dfs exam weds

jimbob

any last minute tips this part
gotta remember cashflow, consolidated i/s b/s as well as i/s b/s with journals erk. journals everyones pet hate in my class.
not to forget ratios....... will simple answers do and not the jargon that the exam answers give you.
ias..... might as well hope and pray on that section
also whats the odds of a consoldidated question coming up thats not pre and post acq profits as we were told to concentrate on this

Sonny_L

The examiner won't expect your 'wordy' answers to match up to the model answers. Get the key points in.

jimbob

thats a valid point as long as i quote the revelant standards and key word it should be ok for some marks

Sonny_L

Full marks most likely. The model answers are a step above for tutorial purposes. DFS is one of the more repetitive exam IMO, plenty of past paper practice got me through it.

Sarah_Wilks

What does IMO stand for?

Sonny_L

In my opinion

jimbob

yes but there are only 4 past exams for the same standards as they changed them and according to teacher they not relevant to what we need to be judged as competent

hunter

it worries me that DFS has been quite repetative, hope they dont do a PEC 07 to us!!!!:(

jimbob

pec????????????
am i being thick whats that

hunter

Sos PEV!!!!!!!!!!!!!!! stressing already and still another revision day to go.

jimbob

we only doing pcr pev and dfs is this an easy option

Sonny_L

You mean the change to IAS's? I had a BPP textbook and they had reworded all of the exams from 2003 onward to the international standards?

peugeot

Tips

My tips for your DFS exam on Wednesday are:

• Have a basic understanding of all examinable IAS's. A list of examinable IAS are in the resources on the students page.
• Remember only consolidate a subsidiary - don't consolidate an associate. Associates are accounted for under IAS 28 using the equity method of accounting.
• Show all your workings - even if you make a total mess of the answer. You can only be penalised once for a c/f mistake.
• If you are asked for a report (a section B question) write a report - not a letter/memo. You will get credit for complying with this.
• With ratio analysis, get a basic knowledge of the purpose of each ratio. You will be asked (a) to calculate and (b) to write about it.
• With a cash flow remember when to add/deduct increases/decreases in working capital. Remember if it worsens the cash flow deduct - if it increases the cash flow add. For example increases in trade receivables means less cash has been received, thus an 'outflow' so you deduct the increase.
• Try to remain calm.

Remember it is important to show your workings - if you don't then the marker won't know how you've arrived at an answer. Even if the resulting answer is wrong, you can still pick up marks by showing your approach.

Good luck.

Steve

lorraine

am i correct in saying that you still calculate goodwill for an associate the same way as you would for a subsidiary.

Lor

zippy

Yes I think so Lor, with the difference being that you add the goodwill to the % of he associates net assets that you have a share in, and total it under investments, rather than show it as a separate goodwill item.


Does anyone know if we're likely to intragroup trading with items remaining un sold at the year end?

jimbob

whats odd of being assessed on associates we didnt study this. only found it by accident y/day

zippy

I guess no-one really knows jimbob but we've been told to prepare for it.

jimbob

bugger bugger and bugger we wasnt. all emphasis was on consolidated i/s and b/s accounting for goodwill

zippy

There's no saying it will be in there, but it's not all that different from a subsidiary, if you have the book you could probably grasp it quite quickly.

karenv

You are not alone Jimbob, we didnt cover it either.....getting books out now!
Last minute panic attack starting!

jimbob

50p says it turns up its called sods law.

confused!!

Hopefully though guys it may only be a wordy question (I hope!)

So, if it does come up, do we account for it in the exact same way as we would with a normal subsidary? I havent seen any past papers on this?!

jimbob

an associate owns less than 50% of a company a subsidiary owns at least 51% correct me if im wrong so you would need to account for it as same way as a minority interest and in % of profit from ops wise


correct me it thats wrong pls

Laura88

Dreading DFS tomorrow!!

Really do not want it! Anyone else feel the same? This is my worst area and if I could do something to get out of this exam then I would!

I HATE DFS!!

confused!!

so you dont do the goodwill etc?? i wonder if we will have a subsidiary and an associate, where then you just calculate the Minority interest part and thats it

jimbob

sorry laura you'll just have to do what us mere mortals do turn up and pray.
good luck and pls share any tips you might have

mehmet

SUBSIDIARY

A subsidiary is an entity that is controlled by another entity (IAS 27)

Control is defined as being when the parent(an entity with one or more subsidiaries) has:
-Majority voting shares (more than 51%)
-Right to exercise influence over subsidiary (usually by having an agreement with other investors)
-Controls voting rights
-Parent manages subsidiary
-Parent has ability to appoint and remove directors (usually by having an agreement with other investors)

When consolidating accounts with a subsidiary we need to calculate the;
-goodwill
-consolidated reserves (group retained earnings)
-minority interests.

Then you do a line by line consolidation, adding the subsidiaries figures to the parents to get one total for receivables, PPE, payables, revenue, distribution costs, etc.
Also, you must eliminate all intra-group transactions (in accordance with the single entity concept), e.g, intra-group sales. Also, any unrealised profits must be deducted from any transferred goods which have yet to be sold.

ASSOCIATE

An associate is an entity over which the investor has significant influence. (IAS 28)

The standard makes a presumption that significant influence exists once the investor has at least 20% of the voting rights. Other circumstances where significant influence arises include when the investor is the sole supplier to the entity.

If investor has significant influence, it must use the equity method of accounting in the consolidated accounts:
-In the Profit & Loss account, the investor will put a separate line for it's share of the associate's profits
-In the balance sheet, there will be one line entered, showing the value of investment in the entity. This can be calculated in one of two ways:

• parent's share of net assets plus unamortised goodwill
• cost of investment plus any post-acquisition profits

Also, note that the share of post-acquisition profits, less any goodwill impairment will be added to the parent's reserves.

confused!!

Hi

I actually quite like DFS - may regret saying that tomorrow though!

Its the costing ones I dont like - PEV & PCR!!

mehmet

As for past exam questions, the June 2005 DFS paper has a question with a subsidiary and an associate. You have to calculate the goodwill in the subsidiary and the value of investment in the associate only. However, I have gone as far as doing the consolidated balance sheet, so attempt that, and I'll post my answers later today if anyone wants.

confused!!

I just emailed my tutor and below was his reply!! hope this helps anyone as think it does me

For an associate you just bring in 1 line on the balance sheet - no goodwill calc. and DO NOT add in their assets and liabs - it is NOT treated the same as a SUB.

jimbob

your allowed to email your tutor................ wish we was allowed i think they gone on holiday