FAE 2011 Where to begin

the_big_dawg

the_big_dawg wrote: »

Something which has been confusing me for a while- when purchasing the assets in a company, stamp duty of up to 4% (NI) applies but may be exempt if 'transfer by delivery.'

Anyone know what the feck this means? Comes up in quite a few cases. Thanks in advance!

Is it to do with assets like p&m that don't require a stamp, and therefore assets that do require a stamp etc property always have stamp duty?

okdune

TRANSFER PRICING

I have been putting this off, don't know how likely it will be to have to calculate anything but would like to have a clue if it comes up.

Has anyone found a simple explanation anywhere - or a good example in a case today?

Thanks

netpia11

can someone please tell me the benefits of participation relief? I understand for a holding company disposing of a subsidiary no CGT arises. Does it have any influence on an individual disposing of shares??

Slim Shady1

Doin the 2010 audit elective mock here. Sim 1 seems ridiculous and I can't even find wer it relates to on the syllabus! Sim 2 indicator 2 asks you to draft mgt letter points.... is it not the case that u shudnt make recommendations to a listed company in fear of being unethical..... any1 any thots??

Perennial Procrastinator

Slim Shady1 wrote: »

Doin the 2010 audit elective mock here. Sim 1 seems ridiculous and I can't even find wer it relates to on the syllabus! Sim 2 indicator 2 asks you to draft mgt letter points.... is it not the case that u shudnt make recommendations to a listed company in fear of being unethical..... any1 any thots??

I know sim 1 on that was off the wall.

Management Letter is always in the form of; Observation, Implication, Recommendation

Slim Shady1

Perennial Procrastinator wrote: »

Slim Shady1 wrote: »

Doin the 2010 audit elective mock here. Sim 1 seems ridiculous and I can't even find wer it relates to on the syllabus! Sim 2 indicator 2 asks you to draft mgt letter points.... is it not the case that u shudnt make recommendations to a listed company in fear of being unethical..... any1 any thots??

I know sim 1 on that was off the wall.

Management Letter is always in the form of; Observation, Implication, Recommendation

I have noted in my lecture notes that for listed companies recommendations shudnt b given as can be seen as a breach of ES5..... b seen to b giving non-audit advice. can't see it anywer in ISA tho!! No1 else come across this?

ManwitaPlan

Slim Shady1 wrote: »

I have noted in my lecture notes that for listed companies recommendations shudnt b given as can be seen as a breach of ES5..... b seen to b giving non-audit advice. can't see it anywer in ISA tho!! No1 else come across this?

As far as I know its perfectly fine to give management recommendations on how to improve their controls. Management letters with observation/implication/recommendation crops up a lot.

Its not a "non-audit service" its general advice to a client on how to improve the audit process.

Sorry that I cannot point to something technical off the top off my head but I am 99.9% sure this is ok...hold my hands up if anybody knows better.


PS: Thanks Christ I am not doing CAP 2 exams because I am certain I would fail on consol....what an absolute whore god of a topic.:eek:

Choc Chip

netpia11 wrote: »

can someone please tell me the benefits of participation relief? I understand for a holding company disposing of a subsidiary no CGT arises. Does it have any influence on an individual disposing of shares??

Nope - companies only. S626B particularly refers to a "gain accruing to a company ... on a disposal of shares in another company" so you can't avail of the relief if you're an individual/ the business that you're disposing of is a branch rather than a subsidiary company.

Basically the benefit is that the parent company doesn't have to pay CGT. Parent in this case being loosely defined as holding at least 5% of the company being disposed of for an uninterrupted period of 12 months within the 2 year period prior to the disposal. Also, the company being disposed of, or the group that is disposing of the company, has to be mainly trading.

Choc Chip

okdune wrote: »

TRANSFER PRICING

I have been putting this off, don't know how likely it will be to have to calculate anything but would like to have a clue if it comes up.

Has anyone found a simple explanation anywhere - or a good example in a case today?

Thanks

Please tell me you're talking about transfer pricing in management accounting and not in tax? Didn't even realise it was on the course tbh but reckon I could about blag mgt accounting. TP in tax would make me cry.

eoferrall

MW2011 wrote: »

Hey,

If anyone has done the plastic products case in the management and finance book can they help with the Lease v. Buy decision?

The answer uses an after tax cost of borrowings as the discount rate of 6% (1-10%), but then goes on to take away the PV of the tax payments again at 6%????

Surely this is the equivalent of taking tax off twice?

Might be interpreting you wrong, but my understanding of what you're asking is that you are mixing up different tax sources.

The case is taking the 6%, ie the after tax cost of borrowings or known as the 'cost of capital', as the DF. ie the cost after tax savings on the interest paid on the loan as loan interest is tax deductible, not the tax impact of lease payments or capital allowances etc which should be allowed for in the calc.

in the question there are 3 areas tax occurs that are relevant to the calc
Interest payment tax saving
Lease payments tax saving
Capital allowances tax saving

hope that helps.

Choc Chip

the_big_dawg wrote: »

Is it to do with assets like p&m that don't require a stamp, and therefore assets that do require a stamp etc property always have stamp duty?

My understanding is, kinda, yeah. Certain assets (like land) have to pass under a stampable instrument (being the contract of sale). As SD is payable on the instrument, effectively SD is always payable on land transfers.

Certain other assets (like P&M), don't have to pass under a contract. The contract should therefore state that these assets will pass by delivery and they are not included in the document which is liable to duty.

Essentially, SD is payable on the document rather than the transaction, so if you can transfer assets without using a stampable document (i.e. by delivery) there is no stamp duty.

Perennial Procrastinator

Has anyone got a list of the 14/15 tax reliefs and the situations they apply to or any summary notes around tax at all?

Really worried i wont hit the key points in tax indicators.

LightningBolt

Perennial Procrastinator wrote: »

Has anyone got a list of the 14/15 tax reliefs and the situations they apply to or any summary notes around tax at all?

Really worried i wont hit the key points in tax indicators.

I've an updated version with one or two more points added but can't find it. Lists out the 14 main loss reliefs that apply for the south.

acahopeful

Hi everyone, this may seem like an obvious question but if someone oculd help i would really appreciate it. In the Firesec question in the tax indcator under sale of trade and assets it says based on valuations, retirement relief is unlikely to be available. Is this correct even though he is selling the trade and assets to his sons? Under the heading sale of shares it says that Brian may be able to claim retirement relief should a gain arise on the disposal of shares. Thanks in advance!

LightningBolt

No notes on transfer pricing.

Off the top of my head there's three ways:

1) Transfer at market prices when there is an active market for the goods and the transferring division is at or near full capacity.

2) No active market or excess supply you'd transfer at whatever it costs to make

3) Transfer at cost plus a percentage where there is an active market but capacity is only at 50-60%

Probably overly simplistic but presume that's the jist of it? Genuinely hope it doesn't come up, along with consol, pensions, working papers, internal control, company valuations...

LightningBolt

acahopeful wrote: »

Hi everyone, this may seem like an obvious question but if someone oculd help i would really appreciate it. In the Firesec question in the tax indcator under sale of trade and assets it says based on valuations, retirement relief is unlikely to be available. Is this correct even though he is selling the trade and assets to his sons? Under the heading sale of shares it says that Brian may be able to claim retirement relief should a gain arise on the disposal of shares. Thanks in advance!

There's no max on retirement relief if transferred to a child. If it's transferred to a third party via sale of assets/shares the max relief claimable is 750k and then marginal relief kicks in. That's my understanding of it.

acahopeful

LightningBolt wrote: »

There's no max on retirement relief if transferred to a child. If it's transferred to a third party via sale of assets/shares the max relief claimable is 750k and then marginal relief kicks in. That's my understanding of it.

Yeah that's what I thought - do you think the solution is wrong then?

SL10

acahopeful wrote: »

Yeah that's what I thought - do you think the solution is wrong then?

I think the reason for this could be that if it is the assets that are being sold they are technically being sold by the company to the sons and then the father would be extracting the cash from the business and so the RR relief doesnt apply as he would only get the 750k. This is my own reasoning on this so I could be wrong and am open to correction...

Perennial Procrastinator

LightningBolt wrote: »

I've an updated version with one or two more points added but can't find it. Lists out the 14 main loss reliefs that apply for the south.

Cheers, that's really helpful. Well put together. If you could post the updated one when you find it that would be great. Thanks again.

SL10

okdune wrote: »

TRANSFER PRICING

I have been putting this off, don't know how likely it will be to have to calculate anything but would like to have a clue if it comes up.

Has anyone found a simple explanation anywhere - or a good example in a case today?

Thanks

CAP 2 SFMA toolkit has a good explanation of this in the last section.

SL10

In relation to Associates and Joint Ventures in the toolkit it mentions that the investor should only recognise profit/loss to the extent of the unrelated investors interests in the associate/JV. This may be a stupid question but does anyone know if this is just in relation to the consolidated FS or is it also in the individual FS?

okdune

LightningBolt wrote: »

No notes on transfer pricing.

Off the top of my head there's three ways:

1) Transfer at market prices when there is an active market for the goods and the transferring division is at or near full capacity.

2) No active market or excess supply you'd transfer at whatever it costs to make

3) Transfer at cost plus a percentage where there is an active market but capacity is only at 50-60%

Probably overly simplistic but presume that's the jist of it? Genuinely hope it doesn't come up, along with consol, pensions, working papers, internal control, company valuations...

Thanks a million for that. The notes I had were super complicated calculations and to be honest did not think we would have to know that much. Tricky to get the jist or how/what detail the calculations will be.

Thanks again.

FAEs

Does anyone have the Flexum solution please?!

Lowrey

FAEs wrote: »

Does anyone have the Flexum solution please?!

.

Gametime

Please tell me I'm not going mad but I've just done the Mid West Oil casestudy and I believe a direct indicator has been left out of the solution, may have been highlighted before??

In the case the 4 brothers are considering creating 4 companies out of the 4 divisions & in the case it writes:

"are wondering about the tax consequences of each of them simply taking the division they each run in place of their shares in MWOL.....they presume there will be no tax consequences.....open to your suggestions."

I took that as a pretty obvious tax indicator however no mention of it in the solution.

In my answer I talked about incorporation relief & the effect of reducing the base cost of shares in the new company, does anyone know if this is the correct answer?

Many thanks!

Revising on a Friday night...Rock'n'Roll lifestyle this

fancyanosh

Can someone post up Tom McDermott's slides on Ethics and Corp Governance?

Also Perfecto Case Study and Solution

:eek:

Fiona44

Any chance of someone posting up the 2010 Mock AAE paper please??

Kingdomkerry

Im very bare on HRM, Change Mgt and IMP. I have some of the stuff that came up in case studies (HRM - remuneration - linking pay with shareholders wealth. IMP - internal controls, weaknesses in systems, new system spec, outsourcing. CM - acquisition). Does anyone have any other suggestions?

Rickyroma

Gametime wrote: »

Please tell me I'm not going mad but I've just done the Mid West Oil casestudy and I believe a direct indicator has been left out of the solution, may have been highlighted before??

In the case the 4 brothers are considering creating 4 companies out of the 4 divisions & in the case it writes:

"are wondering about the tax consequences"

I took that as a pretty obvious tax indicator however no mention of it in the solution.

This has been mentioned before - I think you are probably working off the 2010 question and the 2011 answer - the 2011 q omitted the line about tax consequences.

Student456

Would anyone have a summary of IFRS1? I have absolutely no notes on it and cannot find anything on the website!

Thanks a mill in advance!!