I am having a bit of trouble with some excercises in my Financial accounting practice and revision - there are answers, but still I don't get it - but only a portion of the exercise.
I enclose the whole exercise and answers - they are numbers 24.2 and 24.3 - What I do not understand and probably looking too much into it ( it is probably the simplest thing) are those percentages 10% (24.2) and 90% (24.3). Where do they come from???
Ooh, can't believe that I missed this one this afternoon. I love these (hate cashflow consolidations though).
Right, whenever you get a consolidation question there are always five fundamental workings that you need to work out.
1) Group Structure
2) Net Assets
3) Goodwill
4) Non Controlling Interest
5) Retained Earnings.
All of the information needed is in the question and we can work through this in quite a structured manner. Wait just a min as I'm off to Excel so that I can insert it as a picture rather than lose the formatting.
Get into the habit of setting out your workings using the headings given in my example and you will be fine.
The key to everything is understanding that you are interested in the amounts at acquisition and then the change post acquisition.
Its not the totals as they exist now but the movement that you calculated through W2.
These get much more complicated but once you have the structure of those five workings you can work through the basics of any consolidation question before moving onto things like foreign exchange differences, associates, etc, etc.
I'm hoping that the above is actually internally self explanatory but if not feel free to post a follow up and happy to explain any and all of the various bits.
kindest regards,
Shaun.
P.S. That was actually fun
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I have my exam - F3 in few weeks time, so there is just so much to get in my head at the moment.
I purchased my book F1 - F3 in one go, so that is why I have not got the Kaplan ones as we discussed.
I think they must presume, that every student has got a tutor or has some previous knowledge of the syllabus, because they just do not explain it well, and lot of the time it is a guessing game. Sorry I keep on going on about it.
Well, there is a thought - maybe you should teach! You always explain it so well. Thank you.
PS: How is your studying? I believe that you have a last paper to do....
no probs at all people. I really enjoy doing these consolidation questions. Probably helps that I start off most days with a warm up random three company consolidation from my collection of them, gets the old grey matter up to normal operating temperature before starting on the real stuff but unfortunately I seem to be memorising all of the one's that I have so new one's are always welcome.
I can't remember if they actually get much more complex than this for F3. Might be worth checking your study text to see if you also need to cover associates or more than one subsidiary as if they are in the sylabus you will need to be prepared for those as well. (Could be that they don't actually come in until F7 when you'll also hit things like mid year acquisitions, Part Disposals, D shaped groups, overseas subsidiaries and foreign currency translation, etc.).
I can see what you mean about the BPP books expecting you to be using them on a course BJ whereas the Kaplan one's are far more self explanatory (and have loads of excellent (if not always correct!) examples).
Three weeks is completely doable BJ.
Make sure that you do a consolidation question every day between now and then (Which will also practice your knowledge of the balance sheets and the P&L (or more to the point group statement of financial position and consolidated statement of comprehensive income).
Practice your definitions of Assets, Liabilities, Provisions, Contingent assets, Contingent Liabilities, obligating events, fair value, revenue, materialarity and intandgible assets from your index cards. Again, every day even if it seems boring at times.
Make sure that you know the names and basic information on all of the accounting standards including the changed IAS28 and the new IFRS10, IFRS11, IFRS12 and IFRS13.
Make sure that you know the difference between margin and Markup
Make sure you know the rules for when an entity is a subsidiary.
Ensure that you know the make up of the cost of an asset (all costs incurred in bringing the asset to the location and condition intended by management.
Cover the basics of IAS23 (Borrowing costs).
Understand the basics of leases from both lessee and lessor perspectives
IAS16, IAS36, IAS37 and IAS38 are particularly important standards. (Covering Tangible and Intangible assets, impairments and provisions).
Go through the ACCA F3 sylabus to see if there is any element that you have not yet revised.
Many people say have a break the day before the exam. Personally I think that this is tosh. Do as much as you can right up until you walk into that exam hall but just make sure that you get a good few nights sleep on the run up and don't depend on coffee, pro-plus and energy drinks on the day as such may help you stay awake but doesn't help your memory.
Whilst the above pointers may help, unfortunately one can never double guess whats going to come up in the exam so it's just a matter of trying to memorise everything that you can between now and then.
The day before the exam you will probably think that you know nothing but you know more than you think and on the exam day when the adrenalin kicks in these three weeks of study are going to pay dividends.
Good luck BJ. Any questions, just post and we'll get an answer to you as soon as we can
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
WOW Shaun I take my hat off to you when you get into this type of question you kind of go into the zone and nothing else matters lol, I am going to be picking your mind when I start my ACCA studies in Sept. I have not ever had the time or money in the past to go get an accountancy qualification but I know I need one as it's getting tough out there to earn a decent living.
I think it's all down tyo really loving the subject matter which is what really drives me.
as mentioned previously on the site the level of study for the ACCA qualification is second to non but just a warning to be warry of regulation 8 which will actively prevents you from offering any services beyond bookkeeping to trial balance, VAT and Payroll work even if you prepare them now and / or are covered to prepare them under a different supervisory body. (No tax advice, no accounts prep or filing, etc.).
Assuming that you have already taken the above into account and can work around it I'm more than happy to offer whatever help and advice I can when you go onto a higher level accountancy qualification although I'm better at some bits than others (still not completely at home with colsolidated cash flow statements or financial instruments which considering my background (banking) you would think that I would take to that one like a duck to water).
Talk tomorrow,
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Good morning. Thank you for the message. I will be doing all that for the next few weeks.
All that you pointed out makes sense. At the moment I am struggling with bank reconcilliations and suspense accounts. I get very muddled up in the question and then do not know where to start - which is strange because at work my Nickname is Mr Journal - I can fix anything in reality but when faced with a book and theory I am not good at it at all. Any tips...ideas - please???
And your favourite subject cash flows are next on my list............arghhhhh
Even considering all this - it is much better than management accounting. I nearly gave up.
I take it that my response answered the actual question (albeit with a typo...or words I had meant to delete and didn't!!)?
BJA's question suggested that it was only a small percentage if the answer that he didn't undertand. Of course you answered the whole thing quite comprehensively.......and I understand that you were just 'in to it'! But, this is a danger is it not in normal exam situations where you either waste time answering parts that are not pertinent or are penalised for not reading the question? I always remember being told to search out and understand words in exam questions (particularly CIMA) like describe, demonstrate etc etc. I think as good a tip as any in exams is to take time reading the question and fully understand what is being asked. That might help write less and gain more marks!
It's not a criticism of your answer at all it is just that I have fond memories of 'trick' questions like the one where we were to compare two businesses based on certain financial statement headings. The temptation for many (me included) was to choose the one with great current asset figures (including stock and trade debtors) only to completely miss the fact that it was a fast food business which made the picture quite different for obvious reasons!!
I think that you are over analysing this one which is at level F3 (Fundamental level).
The breakdown of the percentages was just the starting point. The main thing that the question was looking for was to ensure that the reader understood that the key figure was the difference between the assets at acquisition and the assets at the reporting date (W2) and then apply the percentages that one came up with from W1.
I also think that BJ needed help with the whole structure of the standard first five workings rather than only the group structure (W1).
With consolidation questions one should always do all of the workings rather than use shortcuts as these will often prove to be more time consuming than getting down a structure and filling the gaps so it's a good idea to have the pro forma's for the workings memorised.
It took me a few minutes to do all of the workings which gave me the result for 8% of the final exam result.
For F1 to F3 BJ will have two hours to try and get 100 oints, but she's only aiming to clear 50 for a pass. for 100 points she would need to aim to gain 1 point every 72 seconds. For these 8 points therefore she therefore have 9.6 minutes which is more than enough time to build the structure and fill out all of the gaps in order to get the answers to achieve full marks.
You are completely correct that you need to look for the key words in the question (Explain, discuss, evaluate, recommend, etc.) as to how to give the answer but in the case of a consolidation question the full workings are always pertinent. It's just which information from the workings and how it is presented that alter in relation to the question.
On the last part of your post you talk about financial statement analysis.
My issue with that is always trying to ensure that I don't analyse too much as there are 16 basic ratio's before going into the ratio's pyramid and done for several years worth of figures where the examiner may have assumed that you will be able to produce a full wrtitten report in under thirty minutes making doing all of the calculations that one would do in a proper financial analysis non viable so you just need to identify the key figures and do basic analysis on those for the exam question.
That can be really frustrating as you feel that you are not giving the answer that you could purely on the grounds that there isn't enough time to give it. Then post exam you get the examiners report saying how dispappointed they were with the overall answers! And their stock answer obviously takes hours and hours to construct covering several A4 pages with an appendix covering all of the ratio's.... If they want those answers then give us the time to do them!
Sometimes it seems like telling you to drive from London to Edinborough in half an hour and then telling you how porly you did because you only made it to the start of the M1.
Anyway Rachael, going off piest a little there. I am sure that you could have answered BJ's question but slightly misunderstood that she needed help understanding how everything fitted together to get the full set of results rather than only needing help with Working 1 to determine group structure.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The very opposite! My last post was simply suggesting that BJA's question was very simple (or at least a small portion of the whole question/answer).........it was the two percentages (90% and 10%) that was causing the problem and the specific question was 'where do they come from?'.
So my last post was warning against 'over analysis' and answering more than is needed....or indeed asked for. My first response will show that I did not over analyse anything surely?
I think that we both understood BJ's question slightly differently.
Lets just agree that we're both right.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Only just managed to have a look at the discussion board (you know, buried in books and all that.....), I really do appreciate the time you have taken out to explain to me the consolidated financial statements - I thought I understood it, but after your explanation it really was crystal clear. And you are right, it only takes few minutes to do. I am sure I will appreciate the knowledge I gain now when I am in more advanced stages of ACCA (hopefully).
Anyway, thank you.
BJ
PS: will probably have few questions to ask this weekend. Sorry.
As you say, the foundations that you are laying down now will pay dividends when you start building on this knowledge. As mentioned previously consolidations become much more complex with mid year acquisitions, D shaped groups, part disposals, associates, foreign subsidiaries and exchange differences etc. to build in so learning to love them now will make adding the more difficult area's much easier to incorporate.
appart from taking my boy off to see Battleship at the cinema at some stage over the weekend I should be around for most of it so helps never too far away.
kind regards,
Shaun.
P.S. you will absolutely pass the ACCA papers. You may not pass them all first time and I guarantee that you will hit a paper that you will hate (and you'll probably pass that one first time with your highest mark ever!) but there is a lot of knowledge expanding learning in the overall syllabus and you will get through and come out the other side as an accountant in your knowledge base even if getting the letters may prove as difficult as getting the qualification!
I think that you are actually going to really enjoy this when it changes from the short multiple choice two hour exams to the three hour scenario based questions at paper F4 where you get four or five questions with the first being up to 50% of the marks and you have to very much work as in the real world producing reports and building accounts from reading between the lines of the information given inn the question (which can cover several A4 pages).
Right, back to the studying BJ.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
- there are answers, but still I don't get it 
- but only a portion of the exercise.
