ACCA paper p2 corporate reporting

iv KAPLAN PUBLISHING Key features in this edition In addition to providing a wide ranging bank of real past exam questions, we have also included in this edition: • An analysis of all o

Professional Examinations

Paper P2 (INT and UK)

Corporate Reporting

EXAM KIT

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British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Published by:

Kaplan Publishing UK

Unit 2 The Business Centre

Molly Millar’s Lane

Wokingham

Berkshire

RG41 2QZ

ISBN: 978-1-78415-233-8

© Kaplan Financial Limited, 2015

Printed and bound in Great Britain

The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties Please consult your appropriate professional adviser as necessary Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials

All rights reserved No part of this examination may be reproduced or transmitted in any form or

by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without prior permission from Kaplan Publishing

Acknowledgements

The past ACCA examination questions are the copyright of the Association of Chartered Certified Accountants The original answers to the questions from June 1994 onwards were produced by the examiners themselves and have been adapted by Kaplan Publishing

We are grateful to the Chartered Institute of Management Accountants and the Institute of Chartered Accountants in England and Wales for permission to reproduce past examination questions The answers have been prepared by Kaplan Publishing

CONTENTS

Page

Section

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Key features in this edition

In addition to providing a wide ranging bank of real past exam questions, we have also included

in this edition:

• An analysis of all of the recent new syllabus examination papers

• Paper specific information and advice on exam technique

• Our recommended approach to make your revision for this particular subject as effective

The majority of the UK syllabus examination paper will be the same as the international paper, which is based on IFRS The UK paper will also test some differences between UK GAAP and the IFRS for small and medium entities There could be a focus on legal requirements, rather than accounting standard requirements It is anticipated that the differences will account for no more than 20% of the UK P2 paper

UK syllabus students should refer to the list of examinable documents for the UK examination which identifies the main areas of difference between the IFRS for small and medium entities and

UK GAAP and the extent to which those differences are examinable at P2 This document is available on the ACCA web site at www.accaglobal.com

To assist UK syllabus students, additional questions and answers based on examinable UK content are included within this Exam Kit

Quality and accuracy are of the utmost importance to us so if you spot an error in any of our products, please send an email to mykaplanreporting@kaplan.com with full details

Our Quality Co-ordinator will work with our technical team to verify the error and take action to ensure it is corrected in future editions

INDEX TO QUESTIONS AND ANSWERS

this is indicated in the end column of the index with the mark (A).

The pilot paper is included at the end of the kit The final question of this pilot paper has been replaced because the subject matter covered, and the style of the coverage, is not reflective of current examinable documents or exam style

KEY TO THE INDEX

PAPER ENHANCEMENTS

We have added the following enhancements to the answers in this exam kit:

Key answer tips

All answers include key answer tips to help your understanding of each question

Tutorial note

All answers include more tutorial notes to explain some of the technical points in more detail

Top tutor tips

For selected questions, we “walk through the answer” giving guidance on how to approach the questions with helpful ‘tips from a top tutor’, together with technical tutor notes

These answers are indicated with the “footsteps” icon in the index

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ONLINE ENHANCEMENTS

Timed question with Online tutor debrief

For selected questions, we recommend that they are to be completed in full exam conditions (i.e properly timed in a closed book environment)

In addition to the examiner’s technical answer, enhanced with key answer tips and tutorial notes

in this exam kit, online you can find an answer debrief by a top tutor that:

• works through the question in full

• points out how to approach the question

• how to ensure that the easy marks are obtained as quickly as possible, and

• emphasises how to tackle exam questions and exam technique

These questions are indicated with the “clock” icon in the index

Online question assistance

Have you ever looked at a question and not know where to start, or got stuck part way through? For selected questions, we have produced “Online question assistance” offering different levels of guidance, such as:

• ensuring that you understand the question requirements fully, highlighting key terms and the meaning of the verbs used

• how to read the question proactively, with knowledge of the requirements, to identify the topic areas covered

• assessing the detail content of the question body, pointing out key information and explaining why it is important

• help in devising a plan of attack

With this assistance, you should then be able to attempt your answer confident that you know what is expected of you

These questions are indicated with the “signpost” icon in the index

Online question enhancements and answer debriefs are available on MyKaplan:

www.MyKaplan.co.uk

INDEX TO QUESTIONS AND ANSWERS

SECTION A-TYPE QUESTIONS

Page number Question Answer Past exam (Adapted)

Group financial statements

SECTION B-TYPE QUESTIONS

Reporting standards

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Essay style questions

INDEX TO QUESTIONS AND ANSWERS

Page number Question Answer Past exam (Adapted)

UK GAAP focus

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ANALYSIS OF PAST PAPERS

The table below summarises the key topics that have been tested in the most recent P2 INT exams (up to December 2014)

The questions and answers in this edition of the exam kit have been amended, where appropriate, to reflect changes to the style of the exam and also the latest examinable documents

The December 2014 exam questions and answers from the INT P2 paper are included in Sections

3 and 4 of the exam kit Where a past examination question is not included in this edition of the exam kit, it is indicated with an (E)

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IFRS for SME

EXAM TECHNIQUE

• Use the allocated 15 minutes reading and planning time at the beginning of the exam:

– read the questions and examination requirements carefully, and

– begin planning your answers

Please note that it is prohibited to write in the answer booklet during the reading time

• Divide the time you spend on questions in proportion to the marks on offer:

– there are 1.8 minutes available per mark in the examination

– within that, try to allow time at the end of each question to review your answer and address any obvious issues

Whatever happens, always keep your eye on the clock and do not over run on any part of

any question!

• If you get completely stuck with a question:

– leave space in your answer book, and

– return to it later

• Stick to the question and tailor your answer to what you are asked

– pay particular attention to the verbs in the question

• If you do not understand what a question is asking, state your assumptions

Even if you do not answer in precisely the way the examiner hoped, you should be given some credit, if your assumptions are reasonable

• You should do everything you can to make things easy for the marker

The marker will find it easier to identify the points you have made if your answers are legible

• Written questions:

Your answer should have:

– a clear structure, including headings and paragraphs to provide focus

Be concise and stay on topic You will score no marks if you do not answer the question

• Computations:

It is essential to include all your workings in your answers – method marks are available

Many computational questions require the use of a standard format:

e.g standard formats for financial statements

Be sure you know these formats thoroughly before the exam and use the layouts that you see

in the answers given in this book and in model answers

• Reports, memos and other documents:

Some questions ask you to present your answer in the form of a report, a memo, a letter or other document

Make sure that you use the correct format – there could be easy marks to gain here

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PAPER SPECIFIC INFORMATION

THE EXAM

FORMAT OF THE EXAM

Number of marks

Question 1: Group accounts and discussion including ethics

Section B: choice of two from three available questions @ 25 marks each

––––

100 Total time allowed: 3 hours plus 15 minutes reading and planning time –––– Note that:

• Question 1 will focus on preparation of group financial statements for 35 marks There may also be an additional element, such as calculation of the gain or loss on disposal of a subsidiary The remainder of the question is likely to be discursive, perhaps based upon the appropriateness of a particular accounting treatment within the group accounts and will require application of ethical and professional principles to information within the question

• Question 1 is also likely to require technical knowledge of reporting standards to be applied

as part of the consolidation exercise

• Questions 2 and 3 are likely to be multi-transactional questions They will often be presented in the form of a scenario with an entity in the final stages of preparing their annual financial statements, with technical issues still to resolve This may also include use

of incorrect accounting treatments which will require identification, correction and explanation

• Questions 2 and 3 are likely to require both quantitative and qualitative assessment of information provided, perhaps with a summary of corrected or adjusted amounts to include

in the financial statements Discursive explanation of relevant issues will be required and may be in the form of a report or memorandum

• Question 4 is invariably an essay-style question, usually comprising a current issue or a theoretical or conceptual issue for discussion This may include a relatively small computation element The importance of awareness of current issues in accounting cannot

be emphasised too much, including knowledge of articles from Student Accountant

• Note that, for paper P2, two professional marks are available for each question in section B

of the examination As only two from the three available questions must be attempted, a maximum of four professional marks are available per examination You must answer each part of the question to be awarded the full two marks

PASS MARK

The pass mark for all ACCA Qualification examination papers is 50%

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UK GAAP FOCUS

The Examiner has indicated that up to 20% of an examination paper may comprise specific UK

GAAP content This could consist of an individual question or elements of more than one question from either or both sections of the examination paper It may comprise of discursive and/or numerical content and requirements, and will test the differences between UK standards and IFRS for small and medium entities Note that the UK syllabus examination paper will be denominated

in dollars (identified as $); this Exam Kit adopts the same notation and style for UK syllabus content

READING AND PLANNING TIME

Remember that all three hour paper based examinations have an additional 15 minutes reading and planning time

ACCA GUIDANCE

ACCA guidance on the use of this time is as follows:

This additional time is allowed at the beginning of the examination to allow candidates to read the questions and to begin planning their answers before they start to write in their answer books

This time should be used to ensure that all the information and, in particular, the exam requirements are properly read and understood

During this time, candidates may only annotate their question paper They may not write anything

in their answer booklets until told to do so by the invigilator

KAPLAN GUIDANCE

As there is some choice in Section B, there is a decision to make regarding which one of the optional questions to drop, together with the decision of which order you should attempt the questions

Therefore, in relation to P2, we recommend that you take the following approach with your reading and planning time:

• Skim through the whole paper, assessing the level of difficulty of each question

• Write down on the question paper next to the mark allocation the amount of time you should spend on each part Do this for each part of every question

• Decide which optional question to drop and the order in which you think you will attempt

PAPER SPECIFIC INFORMATION

It is usual however that student tackle their least favourite topic and/or the most difficult question in their opinion last

Whatever your approach, you must make sure that you leave enough time to attempt all questions fully and be very strict with yourself in timing each question

• For each question in turn, read the requirements and then the detail of the question

carefully

Always read the requirement first as this enables you to focus on the detail of the question with the specific task in mind

For computational questions:

Highlight key numbers/information and key words in the question, scribble notes to yourself on the question paper to remember key points in your answer

Jot down proformas required if applicable

For written questions:

Take notice of the format required (e.g letter, memo, notes) and identify the recipient of the answer You need to do this to judge the level of financial sophistication required in your answer and whether the use of a formal reply or informal bullet points would be satisfactory

Plan your beginning, middle and end and the key areas to be addressed and your use of titles and sub-titles to enhance your answer

For all questions:

Spot the easy marks to be gained in a question and parts which can be performed independently of the rest of the question For example, noting relevant reporting standards and unusual accounting treatments, laying out basic proformas correctly etc Make sure that you do these parts first when you tackle the question

Don’t go overboard in terms of planning time on any one question – you need a good measure of the whole paper and a plan for all of the questions at the end of the

15 minutes

By covering all questions you can often help yourself as you may find that facts in one question may remind you of things you should put into your answer relating to a different question

• With your plan of attack in mind, start answering your chosen question with your plan to

hand, as soon as you are allowed to start

Always keep your eye on the clock and do not over run on any part of any question!

DETAILED SYLLABUS

The detailed syllabus and study guide written by the ACCA can be found at:

www.accaglobal.com/students/