(b) Discuss the view that fair value is a more relevant measure to use in corporate report
(b) Discuss the view that fair value is a more relevant measure to use in corporate reporting than historical cost.
(12 marks)
(b) Discuss the view that fair value is a more relevant measure to use in corporate reporting than historical cost.
(12 marks)
第1题
(d) Calculate the ex dividend share price predicted by the dividend growth model and discuss the company’s
view that share price growth of at least 8% per year would result from expanding into the retail camera
market. Assume a cost of equity capital of 11% per year. (6 marks)
第2题
Required:
(a) Discuss the particular difficulties encountered when budgeting in public sector organisations compared with budgeting in private sector organisations, drawing comparisons between the two types of organisations. (5 marks)
(b) Explain the terms ‘incremental budgeting’ and ‘zero-based budgeting’. (4 marks)
(c) State the main stages involved in preparing zero-based budgets. (3 marks)
(d) Discuss the view that ‘there is no longer a place for incremental budgeting in any organisation, particularly public sector ones,’ highlighting any drawbacks of zero-based budgeting that need to be considered. (8 marks)
第3题
Required:
(a) (i) Discuss the approach taken by IFRS 9 in measuring and classifying financial assets and the main effect that IFRS 9 will have on accounting for financial assets. (11 marks)
(ii) Grainger, a public limited company, has decided to adopt IFRS 9 prior to January 2012 and has decided to restate comparative information under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The entity has an investment in a financial asset which was carried at amortised cost under IAS 39 but will be valued at fair value through profit and loss (FVTPL) under IFRS 9. The carrying value of the assets was $105,000 on 30 April 2010 and $110,400 on 30 April 2011. The fair value of the asset was $106,500 on 30 April 2010 and $111,000 on 30 April 2011. Grainger has determined that the asset will be valued at FVTPL at 30 April 2011.
Required:
Discuss how the financial asset will be accounted for in the financial statements of Grainger in the year ended 30 April 2011. (4 marks)
(b) Recently, criticisms have been made against the current IFRS impairment model for financial assets (the incurred loss model). The issue with the incurred loss model is that impairment losses (and resulting write-downs in the reported value of financial assets) can only be recognised when there is evidence that they exist and have been incurred. Reporting entities are not allowed currently to consider the effects of expected losses. There is a view that earlier recognition of loan losses could potentially reduce the problems incurred in a credit crisis.
Grainger has a portfolio of loans of $5 million which was initially recognised on 1 May 2010. The loans mature in 10 years and carry an interest rate of 16%. Grainger estimates that no loans will default in the first two years, but from the third year onwards, loans will default at an annual rate of about 9%. If the loans default as expected, the rate of return from the portfolio will be approximately 9·07%. The number of loans are fixed without any new lending or any other impairment provisions.
Required:
(i) Discuss briefly the issues related to considering the effects of expected losses in dealing with impairment of financial assets. (4 marks)
(ii) Calculate the impact on the financial statements up to the year ended 30 April 2013 if Grainger anticipated the expected losses on the loan portfolio in year three. (4 marks)
Professional marks will be awarded in question 4 for clarity and quality of discussion. (2 marks)
第4题
3 The Chemical Services Group plc (CSG), which operates a divisionalised structure, provides services to industrial and
domestic customers in Swingland, a country whose economic climate is subject to significant variations. There have
been a number of recent changes at board level within CSG and therefore the managing director called a meeting of
the board of directors at which each of four recently appointed directors put forward their view as to what their primary
focus should be. These were as follows:
The research and development director stated that ‘my primary focus is upon ensuring that we continue to develop
the products and services that satisfy the requirements of our existing and potential customers’.
The finance director stated that ‘my primary focus is upon keeping our investors satisfied’.
The human resources director stated that ‘my primary focus is upon ensuring that we take all the steps necessary to
establish and maintain our reputation as a responsible employer’.
The corporate affairs director stated that ‘my primary focus is upon the need to ensure that we are recognised as a
socially responsible organisation’.
Required:
(a) Discuss the criteria that should be considered in deciding upon suitable performance measures in respect of
the primary focus of each of the FOUR directors of CSG providing THREE appropriate quantitative measures
for each primary focus.
Note: your answer may include financial or non-financial quantitative measures. (12 marks)
第6题
(b) Discuss the limitations of the above estimates. (6 marks)
第7题
(b) Discuss the statements of the operational manager of Bonlandia and assess their implications for SSH.
(4 marks)
第8题
(b) (i) Discuss the relationship between the concepts of ‘business risk’ and ‘financial statement risk’; and
(4 marks)
第9题
(b) Discuss the relative costs to the preparer and benefits to the users of financial statements of increased
disclosure of information in financial statements. (14 marks)
Quality of discussion and reasoning. (2 marks)
第10题
(b) Discuss the nature of the following issues in developing IFRSs for SMEs.
(i) The purpose of the standards and the type of entity to whom they should apply. (7 marks)