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FAE 2011 Where to begin

FAE_UCH

Hello all,

This thread may be a little premature but after that disaster of a paper on Saturday, I figure i better start doing a bit now while i'm still slightly in study mode. I did a masters so i feel at a huge disadvantage as i did not have to come through CAP 2. Is there any point in me now going back and trying to look at CAP2 material or would that be much too technical for this.

Does anyone know what the best plan of attack to study this? I'd love to hear past Faer's advice, or people who have a plan to share it with us.

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ahtfulal

Anyone got any good notes/general procedures on company valuations? Or what way are people studying this area? Every question I've come across seems to use different methods and approaches. It's more than likely that there will be an indicator on this in the exam.

Jamesw2

Spoofer123 wrote: »

Hi All
Having done a lot of case studies at this stage I am now trying to sort out my notes that I need to bring into the exam.

So far I have done lists summarising the cases and each of the Super 6 which I will add to current class material, cases & solutions. I also plan on bringing some material from old FAE that I find useful. Books wise I am bringing the following:

· The ISA & IAS books (both tabbed to bejesus)
· The financial reporting cases & solution books,
· tax planning book
· resource pack
I know this might be a bit minimalistic for some considering I saw someone bring 2 wheelie bins worth of material last year.

Does anyone have any pointers for other material that might be useful for the exam?

Thanks

Hiya. Stupid question but how did you summarise each of the super 6?

lucky01

Wondering can anyone help clarify this point?

Is it correct that you do not have to depreciate land because land is generally an appreciating asset? if so does this say this anywhere in an IAS, I cant find it!

Lowrey

lucky01 wrote: »

Wondering can anyone help clarify this point?

Is it correct that you do not have to depreciate land because land is generally an appreciating asset? if so does this say this anywhere in an IAS, I cant find it!

You don't deprectiate land as... IAS 16

58 Land and buildings are separable assets and are accounted for separately, even when they are acquired together. With some exceptions, such as quarries and sites used for landfill, land has an unlimited useful life and therefore is not depreciated. Buildings have a limited useful life and therefore are depreciable assets. An increase in the value of the land on which a building stands does not affect the determination of the depreciable amount of the building.

ahtfulal

Are all limited companies regarded as 'small' companies under the UK Corporate Governane Code?

Choc Chip

ahtfulal wrote: »

Are all limited companies regarded as 'small' companies under the UK Corporate Governane Code?

In what context? Footnote 6 of the code confirms that a "smaller" company is one that is below the FTSE 350 throughout the year immediately prior to the reporting year but I don't know if that's what you're looking for..

EDIT: oops, sorry, I getcha - since it's only best practice for them anyway I'd be tempted to state best practice and then if they fulfil the criteria for an SME state the "smaller companies" option too. Just my approach tho..

ahtfulal

Yeh best practice is probably the word to use. Maybe size doesn't matter after all ha!

If it's a company the intro wording I'll use; "As Limited Company is not a listed company (plc) it is not required to meet all the requirements of the code, however the code should be used to provide a useful guide on best practice"

Only so much they can ask in Corp governance hope it's an easy indicator over the 2 days!

levi

Anyone else having trouble logging into CAI website? It seems pretty slow this afternoon... wondering if it's just me?

lisa39

Anyone know where I would get a piecemeal acquisition example?

Lowrey

lisa39 wrote: »

Anyone know where I would get a piecemeal acquisition example?

Telfer Group in Derry Cotter case book page 197.

statikmusic

Just wondering if the institute are replying to anyone's e-mails? Sent them one 10 days ago and still no reply. My patience with them is running thin at this stage.

ahtfulal

Why in Globel Tech Packaging do they use EBITDA and not Profit after tax in the earnings based valuation calc? Is it just because they gave the EBITDA industry multiple and you are to assume to use this?

Sofa King Great

Just wondering, have the institute sent out any exam notifications yet? I know where it's on and when obviously but don't they usually send a letter with an exam number?

the_big_dawg

Sofa King Great wrote: »

Just wondering, have the institute sent out any exam notifications yet? I know where it's on and when obviously but don't they usually send a letter with an exam number?

I got mine in the post today

lucky01

ahtfulal wrote: »

Why in Globel Tech Packaging do they use EBITDA and not Profit after tax in the earnings based valuation calc? Is it just because they gave the EBITDA industry multiple and you are to assume to use this?

I dont think you can use PAT.

EBITA is used to value an LTD when it is being bought over by a PLC. A multiple (range from 4.5-9), although in this question it give you the multiple, is applied to an LTD's EBITDA so as to value it on the same scale as a PLC. (i think! correct me if im wrong!)

lucky01

Sofa King Great wrote: »

Just wondering, have the institute sent out any exam notifications yet? I know where it's on and when obviously but don't they usually send a letter with an exam number?

got mine today!

Choc Chip

Globaltech - I used EBITA 'cos it was given but I don't think you'd be penalised for using PE 'cos they give you that too, I think the important thing would be to recognise that the asset valuation is much higher than the earnings valuation.

Is anyone doing the tax elective and looked at Case Study 4 (Brian Jones and all the VAT)? I was sure that VAT applied to the sale of the property he'd been living in as he didn't seem to have occupied it for more than 24 months and even if he had, the previous self-supply would not have been a "transaction between persons who were not connected". Apparently I'm wrong again though. Any ideas why there's no VAT just because it's a private transaction? I thought VAT rules always applied to the sale of property....

Choc Chip

lucky01 wrote: »

I dont think you can use PAT.

EBITA is used to value an LTD when it is being bought over by a PLC. A multiple (range from 4.5-9), although in this question it give you the multiple, is applied to an LTD's EBITDA so as to value it on the same scale as a PLC. (i think! correct me if im wrong!)

lisa39

Lowrey wrote: »

Telfer Group in Derry Cotter case book page 197.

Thanks Lowrey.

DaeryssaOne

Choc Chip wrote: »

Is anyone doing the tax elective and looked at Case Study 4 (Brian Jones and all the VAT)? I was sure that VAT applied to the sale of the property he'd been living in as he didn't seem to have occupied it for more than 24 months and even if he had, the previous self-supply would not have been a "transaction between persons who were not connected". Apparently I'm wrong again though. Any ideas why there's no VAT just because it's a private transaction? I thought VAT rules always applied to the sale of property....

I had a look at that there Choc Chip cause working on that chapter at the minute and I'm not too sure.
The book says 'where the property is residential property, the supply by the person who developed it in the course of business...is always taxable'.

However he bought one of those houses with the intention of occupying it himself so maybe that's why its not taxable as the sale of that residential property is not 'in the course of business'

CapallBan

jobr wrote: »

I had a look at that there Choc Chip cause working on that chapter at the minute and I'm not too sure.
The book says 'where the property is residential property, the supply by the person who developed it in the course of business...is always taxable'.

However he bought one of those houses with the intention of occupying it himself so maybe that's why its not taxable as the sale of that residential property is not 'in the course of business'

Yeah that's what I got from it, it was a self supply and therefore he should have returned VAT at 13.5% to revenue. It's now a private residence so no VAT is charged.

Coldplayer

Can anyone please tell me why in the MechElec case study when working out the cashflows for the Discounted Cashflow valuation, the solution starts with EBITDA and yet it still adds back Interest expense?

Doesn't make sense!

ahtfulal

I'm pretty sure you can use P/E ratios which would require the use of the profit after tax. You're still going to be adjusting for lack of marketability, infact.... yep - Jones' Furniture has an example.[/Quote]

Yeh I see that in Jones Furniture alrite, they can be tricky enough them valuation questions.

Like in last years fae it was a limited co with option to buy either of 2 other limited co's and they discounted due to lack of marketability. Would you generally always have to do this?

In most cases anyway it's da plc acquiring the ltd co can get my head around this alrite.

Choc Chip

Cheers jobr & cappallban - I'm just struggling to get my head round him giving himself stuff and selling it on not in the course of business, even though that is his business... Stupid VAT. I can see it being my downfall...

ahtfulal wrote: »

Like in last years fae it was a limited co with option to buy either of 2 other limited co's and they discounted due to lack of marketability. Would you generally always have to do this?

Yep - always have to discount when you're starting off with the PE of a plc - you're reducing the value of the limited company for the lack of marketability (and hence liquidity) of the shares in comparison to a plc. I'd generally use about 20% but I think the book uses up to about 30%. As long as it's reasonable they can't really mark you down on using a different %.

Spoofer123

Jamesw2 wrote: »

Hiya. Stupid question but how did you summarise each of the super 6?

Auditing - Read & summarised the ISA's, and have some audit risks & testing questions.

Performance Management - Read IAS's & made notes. Also made notes on old MABF & financial reporting papers.

Finance - Summerised 5-6 key areas that were mentioned in revision classes this year.

Tax - Read & made notes on the Tax Planning book

Business leadership - Summarise combined code & marketing notes in resource pack. I also have P Monaghans Strategy & Marketing revision notes & I used the Change Management notes I got in classes last year.

I didn't do too much work outside of the cases for HR & IMP, but if anyone has suggestions I'm all ears!!!

Peanut_M

Spoofer123 wrote: »

Auditing - Read & summarised the ISA's, and have some audit risks & testing questions.

Performance Management - Read IAS's & made notes. Also made notes on old MABF & financial reporting papers.

Finance - Summerised 5-6 key areas that were mentioned in revision classes this year.

Tax - Read & made notes on the Tax Planning book

Business leadership - Summarise combined code & marketing notes in resource pack. I also have P Monaghans Strategy & Marketing revision notes & I used the Change Management notes I got in classes last year.

I didn't do too much work outside of the cases for HR & IMP, but if anyone has suggestions I'm all ears!!!

What are P Monaghan's Strategy & Marketing revision notes??

Kate2261

Hi

Just finishing the case studies from the resource pack and was wondering does anyone have solutions for Runways, Southern Fisheries, St Bernards or O'Reilly Mortgages?

They seem to be the only ones I do not have printed out and I can't find them anywhere on the notes bit of the website!

zamaramo99

Kate2261 wrote: »

Hi

Just finishing the case studies from the resource pack and was wondering does anyone have solutions for Runways, Southern Fisheries, St Bernards or O'Reilly Mortgages?

They seem to be the only ones I do not have printed out and I can't find them anywhere on the notes bit of the website!

Hi Kate I have attached copies of the 4 solutions u were looking for!!

acahopeful

Hi, does anyone know where I can get the rules for political donations? ie what is the max donation before it has to be disclosed etc? Thanks in advance

p13

I just feel totally disorganised compared to last year. Have been working away since the mocks and feel like I've gotten nowhere.

Any tips to what to concentrate on for the final 2 weeks? Just case study after case study?

I feel like I've not put a dent into tax or finance. There must be only so many situations that can come up around tax (e.g. implications of acquisition or disposal), and finance must be something similar e.g. company valuations