General F2 - points i keep forgetting..

Question 1

Operating sale and leaseback: SP>FV

Answer 1

DR Cash = SP
CR Non-current assets = CA
CR Profit on disposal = FV-CA
CR Deferred income = SP-FV

Question 2

Operating sale and leaseback: SP

Answer 2

DR Cash = SP
CR Non-current assets = CA
DR Prepayments = CA-SP

Question 3

What is the difference between a year 2 liability and year 2 expense of a cash-based payment?

Answer 3

Liability = the amount owed that particular year
Expense = the difference between the year in question and the previous year

Question 4

NCI with fx rates

Answer 4

NCI @ acq @ HR
NCI share of post acq RE (as per post acq RE fx calc)
plus/less: NCI share of fx gain/loss on goodwill

Question 5

Subsidiary post acq RE with fx rates

Answer 5

Use following proforma:
s/cap @ HR
reserves @ acq @ HR
post acq reserves - bal figure
total equity @ CR

Then find group share of post acq reserves

Question 6

Profit NCI with fx rates

Answer 6

NCI share of profit
less: NCI share of impairment (as per ch. 3)
Plus/less: NCI gain/loss on fx rates

Question 7

What are the advantages of a rights issue?

Answer 7

Shareholders can realise cash by selling their rights

It is a relatively cheap message of issuing shares

Companies expect a rights issue to be fully subscribed

Question 8

Finance lease characteristics

Answer 8

The lease term is the same as the estimated economic life of the asset

The lessee has the option to purchase the asset at a price that is expected to be significantly lower than the fair value of the leased asset at the date the option becomes exercisable

Question 9

Operating lease characteristics

Answer 9

The lease does not transfer ownership of the asset to the lessee by the end of the lease term

At the inception of the lease the present value of the minimum lease payments is 50% of the fair value of the asset

Question 10

Investment in associate (normal)

Answer 10

Cost of associate
Our share of associate’s profit AFTER DIVIDEND PAID
Impairment

Question 11

Investment in associate (when sub –> associate)

Answer 11

FV remaining investment

Post acq RE at new % share

Question 12

Profit to NCI

Answer 12

All at NCI%:
Profit for year
less: FV adj depn
less: Impairment
less: PUP adj (if sub --> parent)