ACCA - P2 Advance Financial Reporting - Revision Kit 2016-2017

Paper P2 Corporate Reporting (International and UK) This Kit provides material specifically for the practice and revision stage of your studies for Paper P2 Corporate Reporting that has been comprehensively reviewed by the ACCA examining team This unique review ensures that the questions, solutions and guidance provide the best and most effective resource for practising and revising for the exam One of a suite of products supporting Paper P2 Corporate Reporting, for use independently or as part of a package, this Kit is targeted at ACCA’s exams in September 2016, December 2016, March 2017 and June 2017 and contains: Practice & Revision Kit • Banks of questions on every syllabus area • Answers with detailed guidance on approaching  questions • Three mock exams with full answers and guidance Corporate Reporting (International and UK) BPP Learning Media is dedicated to supporting aspiring business professionals with top-quality learning material as they study for demanding professional exams, often whilst working full time BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials BPP Learning Media’s study materials are written by professionally qualified specialists who know from personal experience the importance of top-quality materials for exam success ACCA P2 ACCA approved content provider ACCA APPROVED CONTENT PROVIDER ACCA Approved Practice & Revision Kit BPP House 142-144 Uxbridge Road London W12 8AA United Kingdom T 0845 075 1100 (UK) T +44 (0)20 8740 2211 (Overseas) E Learningmedia@bpp.com bpp.com/learningmedia February 2016 £18.00 ACP2RK16 (POL).indd 1-3 For exams in September 2016, December 2016, March 2017 and June 2017 Contact us Paper P2 Corporate Reporting (International and United Kingdom) Free access to our Exam Success site Look inside For exams in September 2016, December 2016, March 2017 and June 2017 16/02/2016 12:14 ACCA APPROVED CONTENT PROVIDER As the first accredited publisher of ACCA materials, BPP Learning Media has set the benchmark for producing exceptional study materials for students and tutors alike Our Study Texts, Practice & Revision Kits and i-Passes (for exams on demand) are reviewed by the ACCA examining team and are written by our in-house authors with industry and teaching experience who understand what is required for exam success EXAM SUCCESS SITE To help maximise your chances of succeeding in your exams, we’ve put together a suite of exclusive ACCA resources Our Exam Success site provides you with access to a free digital version of this publication, as well as extra resources designed to focus your efforts on exams and study methods To access the Exam Success site, please email learningmedia@bpp.com with the subject line “Access to Exam Success site - eBook”, including your order reference number and the name of the book you’ve bought (ie ACCA F5 Study Text) for your access code Once you have received your code, please follow the instructions below: To access the BPP ACCA Exam Success site for this material please go to: www.bpp.com/ExamSuccessSite n Create a user account if you don’t already have one Make sure you reply to the confirmation email n Log in using your registered username and password Select the paper you wish to access n Enter the code you received when prompted You will only have to this once for each paper you are studying PAPER P2 CORPORATE REPORTING (INTERNATIONAL AND UNITED KINGDOM) BPP Learning Media is an ACCA Approved Content Provider for the ACCA qualification This means we work closely with ACCA to ensure our products fully prepare you for your ACCA exams In this Practice and Revision Kit, which has been reviewed by the ACCA examination team, we:  Discuss the best strategies for revising and taking your ACCA exams  Ensure you are well prepared for your exam  Provide you with lots of great guidance on tackling questions  Provide you with three mock exams  Provide ACCA exam answers as well as our own for selected questions Our Passcards also support this paper FOR EXAMS IN SEPTEMBER 2016, DECEMBER 2016, MARCH 2017 AND JUNE 2017 P R A C T I C E & R E V I S I O N K I T First edition 2007 Tenth edition February 2016 ISBN 9781 4727 4443 (previous ISBN 9781 4727 2693 3) e-ISBN 9781 4727 4658 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia Printed in the United Kingdom by Ricoh UK Limited Unit Wells Place Merstham RH1 3LG Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable, sustainable sources All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd The contents of this book are intended as a guide and not professional advice Although every effort has been made to ensure that the contents of this book are correct at the time of going to press, BPP Learning Media makes no warranty that the information in this book is accurate or complete and accept no liability for any loss or damage suffered by any person acting or refraining from acting as a result of the material in this book We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, unless otherwise stated BPP Learning Media is grateful to the IASB for permission to reproduce extracts from the International Financial Reporting Standards including all International Accounting Standards, SIC and IFRIC Interpretations (the Standards) The Standards together with their accompanying documents are issued by: The International Accounting Standards Board (IASB) 30 Cannon Street, London, EC4M 6XH, United Kingdom Email: info@ifrs.org Web: www.ifrs.org Disclaimer: The IASB, the International Financial Reporting Standards (IFRS) Foundation, the authors and the publishers not accept responsibility for any loss caused by acting or refraining from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise to the maximum extent permitted by law © BPP Learning Media Ltd 2016 ii A note about copyright Dear Customer What does the little © mean and why does it matter? 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Contents Page Finding questions Question index iv Topic index vii Helping you with your revision viii Revising P2 Revising P2 ix Passing the P2 exam x Exam information xiii Analysis of past papers xiv Exam update xxiii Useful websites xxv Questions and answers Questions Answers 95 Exam practice Mock exam  Questions 329  Plan of attack .339  Answers .340 Mock exam  Questions 359  Plan of attack .369  Answers .372 Mock exam (ACCA September/December 2015 Exam)  Questions 393  Plan of attack .403  Answers .405 Mathematical tables 425 Review form Contents iii Question index The headings in this checklist/index indicate the main topics of questions, but questions often cover several different topics Questions set under the previous syllabus Advanced Corporate Reporting paper are included because their style and content are similar to those which appear in the P2 exam The questions have been amended to reflect the current exam format Time Page number Marks allocation Mins Question Answer Part A: Regulatory and ethical framework Financial reporting framework Conceptual framework (12/07, amended) 25 49 95 Lizzer (6/13) 25 49 97 Venue (12/11, amended) 25 49 100 – – 104 Part B: Accounting standards Preparation question: Sundry standards Non-current assets Key (12/09) 25 49 107 Prochain (ACR, 6/06) 25 49 110 Scramble (12/11) 25 49 112 Estoil (12/14) 25 49 115 Employee benefits Preparation question: Defined benefit plan – – 118 10 Macaljoy (12/07, amended) 25 49 11 119 11 Smith (6/09, amended) 25 49 12 122 Events after reporting period, provisions and contingencies 12 Ryder (ACR, 12/05) 25 49 13 125 13 Royan (6/12, amended) 15 29 14 127 14 Electron (Pilot paper) 25 49 14 128 Income taxes 15 Panel (ACR, 12/05) 25 49 15 131 16 Kesare (Pilot paper) 25 49 16 133 Financial instruments iv 17 Preparation question: Financial instruments – – 18 135 18 Coatmin (12/14) 25 49 18 136 19 Avco (6/14, amended) 25 49 19 139 20 142 20 144 20 Complexity (12/09) 25 49 21 Ambush (ACR, 12/05, amended) 25 49 Question index Leases 22 Preparation question: Leases – – 21 147 23 Havanna (12/13) 25 49 22 147 24 Holcombe (6/10, amended) 25 49 23 151 25 William (6/12) 25 49 24 153 25 49 25 157 Share-based payment 26 Leigh (ACR, 6/07) Performance reporting 27 Zack (12/13) 25 49 26 159 28 Minco (6/14, amended) 25 49 27 163 29 Alexandra (6/11) 25 49 28 166 30 Klancet (6/15) 25 49 29 169 31 Cloud (6/15) 25 49 30 172 32 Calcula 25 49 31 176 25 49 32 180 34 183 34 184 35 187 Related parties 33 Egin Group (ACR, 6/06) Part C: Group financial statements Revision of basic groups 34 Preparation question: Control – 35 Marrgrett (12/08) 25 36 Preparation question: Associate – – 49 – Complex groups 37 Preparation question: 'D'-shaped group – – 36 189 38 Preparation question: Sub-subsidiary – – 37 191 39 Glove (ACR, 6/07, amended) 25 49 39 193 40 Case study question: Jarvis 50 98 40 198 Changes in group structures 41 Preparation question: Part disposal – – 42 204 42 Preparation question: Purchase of further interest – – 44 206 43 Case study question: Marchant (6/14) 50 98 44 208 44 Ejoy (ACR, 6/06, amended) 30 59 46 215 45 Case study question: Traveler (12/11) 50 98 48 219 46 Case study question: Joey (12/14) 50 98 50 225 47 Case study question: Kutchen (6/15) 50 98 52 231 48 Case study question: Robby (6/12) 50 98 55 238 49 Case study question: Bravado (6/09) 50 98 57 244 50 Case study question: Ashanti (6/10, amended) 50 98 59 249 Foreign transactions and entities 51 Preparation question: Foreign operation – – 61 256 52 Aspire (6/14) 25 49 63 258 53 Case study question: Rose (6/11) 50 98 64 261 Question index v Time Page number Marks allocation Mins Question Answer Group statements of cash flows 54 Preparation question: Consolidated statement of cash flows – – 66 267 55 Case study question: Angel (12/13) 50 98 69 269 56 Case study question: Jocatt (12/10) 50 98 73 274 25 49 78 280 Part D: Developments in reporting Environmental and social reporting 57 Glowball (ACR, Pilot paper) Current developments 58 Preparation question: Current issues – – 79 282 59 Fair values and IFRS 13 25 49 79 285 60 Jones and Cousin (ACR 12/06) 25 49 80 287 Lockfine (6/11) 25 49 80 289 62 Seltec (6/10) 25 49 81 293 63 Kayte (12/14) 25 49 82 296 64 Ethan (6/12) 25 49 83 299 65 Norman (6/08) 25 49 84 301 66 Preparation question: Reconstruction scheme – – 85 304 67 Plans 15 29 86 308 68 Decany (12/11) 25 49 87 310 69 Lucky Dairy (ACR, 6/02, amended) 25 49 88 314 70 Yanong (6/15) 25 49 89 316 Specialised entities and specialised transactions 61 IFRS for small and medium-sized entities 71 IFRSs and SMEs (ACR, 6/06, amended) 25 49 91 319 72 Whitebirk (12/10, amended) 22 43 91 322 Mock exam 73 74 75 76 Case study question: Warrburt (12/08, amended) Coate (12/12) Blackcutt (12/12) Jayach (12/12) Mock exam 77 78 79 80 Case study question: Beth (12/07, amended) Verge (6/13) Janne (6/13) Implementing IFRS (6/08) Mock exam (ACCA September/December 2015 Exam) 81 82 83 84 vi Case study question: Bubble (9 or 12/15) Chemclean (9 or 12/15) Gasnature (9 or 12/15) Tang (9 or 12/15) Question index Topic index Listed below are the key Paper P2 syllabus topics and the numbers of the questions in this Kit covering those topics If you need to concentrate your practice and revision on certain topics or if you want to attempt all available questions that refer to a particular subject, you will find this index useful Syllabus topic Question numbers Associates Complex groups Consolidated statement of financial position Consolidated statement of profit or loss and other comprehensive income Consolidated statement of cash flows Corporate citizenship Disposals Employee benefits Environmental issues Ethics Financial instruments Foreign currency IAS (revised) Impairment International issues IFRS IFRS IFRS IFRS 10 to 12 IFRS 13 Joint ventures Measurement of performance Non-current assets Provisions Related party transactions Reporting performance Revenue recognition Share-based payment Small and medium-sized entities Taxation 36 37 – 40 46 40 54 – 56 60 41 – 50 – 11 57 43 – 50 17 – 21 51 – 53 Throughout 5, 64 26 35 – 63 17 – 21 35 – 63 59, throughout 62 27 – 32 5–8 12 – 14 33, 82 32 26 71, 72 15, 16 Topic index vii Helping you with your revision BPP Learning Media – ACCA Approved Content Provider As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use revision materials reviewed by the ACCA examination team By incorporating the ACCA examination team’s comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Practice & Revision Kit provides excellent, ACCA-approved support for your revision Tackling revision and the exam Using feedback obtained from the ACCA examination team review:  We look at the dos and don’ts of revising for, and taking, ACCA exams  We focus on Paper we discuss revising the syllabus, what to (and what not to do) in the exam, how to approach different types of question and ways of obtaining easy marks Selecting questions We provide signposts to help you plan your revision  A full question index  A topic index listing all the questions that cover key topics, so that you can locate the questions that provide practice on these topics, and see the different ways in which they might be examined Making the most of question practice At BPP Learning Media we realise that you need more than just questions and model answers to get the most from your question practice  Our Top tips included for certain questions provide essential advice on tackling questions, presenting answers and the key points that answers need to include  We show you how you can pick up Easy marks on some questions, as we know that picking up all readily available marks often can make the difference between passing and failing  We include marking guides to show you what the examining team rewards  We include comments from the examining team to show you where students struggled or performed well in the actual exam  We refer to the BPP Study Text for exams in September 2016, December 2016, March 2017 and June 2017 for detailed coverage of the topics covered in questions Attempting mock exams There are three mock exams that provide practice at coping with the pressures of the exam day We strongly recommend that you attempt them under exam conditions Mock exams and reflect the question styles and syllabus coverage of the exam; Mock exam is the ACCA September/December 2015 exam paper This exam is compiled from questions selected by the examination team from the September 2015 and December 2015 exams They not reflect the entire September or December exams but contain questions most appropriate for students to practice viii Helping you with your revision ... ENTITIES 20 Financial reporting in specialised, not-for-profit and public sector entities E2 Entity reconstructions F IMPLICATIONS OF CHANGES IN ACCOUNTING REGULATION ON FINANCIAL REPORTING Throughout... Revising P2 xix June 2013 Section A Consolidated statement of financial position with a 'D’-shaped group; comparison of methods for valuing non-controlling interest; ethics Question in this Kit - Section... Agriculture First-time adoption of international financial reporting standards Share-based payment Business combinations Non-current assets held for sale and discontinued operations Financial instruments: