Answers

4DINTIX Paper 3.6INT

Part 3 Examination Paper 3.6(INT) Advanced Corporate Reporting (International Stream) 1 Beel Group Cash flow statement for the year ended 30 November 2004 Cash flows from operating activities Net profit before tax Adjustments to operating activities for: Depreciation Investment income Loss on sale on property, plant and equipment Interest expense Minority interest Associated company $m 2,385 65 (20) 45 35 (7) (16) 2,487 300 (400) (500) 100 1,987 (181) (1,500) 306 (80) (130) (265) 80 110 30 15 (13) 6 (19)

December 2004 Answers

4DINTAA Paper 3.6INT

$m

Decrease in trade receivables Increase in inventory Decrease in trade payables Increase in insurance claims provision Cash generated from operations Interest paid (working 2) Income taxes paid Cash flow before environmental cash flow Payment for environmental damage Net cash from operating activities Cash flows from investing activities Acquisition of subsidiary (working 4) Purchase of property, plant and equipment (working 3) Proceeds from sale of property, plant and equipment Interest received Net cash used in investing activities Cash flows from financing activities (working 5) Proceeds from issuing share capital Proceeds from long term borrowing Dividends paid including minority interest (working 7) Dividends associate company (working 1) Payment of zero dividend bond Net cash from financing activities Net increase in cash and cash equivalents (working 6) Cash and cash equivalents at beginning of period (145 + 30) Cash and cash equivalents at end of period (171 + 44) Working 1 Dividend from Associate/Minority Interest $m AC 55 16 1(6) 65 $m (150) 1(31) (181)

226

(205)

19 40 175 215

Balance at 30 November 2003 Profit/loss for year Balancing figure dividend paid Balance at 30 November 2004 Working 2 Interest paid Interest paid Premium on redemption of bond

$m Minority Interest 355 11(7) 11(2) 346

Working 3 Non-current assets The purchase of property, plant and equipment should be $265 million and the disposal proceeds should be $80 million. This will necessitate an adjustment to the figure for net profit before tax of $45 million for the loss on the sale of property, plant and equipment.

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4DINTAA Paper 3.6INT

Working 4 Acquisitions of subsidiary Purchase of subsidiary Cash acquired with subsidiary $m (160) 30 (130) $m 30 15 (19) $m 20 6 26 14 40 $m 20 (9) 2 13

Working 5 Cash flows from financing activities Issue of ordinary shares (130 sub shares 100) Increase in debt (35 sub loan notes 20) Repayment of bond issue price Working 6 Increase in cash and cash equivalents Cash on short term deposit movement Purchase of investments

Cash increase

Working 7 Dividends paid less minority movement incorrectly shown plus minority dividend (working 1)

Working 8 The premium on the bond will be an interest charge shown under cash flows from financing and the repayment of the capital will be shown under financing. The interest charge for the year will be adjusted on cash flows from operating activities and will, therefore, make the interest expense (30 + 5), i.e. $35 million. 2
4DINTBA Paper 3.6INT

(a)

(i)

Individual accounts As Accounts Investment in B is $1,250 million plus the value of the shares issued to A from B. The value of the shares is the cost of investment in D ($450 million) less the cash received ($50 million). The book value of the investment is preserved in this way. Local legislation is such that shares cannot be issued at a value less than the nominal value. Therefore, D must be worth at least the nominal value of shares issued by B plus the cash consideration. Value of D = $210 x 200 million i.e. $420 million $m 110 50 160

Shares issued by B at nominal value Cash Nominal value of purchase consideration

Therefore the shares are not issued at less than their nominal value. The retained earnings of A will be reduced by the sale of the investment in C ($800 million). (See C below) The shares issued by E will be received by the shareholders of A and will not be shown in As accounts. Bs Accounts The investment in D is switched to Bs financial statements at a nominal value of $450 million. The share premium account is increased by $450 million (cost of investment) less shares issued ($110 million) less cash consideration ($50 million), i.e. $290 million. Therefore the share premium account becomes (200 + 290) $490 million. Cs Accounts E issues shares to the shareholders of A in exchange for As investment in C. This amounts to a distribution of the cost of the investment ($800 million) to the shareholders of A and results in the investment being derecognised from the balance sheet of A and As retained earnings being reduced by $800 million to $1,850 million. (Note: The groups net assets are reduced by the amount of Cs assets at 30 November 2004 which is $850 million and the value of goodwill after impairment ($20 million) i.e. $870 million. Cs accounts will be deconsolidated from the group accounts.)

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4DINTBA Paper 3.6INT

Ds Accounts There will be no effect on the accounts of D. (ii) Consolidated Balance Sheet A Group (after reconstruction) A $m 1,700 1,650 B $m 1,000 1,450 1,450 4,800 1,000 1,950 1,850 4,800 1,750 2,200 1,610 1,490 1,100 2,200 100 400 200 125 175 400 0,345 2,300 5,440 1,000 1,950 2,490 5,440 D $m 300 Revaluation $m 95 Group $m 3,095

Tangible non-current assets (see working) Investment in B (1,250 + 450 50) Investment in D Goodwill Net current assets

Share capital Share premium account Retained earnings

(b)

Group Retained Earnings Alternative (by ref to A, B, D) $m 1,850 1,650 1,,25 2,525 1,1(26) 111,(9) 2,490

A B (1100 450) C (400 250 40 40) D (75 50)

$m 2,650 1,650 11,70 11,25 3,395 11,(26) 11,1(9) 1,(870) 2,490

Less: Goodwill amortisation Impairment Demerger of C (850 + 20)

Working Calculation of goodwill and impairment B $m 1,250 1,500 1,200 1,450 1,150 (1,200) 1,150 1,(20) 1,130 1, 30 1,30 C $m 800 300 150 250 (700) 100 1(40) 160 120 140 D $m 450 200 125 150 145 (420) 130 1(6) 124 115 119 115 Group Accounts $m (B and D only)

Cost of investment Less net assets acquired: Share capital Share premium Retained earnings Revaluation (balancing figure) Fair value of net assets acquired Goodwill Amortisation Value at 30 November 2004 Carrying value after impairment test Impairment Value in consolidated accounts

95

(26)

1(9) 45

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4DINTBB Paper 3.6INT

(a)

Futures contracts and sale of inventory The hedge is a cash flow hedge of the metal inventory. Hedge accounting must follow strict criteria before it can be used. Management must identify, document and test the effectiveness of the hedge. The hedged item and instrument must be specifically identified. The gains and losses on the hedged item and instrument should almost fully offset each other over the life of the hedge. The effectiveness of the hedge must be tested regularly through its life and should fall within the range 80 125% over its life. The risk being hedged with a cash flow hedge is the potential volatility in the inventory selling price. Changes in the fair value of the hedge are deferred in a hedging reserve in equity and recycled to the income statement when the hedged transaction impacts on income (IAS39). Before this method of accounting can be used in this scenario, the effectiveness of the hedge must be tested. The change in the fair value of the futures contracts over the period is $600,000 (200,000 ounces x $24$21) and would be recorded initially in the hedging reserve. The change in the selling price of the inventory is $500,000 i.e. $506m minus $456m. (200,000 x $228) The effectiveness of the hedge is 600 i.e. 120% 500

This falls within the acceptable range of the effectiveness test. Thus if hedge accounting is used the futures contracts would be recorded at fair value when taken out on 1 December 2003 ($48 million). On the subsequent settlement of the contracts for $21 per ounce a gain of $600,000 would be recorded in the income statement having been transferred from the hedging reserve. The purpose of hedge accounting is to ensure that gains and losses on the hedging instrument are recognised in the same performance statement as the gains and losses on the hedged item. Hence the gains and losses on the instrument will be recorded in the hedging reserve until the sale of the artefacts. Income Statement (extract) Revenue artefacts ($228 x 200,000) Cost of sales $000 4,560 (4,000) 560 600 1,160

Profit on futures contracts from Hedging reserve (200,000 x $24 $21)

(b)

Embedded derivative contracts to purchase materials The contract with the supplier constitutes an embedded derivative. An embedded derivative is a derivative instrument that is embedded in another contract, that is the host contract. An embedded derivative should be separated from its host contract and accounted for separately unless the economics of the derivative are closely related to the host contract and the instrument is measured at fair value through profit or loss. For this to be the case in a contract for the purchase of goods, the currency of payment should be the reporting currency of either party or the one in which contracts for the goods are normally priced in. This is unlikely to be the case for this contract and, therefore, Artright should separate the quarterly forward contracts and recognise them as derivatives. They should be accounted for under IAS39 at fair value through the profit and loss. However, the revised IAS39 has concluded that if the denominated currency is commonly used in business transactions in the business environment then it need not be separated. The host contract is the agreement to purchase the packaging materials. As at 30 November 2004, the forward contract will have a fair value of zero and will not affect the financial statements at that date. Impairment of receivables The financial asset is impaired if its carrying amount is greater than the present value of the expected future cash flows discounted at the financial instruments original effective interest rate (IAS39 para 63). In the case of Artright, the following impairment will occur: Due dates 31/5/05 $000 1,050 1,000 50 0953 4765 30/11/05 $000 1,100 1,040 60 0909 5454

(c)

Total contractual cash flows Total expected cash flows Difference Discount factors Impairment

Therefore, the total impairment of the loans outstanding at 30 November 2004 is $102,190 Conversion of receivable to a loan The financial difficulties of the customer is an indicator of an impaired asset. The question arises as to whether a borrowers financial difficulties will cause the recognition of an impairment loss. Whether the loan is impaired will depend on the terms of the restructured loan. The loss due to impairment will be the difference between the assets carrying amount and the

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4DINTBB Paper 3.6INT

expected future cash flows under the new loan agreement. The discount rate used will be the effective interest rate (10%). The present value of the future principal and interest payments will in this case be equal to the carrying amount of (200,000 100,000 + 16,500) $116,500 and no impairment will be recognised. (d) Derecognition of a financial asset factoring of receivables The question arises as to whether the sale of the receivables should result in them being derecognised in the balance sheet. Artright has in effect transferred control of a financial asset and in doing so has created a new financial liability. The new liability should be recognised at fair value (IAS39 para 25). The provision of the limited guarantee creates the new liability. Because Artright has transferred the control over the receivables and the bank has the contractual right to receive cash payments from the trade receivables and Artright, then the transaction should be derecognised and treated as a sale. The sale would be recorded as follows: DR $000 440 72 CR $000

Cash received Loss on disposal income statement Receivables (sold) Liabilities (fair value of guarantee)

4DINTBC Paper 3.6INT

512

500 12 512

(a)

Report to the Board of Directors of Pohler Speed Discussion of key elements of financial statements for the year ended 30 November 2004 The following report sets out the key points in the financial statements for the year ended 30 November 2004, together with a discussion of the proposed accounting treatment. Employee share scheme Recognition and measurement of executive share option plans is now dealt with by IFRS2 Share-based payment. IFRS2 proposes measurement of share options on the basis of fair value. The issue of how the fair value of share options should be measured is difficult as option valuation models are far from being an exact science. It was felt that the area should be dealt with at an international level to prevent any competitive disadvantage arising through large expenses appearing in the income statement. The measurement of share-based payment is dependent upon whether the transaction is cash-settled or equity-settled. The IFRS is based on the view that at the measurement date the value of the promise to issue equity (equity settled transaction) is equal to the fair value of the goods and services it expects to receive. For transactions with employees, the fair value of the services received can be determined by using the fair value of the equity instruments granted at the grant date. The fair value of the services received should be recorded as an expense and as an increase in equity. For cash settled transactions, the IFRS requires a company to measure the goods and services acquired and the liability incurred at the fair value of the liability. The IFRS applies to all new schemes operating after the issue of the original ED (7 November 2002) and should be applied for all annual periods beginning on or after 1 January 2005. Earlier application, as with most standards is encouraged, but not required. Thus there is no problem with applying previous IASB proposals in the current financial statements and adjusting the comparative figures accordingly. The charge against annual profits will be different under IFRS2 and maybe the company feels there is some slight profit advantage in applying previous proposals. However on application of the IFRS, comparative information is restated and the opening balance of earnings for the earliest period (at 1 December 2003) will be adjusted. Thus there is no real advantage to the company in applying previous proposals. Rather than applying out of date proposals, the company would be better served by applying IFRS2 in the current period. Operating leases SIC27 Evaluating the substance of transactions involving the legal form of a lease considers whether a leasing agreement meets the definition of a lease in IAS17 Leases and how a company should account for any fee that it might receive. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership. All other leases are classified as operating leases. In this case, the beneficial and legal ownership remains with Pohler Speed, and Pohler Speed can in fact make use of the electronic sorting systems if it so wishes. Also for a lease asset to be a finance lease the present value of the minimum lease payments should be at least substantially all of the fair value of the leased asset (para 8d). In this case, this amounts to 714% ($100 million $140 million) which does not constitute substantially all. Thus there does not seem to be any issue over the classification of the lease as an operating lease. The immediate recognition as income of the future benefit at net present value is a little more problematical. IAS17 says that lease income from operating leases should be recognised on a straight line basis over the lease term unless another systematic basis is more representative. If a fee is received as an up front cash payment then IAS18 Revenue (para 20) and SIC27 should be applied. (See consensus para 8) If there is future involvement required to earn the fee, or there are retained risks or risk of the repayment of the fee, or any restrictions on the lessors use of the asset, then immediate recognition is inappropriate. The present policy of recognising the total lease income as if it were immediate income, which it is not, would be difficult to justify. Similarly, as regards the deposit received, revenue should only be recognised when there is performance of the contract. Thus as there has been no performance under the contract, no revenue should be accrued in the period.

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Provision for restructuring IAS37 Provisions, contingent liabilities and contingent assets sets out the general recognition criteria for a provision. However, in the case of restructuring provisions, an obligating event must have arisen. It is unlikely that a liability will arise from a legal obligation as the obligation is likely to be constructive by nature. Specific conditions have to exist before a constructive obligation can exist. These conditions are: (i) (ii) a detailed formal plan for the restructuring must exist a valid expectation must have been raised in those affected by the reorganisation

4DINTBC Paper 3.6INT

In the case of Pohler Speed, the company has approved the restructuring and communicated it via the trade unions to employees prior to the year end and effectively commenced the restructuring by issuing redundancy notices and selling plant. The public announcement of the plan after the year end does not of itself trigger the restructuring nor create the valid expectation. Similarly, neither does the board decision alone create a constructive obligation. However, prior to the year end the company has started to implement the plan and has announced the main features of the plan to those affected by it, and, therefore, it would seem that a valid expectation has been created and a provision should be made. The only issue is that the restructuring is expected to take two years to complete which may mean that the provision is premature as the company could change the plan. However, it would appear from the above that a provision of $15 ($20m $5m) million should be made, as the cost of retraining and relocating staff is not allowed as valid expenditure to be included in a restructuring provision because the costs relate to the future conduct of the business. Where a restructuring will take a long time, then it is unlikely that all of the reorganisation will represent an obligation at the first year end. Costs are likely to be charged over a number of accounting periods. Thus the totality of the costs should be disclosed (IAS37) and maybe the costs which are known to be incurred by the time of the approval of the financial statements should be provided for. This is an area where there can be considerable debate. Fine for illegal state subsidy The payment of the fine constitutes a cost to the company and is not an intangible asset. An intangible asset is a resource controlled by the company as a result of past events and from which future economic benefits are expected to flow (IAS38 Intangible Assets). This payment does not meet this definition. The subsidy was used to offset trading losses and, therefore, the fine should be charged against current years profits and disclosed as a separate line item under IASI Presentation of Financial Statements, para 86/87. Goodwill Generally the situations where negative goodwill is recognised are very few. IFRS3 Business Combinations requires the fair values of the assets to be reassessed and liabilities checked if it appears that negative goodwill is arising. If a business is loss making there has to be a question mark over the value of the net assets. Normally only genuine bargain purchases would create negative goodwill although errors in measurement, and the requirements of an accounting standard might impact on the calculation of negative goodwill. IFRS3 Business Combinations says that negative goodwill should be recognised immediately in the income statement. However, negative goodwill already recognised would be derecognised on the application of IFRS3 and would be treated as an adjustment to the opening balance of retained earnings. The treatment is unacceptable, as previously recognised negative goodwill should not be credited to current income. However, because IFRS3 applies to accounting periods beginning on or after 31 March 2004, the company can credit the income statement with negative goodwill for one more period. The review of provisional values of the net assets at the date of acquisition was acceptable under previous standards when additional evidence becomes available to assist in the valuation of the net assets at the date of acquisition. This adjustment should take place within twelve months of the date of acquisition. Similarly under IFRS3 if provisional values have been attributed to the net assets at the date of acquisition, then initially those values should be used. However, any adjustments to those values should occur within 12 months of the acquisition date as a result of completing the initial accounting for the business combination, and any adjustment to goodwill as a result of changes to the value of the net assets should be made. (There will be an adjustment to the opening reserves for the increase in the amortisation of goodwill for prior years.) Thus as long as the evidence is reliable there will be a corresponding increase in the value of goodwill and decrease in opening stock. It will increase the charge against the current years profit. ($4m divided by 5 years i.e. $08m) IFRS3 says that subsequent adjustments to the initial accounting for goodwill can only be recognised if there is an error which this is not. IFRS3 is applied prospectively so that any goodwill arising prior to 31 March 2004 should be amortised for the current year to 30 November 2004. Thereafter amortisation of goodwill should stop and the goodwill should be tested for impairment in accordance with IAS36 on 1 December 2004.

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4DINTBD Paper 3.6INT

(b)

Impact on profit before tax All of the accounting practices chosen by the company have a profit effect. The adoption of the accounting practices for share based payment would not require an adjustment to profit as the accounting practice is acceptable. The other accounting practices impact on current profits: Profit for year before tax Operating lease Provision Fine less Amortisation Goodwill negative Goodwill Amortisation Goodwill inventory increase Inventory goodwill adj opening inventory $m 500 (100) (15) 460 (23) 240 (60) 08 (437)

(1808)

4 Loss for period (2288) Thus it can be seen that when the current accounting practices are revised, the original profit figure turns into a loss for the period of $2288 million. Memorandum to the Directors of Trident, a public limited company Implications of IFRS1 First time Adoption of International Financial Reporting Standards

5 (a)

The introduction of IFRS1 will have wide implications for any company which adopts IFRSs for the first time. The IFRS applies when a company adopts IFRSs for the first time by an explicit and unreserved statement of compliance with IFRSs. The opening balance sheet for the purpose of IFRS1 and the date of transition will be as at 1 January 2004 as this is the beginning of the comparative period. As of that date the company will have to: (i) (ii) (iii) (iv) recognise and derecognise assets and liabilities as required by IFRSs reclassify items recognised under local GAAP as an asset, liability or equity that are treated differently under IFRSs apply IFRSs in measuring all recognised assets and liabilities recognise any adjustments required to move from previous GAAP to IFRS directly in retained earnings or an appropriate category of equity.

IFRS1 grants limited exemptions from these requirements. The IFRS requires retrospective action in some areas but also prohibits this where judgment would be required by management about past conditions after the outcome of the transaction is already known. The transitional provisions in IFRS generally do not apply and the latest version of the IFRS at the date of the first financial statements (31 December 2005) shall apply to its opening balance sheet (1 January 2004) and throughout all periods presented in its first financial statements. Thus Trident will have to prepare its opening balance sheet retrospectively, which may cause problems in terms of the collection of the information required as at 1 January 2004. (b) An immediate question arises as to whether partial adoption of IFRS, as in the case of the subsidiary Mask, would constitute prior adoption of IFRS and, therefore, would not require the use of IFRS1. (IFRS1 applies to the first IFRS financial statements beginning after 1 January 2004.) However, because Mask only utilised IAS32 and IAS39 in its financial statements there would not have been an explicit and unreserved statement of compliance with IFRS and, therefore, Mask will be treated as a first-time adopter (FTA) and the assets and liabilities measured using IFRS1. Trident has become a first time adopter later than its subsidiary Spar. Spar has already applied the IFRS in force at 31 December 2003, and these balances will be included in the opening balance sheet of Trident at 1 January 2004 (after the normal consolidated adjustments). Thus there will be no need to adjust retrospectively the financial statements of Spar for the IFRS effective at 31 December 2005, and no need to apply IFRS1 to the opening balances of Spar at 1 January 2004. The following specific points should be noted by the Directors of Trident as regards the transition to IFRS: (i) A first time adopter can keep the original previous GAAP accounting and not apply IFRS3 Business Combinations retrospectively to past business combinations. If a first-time adopter restates any business combinations to comply with IFRS3, then all later business combinations shall be restated and also IAS36 Impairment of Assets and IAS38 Intangible Assets should be applied from the same date. If IFRS3 is not applied retrospectively, there are certain consequences, for example: (a) all the assets and liabilities not recognised under previous GAAP that should be recognised under IFRS should be shown in the opening IFRS balance sheet. Thus in the case of Mask, as there is no local concept of substance over form, assets or liabilities not shown in the GAAP accounts may appear under IFRS. (b) the carrying amounts of the assets and liabilities under local GAAP will be the same under IFRS in the opening balance sheet and shall be their deemed cost under IFRS. If however IFRS requires a fair value measurement, the assets and liabilities should be shown on that basis, with the adjustment going to opening reserves. (c) Any assets and liabilities recognised under local GAAP but not recognised under IFRS should be excluded from the opening IFRS balance sheet. (d) Past business combinations cannot be reclassified. Therefore purchase accounting must be used. (IFRS3 outlaws uniting of interests.) Generally, the principles in (a) above should be applied.

(c)

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4DINTBD Paper 3.6INT

(ii)

Goodwill cannot be recycled to the income statement on the disposal of a subsidiary whose goodwill had been written off equity in the year of acquisition. Goodwill recognised in the opening IFRS balance sheet (1 January 2004) will be the carrying amount under the GAAP used by Trident as amended for any wrongly classified intangible asset and any contingent consideration. Goodwill should also be impairment tested using IAS36 Impairment of Assets at the date of transition to IFRS.

(iii) IAS21 The Effects of Changes in Foreign Exchange Rates requires that some translation differences are classed as a separate component of equity and on the disposal of the operation, the cumulative translation difference for that operation should be recognised in profit or loss when the gain or loss on disposal is recognised. However, Trident can elect under IFRS1 not to comply with these requirements, and set the cumulative translation differences for all operations to zero as at 1 January 2004 and recognise any differences in accumulated profits/losses at that date. The directors will need to look at the nature of the records of the company in order to see if the necessary detail to comply with IAS21 is available. (iv) A company can elect to measure its tangible non-current assets at fair value at the date of transition to IFRSs and use that value as deemed cost at that date. Additionally, an FTA can elect to use a local GAAP valuation of tangible non-current assets as deemed cost at the transaction date. Trident could use this latter election if it so wished. As the straight line method of depreciation is acceptable under IFRSs it can continue to be used. (v) In terms of the software development costs, if the costs meet the recognition and measurement criteria in IAS38 Intangible Assets, then they will have to be capitalised. If they do not meet the criteria, then they will remain expensed.

(vi) IAS19 Employee Benefits adopts a corridor approach which can leave some actuarial gains and losses unrecognised. The company currently has not recognised any actuarial gains and losses. The company has two choices in order to comply with IFRS at the transition date: (a) (b) Retrospectively apply IAS19 Employee Benefits from the inception of the scheme to the date of transition, applying the corridor approach at each year end, or Recognising all cumulative gains or losses at the date of transition to IFRS and writing them off against retained earnings. It can use the corridor approach under this alternative after the date of transition.

The latter approach would be less onerous to the company but it must be applied to all plans. (vii) Under IFRSs compound financial instruments such as the redeemable convertible preference capital, should be split into separate liability and equity components. However, as the liability component is no longer outstanding on these preference shares, IFRS1 allows the first time adopter not to separate these two elements and treat it as 100% equity. Further the treatment of hedge accounting under IFRS1 is quite complex. Basically IFRS1 requires prospective application of IAS39 in relation to hedging. If the hedging relationship does not qualify under IAS39 for hedge accounting then it should not be accounted for in the opening IFRS balance sheet. Additionally a first time adopter is not permitted to recognise financial assets and liabilities that had been derecognised under previous GAAP prior to the initial effective date of IAS39 (1 January 2001). I hope that the above information is helpful. If you require any further explanation or assistance on these matters, please do not hesitate to contact me.

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4DINTMS Paper 3.6INT

Part 3 Examination Paper 3.6(INT) Advanced Corporate Reporting (International Stream)

December 2004 Marking Scheme Marks 12 1 3 3 3 3 3 3 2 3 36 25

Net cash flow from operating/cash generated from operations Environmental cash flow Dividend from associate/minority interest Returns on investment Capital expenditure Subsidiary Cash and cash equivalents dealing with Financing cash flows Bond Format Available Maximum

(a)

(i)

A explanation B explanation C explanation D explanation Available Maximum

3 2 2 1 8 7 8 4 4 16 14

(ii)

A, B, D accounts Group accounts Goodwill calculation Available Maximum

(b)

Movements on reserves Available Maximum

4 28 25

3 3

(a) (a)

Profit sale Profit futures Discussion Effectiveness Embedded derivative discussion Embedded derivative accounting Impairment of receivables Calculation Conversion of receivable to loan Derecognition discussion Derecognition calculation Available Maximum

1 2 3 2 3 2 2 4 4 3 3 29 25

(b) (b) (c)

(d) (d)

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(a)

(i)

(i)

IFRS2 Main issue Measurement Accounting Applicability Operating lease current practice Recognition of income

Marks 1 2 2 1 1 3 3 4 2 2 2 3 2 4 2 34 25

4DINTMS Paper 3.6INT

(ii)

(iii) Provision current practice Acceptability (iv) Fine intangible asset Acceptability (v) Goodwill current practice Acceptability

(ii)

Profit Report Available Maximum

(a)

Opening Balance Sheet Limited exemptions Latest version IFRS Retrospective preparation Unreserved statement of compliance Available Maximum

2 1 1 1 2 7 5

(b)

Spar Mask

2 3 Available/Maximum 5 2 5 2 3 2 3 2 2 21 15 33 25

(c)

Foreign currency Business combinations Goodwill Financial Instruments Tangible non-current assets Employee Benefits Conclusion Layout Available Maximum Available Maximum

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