2013 CAP2 Discussion Group

Noonster wrote: »

Thanks HorseBox20 for those notes- they look very useful. Haven't really looked at SFMA yet,but will plunge in tomorrow.

Spent today doing the 3 FR papers from last year. Timing is a major issue. No way I could get them finished in an hour and a half. Anyone know why there is a May paper as well?? It was a terrible paper last year!!! It's a shame that we haven't been any guidance on this exam or gone through any papers with the lecturer (D1 hasn't anyway) to help us prepare or to get a better idea of what they are looking for.....

I did the exact same as you yesterday and I can manage all the questions but not a hope of me getting a paper done in 90 mins!!

How many hours in total are people putting in for FR and SFMA CA's on the 18th? I heard that KPMG told their students that 3 hours for 3-4 evenings this week would (in most cases) result in the avg mark of 11-12%. Opinions??

Mypillowface wrote: »

Guys sorry to post this again but does anyone have the dublin group 3 timetable?

i have group 2 if that's of any use? Can you not get it via the course material?

the_law13 wrote: »

How many hours in total are people putting in for FR and SFMA CA's on the 18th? I heard that KPMG told their students that 3 hours for 3-4 evenings this week would (in most cases) result in the avg mark of 11-12%. Opinions??

Sounds about right to me

emmetkenny wrote: »

Is fr still worth 10% ?

Yeh it is still 10% and SFMA is 15%

y0ssar1an22 wrote: »

I have a question I hope someone will be able to help with. Its from FR Jan 2013 Q2 part a. Ballyhoe LTD.

31 dec 2011: NBV = 1166
__________ revalu to 1100

= revaluation decrease of 66000

1. eliminate AD

AD 157000
revalu______157000

2. account for remainder of movement:
66000 + 157000 (AD) = 223000

NCA____________________223000
revalu. surplus 180000
loss on revalu 43000

NBV now = 1100


Dep for 2012:

1100@5% = 55000

AD__________________55000
Dep Expense 55000



Giving a net result of:

NCA_____________________223000
AD ______________102000
Revalu

---

P/L (loss on revalu) 43000
Dep exp _________55000



I am going wrong somewhere, cos the solution is completely different. Help!!

Asset bought 2009 1,300
Dep 25yrs 2009 -52
2010 -52
CV 2010 1,196

In 2011 Reval Surp 23
Charge for year 53 Charge for year is 157-104=53
CV 2011 1,166

2012 reval loss -66
New cost 1100 1166-66
Charge for year 55 1100/20

Carrying Val 12 1045

Yeah, just been looking at the tax calculations now.

Basically, when calculating the base figure for tax payable, instead of subtracting depreciation from (1)profit we subtract the capital allowances instead, as these are approved by Revenue for this purpose.

If the Profit figure we are given has taken depreciation into account, we add it back in and subtract the capital allowances instead. If depreciation has not been considered in the profit figure then we can just take away the capital allowances straight away.

Once we have done the above, we calculate tax figure I.e.. 20 % of taxable profit in the SFMA Case study paper.

Then here comes the messy bit, We then subtract this tax figure from the (1)profit figure above and then we have the final cash flow figure for NPV purposes. So essentially the capital allowance figure is only relevant for calculating the tax figure and then we ignore it when calculating our overall cash flow figure as, like depreciation, it is not a cashflow at all.

An example would best explain this, but there are a few good ones on the notes provided by Horsebox, so I would recommend looking at them.

Kevint30 wrote: »

Thanks for that noonster. One more question. In some investment appraisal questions the capital allowance amount is multiplied by the tax rate and the resulting figure is then added back after tax. In other solutions this doesn't occur is this all connected to depreciation. Thanks again

This will give you the same result:

eg: taxable profit: 100
CA: -20
= 80

tax@ 15% = 12

---

taxable profit: 100
tax@ 15% = 15

CA: 20
Tax benefit of CA: 20 @15% = 3

15 - 3 = 12


remember: CA reduce your tax liability
and be aware there may be balancing allowance/charge in final yr

Bal all/charge:

Cost of asset
- sales proceeds
- CA claimed to date (in the case study this should only be 1 year)
= bal all/charge.

if the figure is positive it is a bal allowance. Therefore treat this like CA and use it to reduce tax liability
if the figure is negative it is a bal charge. this will added to the tax liability, and you will pay more tax.

Mypillowface wrote: »

Does anyone have copies of the SFMA Jan May and Sept 2013 papers and solutions? They aren't available on the website anymore.

...

y0ssar1an22 wrote: »

...

Thank you

Help!!

Was thinking that Sensitivity analysis might some up in the 'investment analysis' question and I just can get my head around it. The following example is reflective of cases I have seen in the book and the notes:

A project has an NPV of €100,000. salaries of €15,000 p.a. For 5 years were charged in arriving at this NPV, using a discount rate of 15%.how sensitive is the outcome of the project to the level of salaries?

Solution given:
PV of salaries = €15,000 x 3.352 (annuity factor,5 years,15%)= €50,280.

NPV/PV cost of salaries= 100,000/ 50,280= 199%=> cost of salaries could increase by 199% before the projects NPV would be reduced to zero.
I.e. Cost is salaries could increase to €44,850 before the NPV would be reduced to zero.

I just can't get this. If the cost were €44,850 annually then the PV would be 44,850x3.352=150,337,which is already greater than the 100,000 NPV.

Anyone able to shed any light??

Hi Imported But. So simple.thanks for the explanation.Really appreciate it

TAA_ICAI wrote: »

Hey,

Anyone know how the interest cost was calculated each quarter from the €20,000 finance cost in IAS 1 Review Question 4 as per below:

Op Bal Repaid Interest Cl Bal
Payment date 140,000 (10,000) 2,500 132,500
01.10.06 132,500 (10,000) 2,333 124,833
01.01.07 124,833 (10,000) 2,167 117,000
01.04.07 117,000 (10,000) 2,000 109,000
01.07.07 109,000 (10,000) 1,833 100,833
01.10.07 100,833 (10,000) 1,667 92,500

Your help would be much appreciated thank you :-)

on my initial reading it appears finances costs are 25000

TAA_ICAI wrote: »

Hi y0ssar1an22,

Thank you for your reply :-). Could you please explain how you arrived at 25,000 for the finance costs?

As I was thinking it was:

Total repayments 160,000
Cost 140,000
Finance charge 20,000

Thank you for you help :-)

Is this the TVs ‘R’ Us question? I just had a look and got it from the trial balance

y0ssar1an22 wrote: »

BTW if it is that question they are CAP2 standard. The exam is on CAP1 material only (I think)

Hi y0ssar1an22,

Yea it is that question, I thought the 25,000 in trial balance was separate from the lease in note (ii) .... Not sure though ...

Actually just looked at competency statement again it is only CAP 1 examinable ... Good job u mentioned thank you :-)