dfs -written questions involving standards - how vital is terminology/wording?

lisnic
lisnic Registered Posts: 141 ? ? ?
im thinking about the written questions in dfs that involve the standards in the answer

obviously if a question says for examples what is ias 16 definition of asset the terminology is vital

however in my course companion when working through a few things im wondering how vital it is to include standard number/name in the answer and the exact wording;

if i give a couple examples it will probably explain what i mean more

question: how should inventories be valued? answer: ias2 contains a basic rule for inventories to be valued at lower of cost and net realisable value. This is on an individual basis and cannot be applied to the whole inventory.

so what i mean is if i put an answer such as: inventories should be valued at lower of cost and net realisable value, on an individual basis rather than the whole inventory.

does this demonstrate i understand the standard i need to apply etc even though i havent stated the actual standard?

another example is with research and development and question gives project details and asks how development should be recognised in financial statements

answer: ias 38 states that development expenditure can be recognised as an intangible asset if project meets all of the following requirements (ie technical feasibility; intention to complete etc and that fuure economic benefits in future periods can be recognised. This project is still waiting to find out find out if external funding will be granted and so all of the ias 38 requirements have not been demonstrated by the project and so cannot be recognised as an asset in balance sheet so expenditure should be included in the income statement.

if i put answer like: the project does not meet all the criteria required in order for development expenditure to be recognised as an intangible asset in the balance sheet due to the funding to complete the development to not being in place. For this reason this expenditure should be included in the income statement for the period.

do you see what i mean? im just wondering how acceptable these types of answers would be in the exam? i feel i have an understanding/knowledge of the standards and how to apply them in most cases but just now i still havent got all the of the numbers and names and the exact wording used ie for the list of requirements in R&D but i can identify gaps when looking at a project - obviously i still have time an will continue to try!

also when it comes to questions like define an asset as per ias 16 - how likely are these types of questions to come up to those that do cover the application of the standards like above but dont use the numbers in the question?

its difficult to judge from the past papers on what is acceptable in your answer as obviously the answers are he full/best answers so the standard numbers/wording etc is used

Thanks

Lisa

Comments

  • jilt
    jilt Registered Posts: 2,903
    Whilst I cannot confirm that the content contained in your alternative answers are correct (I am still studying this myself) I can confirm that you don't have to recite the definition of the standards. It's much easier to learn them if you can describe them your own words.

    And, as Steve Collings so rightly says, if you can prepare consolidated accounts and statements of cash flow then that is 2 standards that you already know without having to recite them from the text books.

    Hope that helps

    Good luck with the exam
  • lisnic
    lisnic Registered Posts: 141 ? ? ?
    jilt wrote: »
    It's much easier to learn them if you can describe them your own words.
    exactly my thought/problem learning exact wording gets me! i know there are key definitions which i will do my utmost to learn but when u go into a bit more detail about applying the standards thats when knowing the exact wording is pretty difficult - however i have it in my head in my more understandle/remembrable terms!

    yes gd luck - i have a very busy few weeks ahead finishing this and btc but im getting there albeit slowly - hoping it will just 'click' certain bits suddenly have the more ive read them etc so sure the rest will too. not too concerned about btc yet more just dfs
  • Steve Collings
    Steve Collings Registered Posts: 997
    In terms of the discussion style questions - particularly those relating to the accounting standards, it is important that you have a basic and broad knowledge of the standard because you have to demonstrate to the examiner that you can apply the requirements of the standard.

    For example, if you look at June 2009, IAS 36 came up and the examiner required candidates to discuss the two amounts involved in the standard: fair value in use less costs to sell and value in use. If you look at my suggested answer and the examiner's model answer, you will see that you don't have to go to the n'th degree to pass the question. If you also knew that an asset's recoverable amount is the higher of fair value less costs to sell and value i use then you would have cleared this question.

    You can actually get away with rote learning the definitions but rote learning is not really applying your knowledge. Don't be afraid to put things in your own words if you are struggling. The paper is practical in nature and in real life if you were to advise a client you would use easy to understand language.

    Kind regards

    steve
  • lisnic
    lisnic Registered Posts: 141 ? ? ?
    thanks steve i actually prefer putting things in my own words, im literally going to rote learn what i think are the key definitions from each standard and just try apply my own wording/thoughts in the discussion questions as think this style is better for me anyway. i just wasnt sure how strict the marking criteria was or how flexible it was for interpretation and using your own words and didnt want to shoot myself in my own foot by using my own words when there may not have been scope for it

    thanks
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