EXAMS.EXAMS.EXAMS.EXAMS.EXAMS.EXAMS.EXAMS.EXAMS.

EXAMS

Guidance for ACCA F7 & P2

REVISION SPECIAL SERIES [ISSUE 1]

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EXAMS UP AHEAD! GET YOUR GEARS RUNNING!

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TO SCORE OR NOT TO SCORE THAT IS THE QUEST!

This issue we took the opportunity to track down some ACCA Kuwait Students. These students have shared their experiences on studying the P2 paper. Check out page 10 for their extensive guidance on studying these papers. If you would like to be among the top stories or know an ACCA who should be part of Traffics Top Stories send us an email at: accatraffic-marketing@hotmail.co.uk.

Top Stories
During exam, always keep a check of the time spent on a given question. If a question is Inside this issue: taking too long, move on to the next TIME MANAGEMNET ISSUES question instead of compromising the BOOK RESOURCES time allocated for the rest of the WEBSITE RESOURCES paper.
NEW STANDARDS FOR P2 AMENDED TO IAS19 KEY PITFALLS FOR P2 F7A TIMED QUESTION HEALTHY STUDYING CURRENT ISSUES P2 KEY TIPS FOR F7 FINGER TIPS ABOUT US TIPS FROM Ex-P2s

P2 66

TAHREEM HAMID
...advices you:

3 3 3 4 4 4 5 9 10 10 11 13 14

ATTEMPT: DECEMBER 2011

P2 69

ARSLAN MUNIR
...advices you:

HIGH SCORES
DECEMBER 2011

Always make

stay motivated, studying fun

(perhaps

by writing general comments on your notes), sleep

well and always keep a balance between studying and recreation. Never get bogged down by your studies to the point where you ignore your family, friends, health and recreational time.
ATTEMPT: JUNE 2011

F7 TAN KAI NIN [MALAYSIA] SCORE: 96 P2 CHAI YIE TAN [MALAYSIA] SCORE: 91

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Check out page 5 for a F7 solved question with timing!

TIME MANAGEMENT ISSUES

what you will be writing. Next, start writing! The second key element: Monitoring. Always keep an eye on the time. Monitor the amount of time that has passed when you are done with your question. This way you will be on track. It will also help you avoid spending too much time on a single question. The third key element: your speed advantage. to your

Time management seems to be the major issue for many ACCA candidates. This is apparent from many recent examiner reports. The issue also appears to be more prominent in the ACCA option papers and specifically for Paper P3. Time management is the managing of your time so that time is used to your advantage and gives you a chance to spend your most valuable resources in the way you choose. But how is it done? The first key element:

minutes wisely. Plan about what you need to write and

Planning. Utilize your 15

study period plan how much you want to spend on a particular section, question or marks. Have this decided early to you actual exam attempt. TME should focus on your actual speed while attempting a particular mark question. Once that is determined work on how you can use

Time Management Exercise. During your

The fourth key element: Attitude. In short, Don't panic. The calmer you are the more alert youll be. Panic only gets in the way of your speed. If you are too nervous, you will be too agitated to concentrate. And if you too casual you wont be alert. So target something in the middle something of a right attitude. Focus on relaxing yourself. Take deep slow breaths, take off your shoes and pull your legs up or simply think calm thoughts. And lastly don't forget the allocation basic techniques. If you haven't finished, leave lots of space in the exam booklet. Answer it later!

REMEMBER THE GOLDEN RULES

Get some sleep Eat something HEALTHY Watch the clock Start with the easy ones Build in revision time Don't leave the exam early Take control of your stress

BOOK RESOURCES
For those of you finding Auditing daunting, we recommend a book that is simple in language, brief in concepts, relevant in context and perfect for your F8 and P7. PACs Auditing 486 Q & A is a book designed for students attempting their auditing exams. This book has a number of questions discussing concepts of auditing and International Auditing Standards (ISAs). The books provides questions on nearly all of the auditing areas and is a good replacement for the original ISAs. Most of the questions have marks added to them. This will help most in planning points to answer a particular mark questions.

WEB RESOURCES
For those giving their P2 this June (2012), www.iasplus.com is the most relevant website to be accessing this month. section Deloitte has also added up certain documents discussing the changes in standards. The new website also has fresh features. The website has added all relevant publication to a standard within the summary section. Now, you can access everything published by accessing the summary. This saves surfing time. Haven't checked out the website yet? Well, what are you waiting for, take a break from your text!

With the update to the The only disadvantage of the website that took place book is the part on earlier of last month this companies act. The focused website has information for act is the Company the new standards that Ordinance 1984 which is the have the potential to be Pakistans companys law examined in the upcoming making it irrelevant for those sitting. studying the UK or INT version of Audit. IASPLUS.com has summaries on all the Apart from this its an standards along with the excellent learning guide. The updates to these standards. book is only available in Within the resources Pakistan.

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FOOD FACT One third of an ounce helps protect against age related memory loss. of chocolate a day

NEW STANDARDS FOR P2

By now you all are aware of the new standards that have been added to the P2 Examinable Document list. Ensure that these are on top of your list for revision. This issue Traffic provides you a brief insight into IFRS10. IFRS10 establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS10 does not deal with accounting requirements for business combinations and their effect on consolidation, including goodwill arising on a business combination. This remains with IFRS3. The standard does, however, introduces new definition requirements for control. The key principle in the new standard is that control exist and consolidation is required, only if the investor possesses power over the investee, has exposure to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect its returns. Prior to IFRS10, control through voting rights was addressed by IAS27 while exposure to variable returns was an important consideration within SIC12 framework. IFRS10 links power and returns by introducing an additional requirement that investor is capable of wielding that power to influence its returns. The new standard also sets out consolidation principles and guidance for measuring NCI, potential voting rights and accounting for loss of control. IFRS10 applies to all parent entities that need to present consolidated financial statements, except for post employment benefit plans or other long term employee benefit plans to which IAS19 applies.

Check out page 10 for details on past paper questions that are impacted by the amendments.

More on IASPlus.com

A CHANGING WORLDTHE AMENDMENTS

The

Employee Benefits standard

amended

IAS

19

was published on 16 June 2011. Some significant variation existed in the publication. The most significant change is the elimination of the corridor approach under which the recognition of actuarial gains and losses could be deferred. The new rule is all actuarial gains and

The amended standard also introduces a new approach to calculating & presenting net interest income or expenses on the net defined benefit liability (asset). Amended standard makes no change to the underlying measurement method in IAS19 for post employment benefits, although change had been proposed earlier in the IASBs project. Some of the terms used in the amended standard, e.g.

settlement & actuarial gain or losses, are now defined differently. A termination benefit is now recognized at the earlier of: W h e n the entity recognizes costs for a restructuring within the score of IAS37 that includes the payment of termination benefits; and When the entity can no longer withdraw the offer of the termination benefits.

losses are recognized immediately in other comprehensive income.

KEY PITFALLS FROM THE DECEMBER 2011 SITTING

Fail to make a reasonable attempt at all parts of the questionsa Need for more comprehensive answers. Repeating information given in the questions without explaining how it impacts the financial statements Quoting facts from standards without referring to the question. Answering ALL four questions. Calculation of impairment of goodwill for Partial goodwill method done poorly. Impairment on financial assets calculated wronglyuse of wrong discount rates. Confusion over component accounting of non current assets. Failure to calculate movement in equity for NCI for disposals.

A REMINDER OF P2 PASS RATES

DECEMBER 2011

ABCDSIHQWRT
...And the percentage is Drums, Drums .

More Tips coming in the next issue. Stay tuned!

P2

48%

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F7A TIMED QUESTION

The QUESTION 1 of F7 Exam paper is usually on the topic of group accounting. Here, the question is solved with the a monitored time. This will give you an idea of the part of questions you should be finished with in the stated time. The chosen question is Question 1 of December 2011 paper. The allocated time to Question 1 is 35 Minutes in this practice. The stated time is for a question with the requirement of preparing a CONSOLIDATED STATEMENT OF FINANCIAL POSITION. at fair value, is calculated by discounting the amounts payable to present value at acquisition.

WORKING 4NCI CALCUATION

STATED TIME: 5 Min. Ensure that you have memorized Choose the relevant format according to the your calculation charts well. given method of goodwill calculation. Ensure you include the POST ACQUISITION SHARE OF PROFITS in NCI. Highlight any notes given that might impact the NCI calculations.

WORKING 1GROUP STRUCTURE

STATED TIME: 2 Min. Determine if group structure is given or needs to be calculated. If it needs to be calculated highlight the following: 1. Number of shares bought in the subsidiary 2. Total number of shares in the subsidiary SOFP Divide (1) by (2) to get the % Holding.

QUESTION TIME

WORKING 5RETAINED EARNINGS & RESERVES

STATED TIME: 10 Min. Only group share of post acquisition retained Earnings and reserves are included in consolidated SOFP. 1. Highlight the Parent and retained earnings and reserves subsidiary

WORKING 2NET ASSET STRUCTURE

STATED TIME: 2 Min.

1. Determine the at Acquisition and at Reporting Date values for the Subsidiary. Remember the NET ASSET will include the Share Capital, Share Premium, Retained Earnings and Reserves. 2. Highlight any adjustment required for assets not included in the non current assets of subsidiary. For example, brand, patent, customer list purchased.

2. Determine additional notes that might impact the retained earnings & reserves of the group.

WORKING 6FINAL PREPARATION

STATED TIME: 8 Min. Sneak a quick peak at all the given notes to see if you have missed out any or not. Prepare your final statement of financial position for the given year and the given group. Make sure you use the correct year end date and present the right format of the financial statement. Give your statement one last look before moving forward. .continued

3. Determine the Fair Value Adjustments from the given notes. Adjust for the increase/decrease in fair values of assets within the net asset schedule. Remember that at acquisition adjustment includes the increase/decrease in fair value. The reporting date should be net of depreciation charge. Remember to adjust the non current assets (Land, PPE) in the final consolidated SOFP.

The Pre-Acquisition Profits are the reserves which exist in a subsidiary company at the date when it is acquired. They are capitalized at the date of acquisition by including them in the goodwill calculations.

Post acquisition profits are profits made and included in the retained earnings of the subsidiary company following acquisition. They are included in group retained earnings.

FOOD FACT
The greatest sources of food to boost your alertness, concentration, and energy are: Dairy products, Eggs, Seafood, Soy Dont sabotage yourself, though. low in salt and unhealthy fats.

WORKING 3GOODWILL CALCULATION

1. Determine the cost of investment. 2. Highlight the given method of calculating goodwill.

STATED TIME: 8 Min.

3. Determine any impairment requirements [usually mentioned in the notes]. Remember incidental cost of acquisition are expensed. Any contingent consideration is measured at fair vale at acquisition date. Deferred consideration, also measured

Rather, choose the varieties that are

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SOLVED QUESTION DECEMBER 2011

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DATA: Saracen = 80%

CALCULATIONS
Paladin 80% 25%

(1) GROUP STRUCTURE 1. Number of shares bought in the subsidiary = 8 million 2. Total shares in the subsidiary SOFP = 10 million Divide (1) by (2) to get the % Holding.

WORKINGS

Augusta = 25% (given) Year End = Sept 2011 Acquisition dates: S = Oct 2010 (Full Year) A = Feb 2011 (8 Months) DATA: Share Capital Retained Earnings at year end Adjustments: ADJUST 1 Note ii: At the date of acquisition, Paladin valued Saracens customer relationships as a customer base intangible asset at fair value of $3 million. Saracen has not accounted for this asset. Trading relationships with Saracens customers last on average for six years. = $10m [Given] = $18m [given] Saracen Augusta

(2) NET ASSETS SARACEN NET ASSETS ACQUIRED Share Capital Retained Earnings
AT ACQUISITION AT REPORTING DATE

Retained Earnings at acquisition =$12m [given]

Adjustments:
Purchased Intangible Assets FV Plant

$m 10 12 22 3 4 29

$m 10 18 28 2.5 3 33.5

Discussion: IFRS3 requires recognition of intangible assets that are purchased.

ADJUST 2 Note ii: At the date of acquisition, the fair values of Saracens property, plant and equipment was equal to its carrying amount with the exception of Saracens plant which had a fair value of $4 million above its carrying amount. At that date the plant had a remaining life of four years. Saracen uses straight-line depreciation for plant assuming a nil residual value.

My Notes: The Consolidated Statement of Financial Position

will include the following figures: INTANGIBLE ASSETS PARENTs SUBs (3CV0.5DEP) $m 7.5 2.5 10.0

goodwill on acquisition, the acquirer should measure FV of The Retained Earnings will require the other side of entry: assets and liabilities. When the assets transferred as considera- DR Retained Earnings $0.5m tion have a different fair value from book value, the acquirer CR Intangible Assets $0.5m has to remeasure the fair value of such assets and recognize gain or loss in its profit or loss. PROPERTY PLANT & EQUITPMENT $m Make sure you remember to adjust the Retained Earnings/Profit figures accordingly while calculating the Consolidated figures for Retained Earnings. PARENTs SUBs FV ADJUSTMENT (4CV1DEP) 40 31 3 74 The Retained Earnings will require the other side of entry: DR Retained Earnings CR Plant DATA: Cost of Investment: Immediate payment of $4 per share Further amount deferred until 1 October 2011 of $54M The immediate payment has been recorded in Paladins financial statements, but the deferred payment has not been recorded. Paladins cost of capital is 8% per annum. Cost Of Investment: Cash Payment Deferred Payment 32 5 37 $1m $1m (3) GOODWILL CALCULATION $m $m

Discussion: IFRS3 requires that for the computation of

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Each year the discount is unwound. This increases the deferred liability each year and the discount is treated as a finance cost.

FV OF NCI

7 44

FV OF NET ASSETS ACQUIRED (W2) (29) Note i: Paladins policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose the directors of GOODWILL ACQUIRED 15 Paladin considered a share price for Saracen of $350 per share to be appropriate. Goodwill is recorded under Non Current Assets in the FV OF NCI =$3.50 x (10m shares x 20%) =$7m Consolidated Statement of Financial Position. Note iv: Impairment tests were carried out on 30 September 2011 Consolidated Non current Liabilities will include $5m of which concluded that consolidated goodwill was not impaired, but, Deferred Consideration due to disappointing earnings, the value of the I vestment in Augusta Also, this entry regarding Unwinding of Discount = $0.4m, will was impaired by $25 million. be relevant: Discussion: Goodwill has not been impaired. DR Consolidated Retained Earnings $0.4m CR Consolidated Non Current liabilities $0.4m DATA: FV OF NCI =$3.50 x (10m shares x 20%) =$7m NCI % of post acquisition profit as represented by change in net assets: POST ACQUISITION PROFIT = $33.5m$29m = $4.5m NCI % = $4.5m x 20% = $0.9m NCI is measured on a fair value basis to be consistent with the goodwill accounting policy. You can try other formats for the calculation of NCI. DATA: Parents Retained Earnings = Given Subsidiary's Retained Earnings = Calculated @ group share Read the notes give in question to identify any elements which have been identified or calculated which now need to be included within either retained earnings or other reserves. Give special attention to retained earnings calculations. PARENTs SUBs @ 80% ASSOCIATEs ADJUSTMENTS FINANCE COST UNREALISED PROFIT 4.5 (W6) (W3) (W7) FV of NCI at Acquisition Share of Post Acquisition RE NCI Share (20%) 4.5 0.9 7.9 Included in the Equity Portion of the Consolidated Statement of Financial Position. (4)NCI CALCULATION $m $m 7

(5)CONSOLIDATED RETAINED EARNING $m $m 34.9 3.6 38.5 (2.3) (0.4) (0.6) 35.2

DATA: Investment in Augusta = $10m [Given] Post Acquisition Profits = $1.2m [Given] Accounting Period = 8 Months Note iv: Impairment tests were carried out on 30 September 2011 which concluded that consolidated goodwill was not impaired, but, due to disappointing earnings, the value of the I vestment in Augusta was impaired by $25 million.

(6)ASSOCIATES CALCULATION $m CASH CONSIDERATION SHARE OF POST ACQ PROFIT IMPAIRMENT LOSS 10 0.2 10.2 (2.5) 7.7

Associates are equity accounted in the group financial statements. The following are the relevant entries: DR Investment in Associate REMEMBER to include INVESTMETN IN ASSOCIATE IN THE STATEMENT OF FINANCIAL POSITION. CR Consolidated Retained Earnings DR Consolidated Retained Earnings CR Investment in Associate $0.2m $0.2m $2.5m $2.5m

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continued

SOLVED QUESTION DECEMBER 2011

DATA:

CALCULATION

(7) UNREALISED PROFIT Price of goods = $2.6m Mark up of 30% on cost, therefore, the calculation will be: ($2.6m x 30/130) = $0.6m

WORKINGS

Note iii: At 30 September 2011, Saracens inventory included goods bought from Paladin (at cost to Saracen) of $26 million. Paladin had marked up these goods by 30% on cost. Paladins agreed current account balance owed by Saracen at 30 September 2011 was $13 million. Parent sold goods to subsidiary

When one group company sells goods to another a number of Adjustment required: adjustments may be needed. DR Consolidated Retained Earnings current accounts must be cancelled CR Consolidated Inventory

$0.6m

$0.6m Where goods are still held by group company any unrealized profit must be cancelled Inventory Figure in the Consolidated Statement of Financial Inventory must be included at original cost to the group i.e. Position: cost to the company which then sold it. The process to adjust is: 1. Determine the value of closing inventory included in individual companys accounts which has been purchased from another company in the group. 2. Use mark up or margin to calculate how much of that value represents profit earned by the selling company. 3. Make the adjustments. This will depend on who the seller is. If the seller is the parent company, then profit element is included in the holding companys accounts and relates entirely to the group. DATA: Note iii: Paladins agreed current account balance owed by Saracen at 30 September 2011 was $13 million. If P & S trade with each other then this will probably be done on credit leading to: A receivables account in one companys SOFP A payables account in other companys SOFP PARENTs These are amounts owing within the group rather than outside the group and therefore they must not appear in the consolidated statement of financial position. They are therefore cancelled against each other on consolidation. SUBs Adjustment (8) INTRA COMPANY ACCOUNTS Adjustment Entry: DR Consolidated Trade Payables CR Consolidated Trade Receivables TP $m 11.6 6.2 (1.3) 16.5 $1.3m $1.3m TR $m 7.4 5.3 (1.3) 11.4 $m PARENTs SUBs Adjustment: URP 11.2 8.4 (0.6) 19

Figures in the Consolidated Statement of Financial Position:

So, there you go, all the workings done. With 8 Mins. reaming on the clock start preparing your financial statement. Make sure your highlight the figures that do not require any adjustment and those that needs to be referred through workings. If each and every figure is clearly labeled, you will be able to finish the statement of financial position in the stated time of 8 Minutes. You don't have to follow Traffics stated time for each workings you can choose your own time limit depending on your understanding of the workings concept. So, what are you waiting for? Give the question a try with Traffics working format but your own time limits. Good Luck! Let us know if you found this TIME FRAME helpful. You can reach us at accatraffic-marketing@hotmail.co.uk. Next series: The Consolidated Statement of Comprehensive Income. Stay Tuned!

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HEALTHY STUDYING
Nutrition Scientist Claire MacEvilly explains why it's important to maintain a balanced diet throughout the exam period: Although weighing only 2% of total body weight, the brain uses approximately 20% of the body's energy at rest. This is why regular, nutritious meals are important during exam time. The brain is powered by energy which comes from broken down food. The primary source of energy for the brain is glucose which comes from carbohydrate rich foods like breads and pasta. The brain's energy stores are very small, so to keep it functioning at its best, it needs constant glucose replacement. Food influences mood, but mood also influences food choice. There is no magic food to relieve stress, but we would recommend that you avoid skipping meals at all costs. There is no such thing as good or bad foods for exams, or any other time of the year. There are however bad habits! Focusing on one particular food is a bad thing, so you shouldn't really be eating vast amounts of one particular food.

Brain food Routine Breakfast

It's a clich, but breakfast really IS the most important meal of the day. Your body has been starved of food all night while you sleep and you need to refuel to prepare for the school day ahead. Here are some tips for the best way to start your day. Healthy options include: Cereal or toast, but make sure you choose a low sugar/salt cereal and try to go for whole meal bread. Get a fruit portion in the morning by having a glass of pure fruit juice. Porridge - it's surprisingly tasty, and can be made in the microwave. Try it with natural honey and a chopped banana.

Lunch
You can make healthy choices if you're having a school dinner at lunchtime; you just need to know which foods to pick. Salads can be a good choice, but make sure you go easy on dressings. Jacket potatoes can be very healthy, but try not to have cheese as a topping all the time. You should be eating five portions of fruit and vegetables every day, so stock up at lunchtime.

Dinner
If you're not cooking your own tea, try to get whoever is to steer clear of fatty, fried food. A proper evening meal will help your brain to tackle homework. Adopted from: http://www.bbc.co.uk/

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P2 PAST PAPER
FOR IAS19 EMPLOYEES BENEFITS December 2007 Question 2 (a) December 2010 Question 1 (iv) December 2011 Question 1 (6) The BPP Revision Kit and the FTC Revision Kit have the adjusted version of these questions. Make sure to follow up your Kits past paper questions.

FOOD FACT down by releasing glucose effect is similar for bagels and rice. into the blood. The Potatoes calm people

CURRENT ISSUES FOR P2

ED 2009/12 Financial Instruments: Amortized Cost and Impairment The proposals in the ED form the second part of the Boards project to replace IAS39 Financial Instruments: Recognition and Measurement and represent a significant change from current practice. The current incurred loss approach to impairment of financial assets assumes all loans are fully recoverable until the occurrence of impairment indicator. The ED proposes to replace this approach with an approach based on expected loss. This approach uses an expected cash flow criteria which is forward looking and incorporated expected future credit losses. ED 2010/06 Revenue from contracts with customers The exposure draft proposes a new revenue recognition model that could significantly change the way entities recognize revenue. The objective is to remove inconsistencies in existing revenue requirements and improve the comparability of revenue recognition across industries and capital markets. The proposed standard employs an asset and liability approach. Current revenue guidance focuses on an earnings process but difficulties often arise in determining when revenue is earned and when the earnings process is complete. The boards believe a single, contract based model that reflects changes in contract assets and liabilities will lead to greater consistency in the recognition and presentation of revenue. ED 2010/01 Measurement of liabilities in IAS37 The ED emphasizes that liabilities should not be measured at hypothetical transfer or cancellation prices. And adds guidance on applying the expected value techniques. It also specifies how to identify and measure relevant future outflows. ED 2011/2 Improvements in IFRSs Key proposal in this ED related to IFRS1, IAS16, IAS12 and IAS34. The ED proposes change to certain topic areas of these standards.

ED 2011/4 Investment Entities The objective of the project is to identify particular types of investment entity that will be exempt from the general requirements to consolidate entities that they control. Instead such an entity would measure its investment at fair value, with changes in fair value recognized in profit or loss. ED 2010/13 Hedge Accounting This is the final installment of the final phase to replace the existing standard on financial instrument IAS 39. The ED proposes significant changes to the current general hedge accounting requirements while the second installment is intended to address portfolio or macro hedging. ED2011/1 Offsetting Financial Assets and Liabilities The proposed offsetting criteria would be similar to those that currently exist in IAS32. However, the proposal would amend IAS 32 by clarifying that in order to enable offsetting, a right of set off must be both unconditional and legally enforceable in all circumstances as opposed to the present requirement that an entity currently have a right to set off. ED 2010/09 Leases In the Exposure Draft ED/2010/09 Leases (the ED) the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) propose a new approach to lease accounting for lessees and lessors.

The BPP STUDY TEXT has information on current issues and the mentioned exposure drafts (ED) in this section..

FOOD FACT Sugar is vital to feed your brain and attention and learn new things its and desire. helps you pay

absence causes sensations of craving

A REMINDER OF F7 PASS RATES

DECEMBER 2011

KEY TIPS FROM THE DECEMBER 2011 SITTING

Show detailed working for figures that need suchHave a breakdown of how you arrived at the final figure. Read the requirement of the questions carefully. Try to understand the issue that is examined.

ABCDSIHQWRT

...And the percentage is Show clear and descriptive workings. Drums, Drums . Many candidates wrote down a long

F7

56%

line of figures with no written description of what the figures represented or how they had arrived at them. When this happens it is almost impossible for markers to determine whether incorrect totals deserve any credit.

Know your group accounting work sheet and concepts. Try to complete all FIVE questions. In the next issue Traffic brings you the key pitfalls in Group Accounting Questions.... Stay Tuned!

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Early adoption of the standard IFRS9 is a major step for any entity as an early adopter of IFRS 9 continues to apply IAS39 for other accounting requirements for financial instruments that are not covered by IFRS9, that is, impairment of financial assets and hedge accounting. The P2 examiner has indicated that questions on financial assets will be set with IFRS9 in mind but answers in terms of IAS39 will be acceptable. IAS39 still applies to hedge accounting.

JUNE 2012 IFRS 9 OR IAS39?

finger tips

Companies that engage in e-commerce may have particular revenue recognition issues. The entity may act as a principal or as an agent. They must determine whether to disclose

REVENUE RECOGNITION IN AN E-COMMERCE ENVIRONMENT

their gross sales, or merely their commission. For example,

Lastminute.com discloses a figure TTV which does not

represent statutory revenue, but represents the price at which goods and services has been sold across the groups platform. Revenue itself is largely made up of commission on selling those goods and services. The company may engage in reciprocal arrangements with other companies whereby both advertise on each others website. Whether such an arrangement results in revenue must be considered. It must then be accounted for appropriately.

IAS 16 Property, Plant and Equipment states that spare parts and servicing equipment are normally to be treated as INVENTORY and expensed as consumed. MAJOR spare parts and stand-by equipment should be treated as Property Plant and Equipment when they are expected to be consumed in more than one accounting period.

ACCOUNTING FOR SPARE PARTS

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IFRS3 & CONTINGENT LIABILITIES

A contingent liability is defined in IAS37 as:
A possible obligation that arises from past events and whose existence will be

confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the entity; or
A present obligation that arises from past events but is not recognized because: It is not probable that outflow of resources embodying economic benefits will be

required to settle the obligation; or,

The amount of the obligation cannot be measured with sufficient reliability. In the

context of a business combination, the acquirer is required to recognize a

finger tips

contingent liability assumed in a business combination as of the acquisition date if it is a present obligation that arises from past events and its fair value can be measured reliably. Under IAS37, a present obligation is not recognized as a liability because an outflow of economic resource is not probable, or the amount of the obligation could not be reliably measured. A contingent liability recognized in a business combination is measured subsequent to initial recognition at the higher of:
The amount that would be recognized in accordance with IAS37; and The amount initially recognized less cumulative amortization recognized in accordance

with IAS18, Revenue.

An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceeds the economic benefits expected to be received under it. An example might be a vacant leasehold property. If an entity has

SO WHAT IS AN ONEROUS CONTRACT?

a contract that is onerous a provision must be made for the net loss. An entity cannot get out of an onerous contract legally without incurring costs. Another example of onerous contract is when an entity has signed an agreement to market the products of a principal for a period of five years and the term of agreement provide for payment of compensation in the case of its early termination. The obligation under this agreement is the amount of penalty that is to be paid.

ACCA TRAFFIC E-ZINE

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FOR OUR NEXT SERIES Let us know what issues surrounds you during your revision period. Are you prepared, Under prepared, Over Prepared or Not prepared at all? Share your insight on our facebook page or email us your thoughts with your full name and the paper(s) you are attempting! FOR OUR NEXT SERIES Self studying and stuck on a topic! Send us your topic and issue through our Facebook page or email us and we will make sure it gets guided on in the next series.
Traffic E-Zine is the end-result of the KID WITHIN US that strives to look for exciting and amazing things at an age when seriousness and professionalism are key personality elements. Dedicated to your inner KID. We hope you enjoy it as much as you value your learning.

Our special message: Time. Enjoy your Revision The Traffic Team

Traffic will be issuing FOUR series for the June 2012 exam focusing on areas that YOU require guidance on. Keep a look out for these! If there is something you would like to see in the next series of Revision Special, Email us before the 27th of May 2012 with your stated query.

Ms. TAHREEM HAMID shares her experience of sitting her P2 Exam in December 2011.
She took regular classes from a tutor in Kuwait for her P2 paper. And is not employed in any accounting role. She also believes that passing P2 does not require working in the same sector.

Mr. ARSLAN MUNIR shares his experience of sitting his P2 Exam in June 2011.
He took regular classes from Skans School of Accountancy in Pakistan. He believes work experience is necessary; however, his view is that experience is likely to make attempting this paper a little easier.

Her Key Scoring Strategy:

His Key Scoring Strategy:

Regular feedback from tutor in the form of I believe regular practice helped me score mock exams really helped me determine the well in P2. exam technique required; regular practice helped me get used to the exam His choice of text: questions. BPP, as I believe it is the most elaborate. Her choice of text: Depends on the preference of students. BPP if youre seeking comprehensive details, He would do differently: KAPLAN if you prefer a more straightBetter use of P2 articles available on the forward and precise text. ACCA website perhaps, would have helped She would do differently: me score better. Taken less exam-room stress and instead kept myself calm during exam. Perhaps His Tutors Contribution: focused more on the topics I did not like and My tutor Mr. Yasir Riaz gave us his tended to skip during revision. personally prepared notes, which were Her Tutors Contribution: extremely comprehensive yet easy to My tutors easy to follow lectures gave me understand, due to their simple language the knowledge I needed and regular and logical flow. Furthermore, he was a very practice sessions taught me application of motivating tutor and built a lot of that knowledge. My tutor kept me focused confidence in his students. and motivated and provided me with extra study material and useful articles.

Most Interesting Aspect of the Paper for her:

Most Interesting Aspect of the Paper for him

The diversity of the syllabus and the It was quite interesting how topics could be practical nature of the question scenarios so different yet be still tied in by the same basic accounting principles and fulfilling the were the most interesting aspects for me.. same purpose of True and Fair presentation.

Her Revision strategy is:

Prepare a summary for each topic/standard and revise it frequently to keep all the relevant points at your fingertips. Mark out questions from the practice and revision kit (or any other source) which you found particularly hard at first and solve them again near exam date.

His Revision strategy is:

Make summarized notes during your classes and revise from these summarized notes when exams are approaching. Practice is the key to success for this paper, so practice as much as you can. P2 tends to get boring, so always keep yourself fresh by taking minibreaks.

Self Studying or Regular Classes?:

I would definitely recommend classes. The Self Studying or Regular Classes?: breadth of syllabus can get confusing and For P2 I would always recommend daunting. Classes would, I believe, keep the classes. student focused and provide an established source to clear any doubts.

Difficulty Level of P2 Paper:

On a Scale of 1 (very easy) to 5 (very difficult), Tahreem scales P2 on level 4.

Difficulty Level of P2 Paper:

On a Scale of 1 (very easy) to 5 (very difficult), Arslan scales P2 on level 4.