .

352 0.942 0.205 0.404 0.292 0.885 0.164 0.258 8% 0.650 0.060 0.879 0.452 0.361 0.861 0.437 0.855 0.188 0.388 0.209 0.218 0.231 0.312 -n 1% 0.583 0.756 0.686 0.482 0.494 0.530 0.051 17% 0.429 0.458 0.624 0.081 0.735 0.889 0.708 0.797 0.623 0.693 0.279 0.331 0.847 0.099 0.088 0.467 0.333 0.140 0.045 0.962 0.153 0.567 0.163 0.044 0.442 0.026 Financial Operations 17 May 2012 .711 0.208 0.943 0.924 0.508 0.194 0.402 0.215 9% 0.673 3% 0.596 0.744 0.317 0.840 0.534 0.614 0.299 0.901 0.422 0.694 0.870 0.198 0.887 0.836 0.706 0.130 0.419 0.623 0.593 0.888 0.760 0.397 0.116 0.864 0.070 0.990 0.475 0.340 0.078 0.239 0.641 0.396 0.642 0.592 0.863 0.187 0.176 0.700 0.481 0.098 0.290 0.621 0.233 0.178 0.952 0.658 0.061 0.243 0.071 0.124 0.135 0.141 0.376 0.376 0.905 0.893 0.326 0.871 0.351 0.371 0.906 0.731 0.935 0.917 0.705 0.183 0.469 0.386 0.247 0.746 0.907 0.681 0.148 0.593 0.266 0.552 0.853 0.145 0.123 0.728 0.093 0.275 0.111 0.731 0. that is (1 + r) where r = interest rate.116 0.833 0.613 0.095 0.587 0.162 0.837 0.377 0.788 0.731 0.060 0.191 0.444 0.502 0.980 0.125 0.284 0.914 0.257 0.237 0.855 0.352 0.816 0.915 0.659 0.527 0.547 0.675 0.828 0.813 0.195 0.665 0.149 Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 11% 0.258 0.394 0.456 0.743 0.168 0.123 0.252 0.961 0.232 0.315 0.763 0.743 0.424 0.208 0.873 0.909 0.410 0.270 0.152 0.513 0.263 0.497 0.572 0.391 0.MATHS TABLES AND FORMULAE Present value table Present value of $1.943 0.286 0.052 0.577 0.456 0.163 0.314 0.194 0.516 0.942 0.038 0.579 0.712 0.751 0.820 0.681 0.335 0.837 0.112 0.425 0.362 0.822 0.080 0.250 0.093 0.261 0.500 0.051 0.277 0.107 0.792 0.519 0.339 0.322 0.766 0.480 0.125 0.677 0.087 Interest rates (r) 14% 15% 16% 0.713 0.249 0.296 0.054 0.769 0.823 0.031 0.718 0.558 0.783 0.888 0.826 0.081 0.585 0.482 0.436 0.141 0.961 0.971 0.840 0.971 0.570 0. Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Interest rates (r) 4% 5% 6% 0.083 0.130 0.701 0.350 0.370 0.605 0.951 0.722 0.229 0.037 0.051 0.079 0.773 0.388 0.434 0.853 0.476 0.308 0.069 0.368 0.215 0.890 0.227 0.182 0.104 13% 0.645 0.507 0.820 2% 0.544 0.463 0.232 0.555 0.625 0.896 0.204 0.592 0.857 0.862 0.432 0.295 0.415 0.319 0.356 0.285 0.270 0.416 0.178 10% 0.062 0.609 0.456 0.683 0.933 0.093 0.333 0.789 0.650 0.923 0.305 0.554 7% 0.390 0.160 0.980 0.350 0.582 0.287 0.499 0.534 0.327 0.535 0.505 0.636 0.925 0.162 0.475 0. n = number of periods until payment or receipt.703 0.417 0.146 0.627 0.095 0.784 0.844 0.317 0.747 0.209 0.124 12% 0.877 0.564 0.069 0.263 0.794 0.031 20% 0.181 0.212 0.138 0.059 0.666 0.111 0.460 0.497 0.180 0.870 0.557 0.296 0.400 0.601 0.790 0.231 0.630 0.543 0.926 0.065 0.540 0.842 0.043 0.513 0.073 0.772 0.104 0.037 19% 0.804 0.160 0.661 0.043 18% 0.108 0.084 0.676 0.354 0.170 0.225 0.812 0.714 0.137 0.108 0.758 0.

192 4.106 12.372 9.799 5.647 1.160 4.146 5. discounted at r% per annum: PV = 1 r May 2012 18 Financial Operations .302 6.111 7.402 3.899 9.639 4.580 5.273 5.288 4.954 5.628 6.756 8.469 13% 0.604 6.652 8.274 3.713 5.990 5.611 4.918 6.085 11.623 5.194 6.046 2% 0.624 3.630 3.530 9.170 3.197 5.467 6.575 6.103 7.706 3.791 4.926 1.405 5.380 9.723 2.120 7.787 10.690 2.862 1.325 8.784 3.922 4.418 6.421 5.611 4. payable or receivable in perpetuity.942 2.447 9.444 3.635 11.833 2.531 3.528 2.106 12.946 4.322 2.837 4.993 4.988 5.808 4.468 6.031 4.717 4.843 4.795 6.838 10.355 4.889 6.008 5.373 6.544 8. discounted at r% per annum:  1 1 PV = 1 − n r  [1 + r ]  Perpetuity Present value of $1 per annum.577 3.929 7% 0.938 4.546 3.025 17% 0.718 15.963 12% 0.259 5.775 4.122 6.943 1.101 20% 0.722 7.938 6.992 15.702 7.952 0.749 6.970 2.477 12.246 2.842 5.943 8.140 2.759 2.652 10.982 7.019 4.713 2.424 6.339 4.494 4.962 0.696 4.226 18.971 1.229 5.561 13.306 7.240 3.250 7.222 5.811 6.808 2.715 4.730 4.070 5.132 5.938 7.162 8.029 5.161 7.563 9.210 2.877 0.941 3.865 14.909 1.514 11% 0.059 10.385 8.499 7.324 5.733 6.033 5.855 2.954 10.910 5.230 7.351 3% 0.606 7.745 9.274 10.118 10.889 3.710 7.990 1.158 13.242 5.078 4.536 7.914 2.679 16.387 4.885 1.828 13.033 5.004 13.312 3.191 7.360 8.712 5.426 5.986 9.839 7.533 4.471 10.316 5.589 3.303 4.002 5.760 8.847 5.786 5.039 4.234 5.465 4.901 1.950 9.328 5.589 2.917 6.566 2.547 2.463 6.265 5.129 10% 0.559 8.991 3.Cumulative present value of $1 per annum.417 6.108 6.673 3.783 2.938 12.487 7.292 14.687 5.326 3.492 6.061 8.475 5.342 6.607 5.162 5.470 Interest rates (r) 14% 15% 16% 0.435 7.550 6.601 6.836 4.361 2.968 5.166 11.980 1.853 5.348 12.562 16.824 8.139 7.855 1.585 2.829 3. receivable or payable for n years.668 2.877 6. commencing in one year.849 13.549 7.870 FORMULAE Annuity Present value of an annuity of $1 per annum.166 13.462 11.763 10.659 4.668 6.583 5.743 3.495 6.983 9.650 5.935 1.127 3.367 7.535 5.884 3.775 2.840 1.128 5.058 3.656 7.767 5.812 4.904 8.344 4.253 9.690 10.327 4.423 4.868 5.231 4.995 6.575 11.605 2.639 3.584 5.002 5.100 4.772 4.210 7.398 17.534 5.433 3.247 6.486 5.517 3.712 11.487 3.859 1.582 6.659 11.163 4.675 4.870 0.998 4.818 9% 0.917 1.736 2.092 5.111 4.368 11.590 12.623 6.366 7.108 9.335 5.604 9.802 8.747 6.729 6.487 4.805 7.122 9.453 5.452 4.818 6.022 8.199 3.840 6.974 3.690 3.515 7.971 6.798 3.886 1.863 8.394 8.812 4.384 9.134 12.353 19% 0.847 1.876 4.462 6.728 7.047 5. commencing in one year.605 3.106 2.759 6.893 1.974 7.410 3.754 14.851 9.076 4.283 2.379 7.833 1.954 4.890 4.750 6.913 2.660 5.358 8.142 5.206 5.814 7. Receivable or Payable at the end of each year for n years 1− (1+ r ) − n r Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 1% 0.329 4.313 8.793 4.498 3.118 5.902 4.626 1.566 9.605 4.216 5.198 5.724 5.486 4.244 8.439 4.472 7.365 8.564 4.853 10.802 4.207 4.296 11.451 4.786 8.212 5.352 3.594 8% 0.628 18% 0.685 4.786 8.295 11.037 3.336 10.201 8.102 3.878 Interest rates (r) 4% 5% 6% 0.537 5.887 9.020 7.833 5.145 6.324 14.207 6.578 14.389 5.024 7.255 12.134 13.174 2.

inform or notify Appraise or assess the value of Advise on a course of action Financial Operations 19 May 2012 . establish or select after consideration Use an example to describe or explain something Level 3 . LEARNING OBJECTIVE Level 1 . Advise Evaluate Recommend Counsel. make decisions or recommendations. Describe Distinguish Explain Identify Illustrate Communicate the key features Highlight the differences between Make clear or intelligible/State the meaning or purpose of Recognise.ANALYSIS How are you expected to analyse the detail of what you have learned. the details/facts of Give the exact meaning of Level 2 .LIST OF VERBS USED IN THE QUESTION REQUIREMENTS A list of the learning objectives and verbs that appear in the syllabus and in the question requirements for each question in this paper.APPLICATION How you are expected to apply your knowledge. Analyse Categorise Compare and contrast Construct Discuss Interpret Prioritise Produce Examine in detail the structure of Place into a defined class or division Show the similarities and/or differences between Build up or compile Examine in detail by argument Translate into intelligible or familiar terms Place in order of priority or sequence for action Create or bring into existence Level 5 . Apply Calculate Demonstrate Prepare Reconcile Solve Tabulate Put to practical use Ascertain or reckon mathematically Prove with certainty or to exhibit by practical means Make or get ready for use Make or prove consistent/compatible Find an answer to Arrange in a table Level 4 .COMPREHENSION What you are expected to understand.KNOWLEDGE What you are expected to know. VERBS USED List State Define DEFINITION Make a list of Express. It is important that you answer the question according to the definition of the verb.EVALUATION How are you expected to use your learning to evaluate. fully or clearly.

Financial Pillar Operational Level Paper F1 – Financial Operations May 2012 Thursday Morning Session May 2012 20 Financial Operations .