SBM Flashcards
Calc present value of the following:
A perpetuity of £4K starting in T4. The amount received will grow at 3% per year from T4 onwards. The discount rate is 10%
1/(0.1-0.03)DF AT T34k (cash flow)=42932
How to predict the futures price on a transaction date?
Can assume it declines linearly there get the change between the spot and the futures price and dividend my time to expiry, can then approximate any date until then
Explain disposal groups and AhfS (before and after)
Immediately before:
Immediately before the classification of a disposal group as held for sale,
the carrying amounts of the assets need to be reviewed (IFRS 5).
On this basis, evidence of impairment should be assessed on each
individual asset (or cash generating unit (CGU)) immediately prior to the
held for sale date.
After classification as held for sale, any test for impairment will be based on the disposal group as a whole.
In the case of HBB, there is no apparent evidence of impairment on the
assets but more information will be required to verify this, particularly as
the fair value is uncertain.
An adjustment that will need to be made prior to classification as held for
sale is in respect of the depreciation charge
After classification:
IFRS 5 requires that a disposal group shall, at the date when reclassified
as held for sale, measure the relevant assets at the lower of:
* carrying amount
* fair value less costs to sell
Where the carrying amount is greater than the fair value less costs to sell,
an impairment charge will be required upon reclassification.
Any test for impairment will be based on the disposal group as a whole. As
the expected proceeds from the sale of the disposal group to K-Drinks is
£12 million and the carrying amount immediately before reclassification as
held for sale is £18.9 million, there is an impairment charge of £6.9 million.
This total impairment charge is allocated to assets within the disposal
group in accordance with IAS 36. The order of allocation is as follows:
(1) Goodwill (first element of impairment charge)
(2) Pro rata to other assets (for remainder of the impairment charge)
But no asset shall be reduced below the lowest of:
* fair value less costs to sell
* value in use
* zero
