FAE September 2014

arnie_ni

danko2012 wrote: »

Likewise this being my 3rd attempt and failing on IMP in 2012 I ensured that tommy was to be retained and his IP was to be transferred to the company!

Very indirect indicators I though in some parts today

Yep done the same as you. It was a very vague imp indicator. I didnt see it at first and i didn't get time to ans imp yesterday. Thought about abandoning ship cause i would get na in imp, until i realised the ip was in hid own name not the company

Torres999

R and d credit, something to do with outsourcing threw me off, what was the craic?

arnie_ni

Shorty11857 wrote: »

Did they actually backdate the invoice though? As far I could tell they just agreed to take title and be invoiced before they received the goods, pretty sure there's a similar question in the case study pack

They wanted it back dated to dec 13. We were in jan 14, to use up their budget. The sale shouldn't have been included in 2013 accs. That was my view

LOccitane

I did not see an Ethics indicator with the premature Revenue Recognition. There is a case similar to that in Self Study along the lines of the Invoice and transfer of title pre year and and it didn't address Ethics - but I could be totally wrong.

8 Indicators I thought:

SIM 1:

BL Strategy
IAS 18 PM
Finance Working Capital.

Thought that was a very fair case.

SIM 2: Took me three hours to realise that the NPV is IMP - The Income Approach to valuing IP.

Got 5 indicators...

IMP Valuation

Audit (Horrific, was reliant on a past case to get through this, no other material available, hopefully enough to get RC)
Also nasty that we had to draft a Document separately within the BP to Tommy - first time I've seen that at Finals, just a bit catchy.

BL - SWOT and Senior Personnel.

PM - Management Accounts, liked it to BL senior appointment.

Tax R&D - Went down the road that Outsourced Development is not allowable.

Felt very uncomfortable with the Sim 2 overall. Passing is very much in doubt...

kookies

arnie_ni wrote: »

Yep done the same as you. It was a very vague imp indicator. I didnt see it at first and i didn't get time to ans imp yesterday. Thought about abandoning ship cause i would get na in imp, until i realised the ip was in hid own name not the company[/quote

Would that be sufficient to get you through? I have mentioned it in the SWOT.

myshirt

IAS 18 - 'Bill and Hold' type sale. It was ok. No ethics.

The other one required discounting due to it being an 'installments plan' sale.

In the fatter IFRS book.

iwishihadaname

BigMawn12 wrote: »

I assumed that the 18% return covered the risk.

So was yesterday's question an IMP question or marketing do yas reckon?

I can't think, how many other BL indicators came up altogether? Should help "indicate" whether it was imp or not

arnie_ni

Torres999 wrote: »

R and d credit, something to do with outsourcing threw me off, what was the craic?

In the north you have to make s joint election that the outsourced r and d firm is connected to you to avail of the full enhancement. Otherwise you only get a reduced rate. Not sure about south though

LOccitane

arnie_ni wrote: »

They wanted it back dated to dec 13. We were in jan 14, to use up their budget. The sale shouldn't have been included in 2013 accs. That was my view

They're using up their budget before year end, so they requested to be invoiced and to take title from December 27.

No backdating there but that was my reading of it...

danko2012

arnie_ni wrote: »

id love to know of in comp you wrre certain you nailed the finance indicator could you effectively have ignored finance today, allowing more time to do other indicators.

Risky though

To be honest that strategy killed me last year as ignoring indicators that I did well on in comp I didn't make up the difference and failed on 6 yellows so I tried get as many C as I could. Personally can't see how the IP was and IMP. Indicator as they clearly asked for a valuation of CG and what equity should take, that's surely finance! Put hey as a repeater what do I know

applehunter

I rejected both the factoring and the wholesale discounting and gave an alternative of better debtor function and agree better terms with suppliers.

Had the nightmare of doing my discounted cashflows twice in the appendix after i made an error. Waste of 10 minutes that i could have done with elsewhere.

Looked for equity c.45-48% for the €2 million.

BigMawn12

The way I was talking was to take on the IP into the company and possibly produce more patents but didn't explicitly say to sign them over to company. If that doesn't cover it then I'm screwed. Got green in IMP in 2012 over similar matter fs. Ugh. Melt.

kookies

Was r&d oursourcing not allowed? i thought it was the lower of 5% and €100000?

Debs23

I think i failed on PM.

Reaching in AARFP
Didnt do disclosure in consol qu
Tranfer pricing waffeled
FR ok
Management accounts: i discussed financial accounts

Shorty11857

myshirt wrote: »

IAS 18 - 'Bill and Hold' type sale. It was ok. No ethics.

The other one required discounting due to it being an 'installments plan' sale.

In the fatter IFRS book.

Were we actually expected to discount it or just recognise that it needed to be discounted. Had no time to do it anyway so wasn't sure what percentage to discount it with




Completely forgot to mention transferring the IP to the company...

Aidodub87

kookies wrote: »

Was r&d oursourcing not allowed? i thought it was the lower of 5% and €100000?

This is correct

arnie_ni

myshirt wrote: »

IAS 18 - 'Bill and Hold' type sale. It was ok. No ethics.

The other one required discounting due to it being an 'installments plan' sale.

In the fatter IFRS book.

I totally misunderstood that then. I thought they were ordering it today and wanted it back dated to use their budget

Mark1916

I may start up the 2015 thread so!

arnie_ni

Beginning to think I'm done for on PM. Can you just repeat aarpf assessment if that would get you over the line? I got nc in it

GR3YFOXXX

Torres999 wrote: »

I had case 1:

FR IAS 18
Strategy
Financing vs Discounting

Case 2:

PM management accounts
Strategy Swot thing
IMP valuation property, took it as IMP not finance
Tax r and d
Directors responsibilites

Samesies except for imp/finance

iwishihadaname

arnie_ni wrote: »

I totally misunderstood that then. I thought they were ordering it today and wanted it back dated to use their budget

I used a substance over form approach - said legal title may have passed but the fuel didn't even exist until Jan so in substance the risks and rewards didn't.pass.

galway321

How did people do the valuation?

2m spend now
Revenues for 6 years
and 8m residual value

All discounted at 18%?

I think I made a bubu somewhere in there!

Also I thought 18% was very very high..

Nermal

I picked FAST FOOD plc as it's the only one that would scale.

Preferred the discount for early payment to factoring but told them to go off and look at debt again - no way a company with growth prospect, interest cover & debt/equity ratio like that would not get attractive finance.

Looking at transaction 1 - it is not clear WHEN they placed the order. You can read it as they ordered it on 27/12 for delivery 13/01, or that it was ordered on and to be delivered on 13/01. Think they will have to be lenient with interpretation there.

Transaction 2 obviously needs to be undone but 3 is fine. NPV discount 3 if it's material only.

cson

Mark1916 wrote: »

I may start up the 2015 thread so!

Don't.

You won't pass if you do.

There is a curse.

Didiman26

Cud someone post how they got da valuation. My valuation was below 2million so said they shud be getting 100% at that price - know that's wrong. Wondering how it's spose to be done.

Mark1916

galway321 wrote: »

How did people do the valuation?

2m spend now
Revenues for 6 years
and 8m residual value

All discounted at 18%?

I think I made a bubu somewhere in there!

Also I thought 18% was very very high..

I used a discount rate 12% noting 18% was very high, said it was early to be giving a value too due to it not even being on the market yet caveats all over the place!

Nermal

On the valuation I got around 4.3M I think, I didn't see anything non-cash to pull from their projection, usually they would throw that in. I said go for 51% for your 2M to gain control and allow you to shift the R&D credit to us if we want.

I'm not actually sure the discount rate should have been 18% at all - should we just have picked a more normal rate, then worked out the NPV, then made sure that we got a projected 18% return on the 2M investment at the end?

A lot of waffle for strategy indicator - it was ridiculously broad. Do a SWOT, tell us how to address it, develop a strategy and responsibilities of a senior appointment. Taking the piss with a compound indicator like that frankly.

galway321

Mark1916 wrote: »

I used a discount rate 12% noting 18% was very high, said it was early to be giving a value too due to it not even being on the market yet caveats all over the place!

Ok I wasn't completely off then!

I did it at 18% and then at 10% and used the two as a valuation range - think it was 2.4m - 5m or something along those lines. Said depends on income and discount factor.

Caveats were longer than my calcs!

LOccitane

kookies wrote: »

Was r&d oursourcing not allowed? i thought it was the lower of 5% and €100000?

Yes that's what I went with together with the R and D activity to Institutes. Sorry, I didn't make that clearer earlier. Whatever it says in our Tax book.. Was my last indicator so worked from the book. Also, it's only an incorporated company that can avail in any event.

lee71189

did anyone say they didnt qualify for R&D credits?

arnie_ni

iwishihadaname wrote: »

I used a substance over form approach - said legal title may have passed but the fuel didn't even exist until Jan so in substance the risks and rewards didn't.pass.

I mentioned that as well.

BigMawn12

The bank factoring wasn't too bad I thought since it saved £125k on admin costs and interest was tax deductible. Worked out as a very low effective rate. Or maybe my calculations were incorrect.

Reduce drs by £700k

So 5.5m
X80%
£4.4m
X 5% (3% + 2% admin fee)
=
£220,000
Less £125,000 admin saving
=
£95,000.

Which is an effective interest rate of 2.2% on the £4.4m. They could invest the money at a higher rate.

Then corp tax reduced by 23% of 21,850. So even lower effective rate = 1.7%.

Torres999

For tax I mentioned the fact with was outsourced development, but It said in the book something about except for the greater of 10% of R&D spend and 100.000, my brain was so fried I couldn't even put this into perspective, so I just then wrote a line saying that they will get up to 100,000 and that it was only 36,000 spend?

What's the story with that 10% or greater than 100k?

applehunter

lee71189 wrote: »

did anyone say they didnt qualify for R&D credits?

I said the young fella couldn't get key employee relief as he was a director.

Said they were eligible if they got their **** together.

maninblack

Missed IMP. Devastated.

If I fail on IMP I think I'd have to just laugh. I did see it on my initial read and flagged it as a possible indicator, but my rationale was:

Max 5 indicators in any sim (thought this was a written rule?)
The timings on the sims were:
90 min recommended for sim 1 (3 indicators @ 30min)
150 min for sim 2 (5 indicators @ 30min)

I dno, I was tight on time and made a call to cut it. Would be so heartbroken if thats cost me. Yesterday was a bit iffy but I made a serious push today, gave it absolutely every ounce of sweat I had and if it comes down to IP, it'd just kill me

arnie_ni

Pity they just couldn't release the answers now so we don't have it sitting over us for 12 weeks.

Torres999

I don't think people missed the IMP indicator, I think the indicator that people did finance for was actually IMP, the valuing of the company was the same as valuing the intellectual property as there was nothing else in the company. Theres no chance there was 6 indicators in 150 mins, just 2 less than the core.

LOccitane

Torres999 wrote: »

For tax I mentioned the fact with was outsourced development, but It said in the book something about except for the greater of 10% of R&D spend and 100.000, my brain was so fried I couldn't even put this into perspective, so I just then wrote a line saying that they will get up to 100,000 and that it was only 36,000 spend?

What's the story with that 10% or greater than 100k?

Think Finance Act 2012 updated it to EUR 100K outsourced allowable for unconnected persons from what I've just checked online but I just went straight for the book.. Couldn't even see properly at that stage. Hoping I stated enough for RC. I had stated that they should in source it from a strategic perspective earlier...

PS: Thought the volume was very heavy on Sim 2

Overall I feel the CORE was a step up from last year.

TheDoctor

Can a sole trader qualify for R&D credits?

Torres999

No they can only get the credit if they incorporate i think

TheDoctor

Torres999 wrote: »

No they can only get the credit if they incorporate i think

Thats what I said

20 Times 20 Times

arnie_ni wrote: »

Backdating invoice is falseyfying records which is a breach of company law snd therfore unethical. Do not do. I reversed the sale and put items back into stock.

Reversed sale i second one as well ias 2 consignment stock.

The third one i said was ok as long as they set up a debtor

I did this - I am so glad someone else did this

Melon head

Does anyone have copy of the exam papers?

barbie_j

feel so bad after the exam! i was looking for 1 imp indicator but couldn't find it. I did the GG calculation based on DCF, and the value of GG <2m. then i used GG value/2m =75%, totally a joke!! i don't know where did i get that weird idea…

i asked a few ppl and seems everyone missed out the IMP, i was thinking of the 2012 disaster, but just remembered that The patent will walk away with Bill.. CRAP!!

then the director's responsibility, i copied something from Common law and Stat duty thing, emphasised on maintain the records, prepare regular mgt a/c….

anyway.. i will fail this stupid exam bc of IMP!! left me without a hope for tomorrow

cian twomey

did anyone mentioned credit for intangible assets patents copyrights in tax?,

ashmcg9

maninblack wrote: »

Missed IMP. Devastated.

If I fail on IMP I think I'd have to just laugh. I did see it on my initial read and flagged it as a possible indicator, but my rationale was:

Max 5 indicators in any sim (thought this was a written rule?)
The timings on the sims were:
90 min recommended for sim 1 (3 indicators @ 30min)
150 min for sim 2 (5 indicators @ 30min)

I dno, I was tight on time and made a call to cut it. Would be so heartbroken if thats cost me. Yesterday was a bit iffy but I made a serious push today, gave it absolutely every ounce of sweat I had and if it comes down to IP, it'd just kill me

I agree completely with you. Only had 10 mins to do IMP indicator yesterday so made a mess of it and completely missed IP indicator today - absolutely devasted. I'll actually be so mad at myself if I fail on IMP In other parts of my case study I mentioned that the company needs to ensure the IP rights are registered as soon as possible because that is where the value of the company comes from and it is vital to the success of the company - but that was about it! I can't believe they had such a hidden indicator like that - and I remember doing the case study where they had to register the IP in the company's name because it was in the individual's name. I'm so angry at myself

daisy chain

IMP/ finance screwed me.

Any one know if you get one RC and one NC in finance or one where only two indicators come up, what's the overall result for that subject?

bikeman1

Packing away the Core books, notes and folders now. I will be sick if I have to take them out again next year.

Well today was not what I expected. It is true they really like you to think on your feet on the day. Just remember we are all in the same exam together. If you missed something small, it's not like you are the only one.

Sim 1 was ok I thought.
FR-IAS 18 Revenue. Write back the Revenue in 1 & 2 and add back the stock.

Working Capital Problems - possible overtrading. Offer of factoring / discounts. Poor collection of receivables. Tied this in with the Strategic Options.

Strategic options. Gave the pro's / con's of each in a table. Said there was over 3 months inventory on hand, that there was no clear winner of the three and that the management should focus on sorting out the liquidity problems and better inventory management.

Sim 2

Value of the company. Said that with 18% return you would need 100% equity, but that would not be possible. Offer 50%. I went on to say that valuing the company was difficult as you cannot put a price on the IP.

Document to Tommy. Went through what I know from work as the responsibilities of a director are. Not sure if it was enough / relevant.

Then did a big section of change in the business. Shed to offices with a team under him. In the SWOT analysis (not in the Finance indicator) I said that having only Tommy with the IP was a weakness. Not sure if enough for IMP?
Listed out 6 positions and their responsibilities.

Management Accounts. Waffled on this one. Listed what I would expect there to be. Linked it to appointments that a competent qualified person should be hired to complete the accounts.

R&D Credit. Went through the relief how it works, how you claim it. Said it is only for the new company. I said it sounded like we could claim the credit on relevant expenditure but full advice should be sought.

If I fail on IMP I will be so disgusted. I attacked yesterday like a Marketing Indicator and today like Finance. What a stress.

barbie_j

maninblack wrote: »

Missed IMP. Devastated.

If I fail on IMP I think I'd have to just laugh. I did see it on my initial read and flagged it as a possible indicator, but my rationale was:

Max 5 indicators in any sim (thought this was a written rule?)
The timings on the sims were:
90 min recommended for sim 1 (3 indicators @ 30min)
150 min for sim 2 (5 indicators @ 30min)

I dno, I was tight on time and made a call to cut it. Would be so heartbroken if thats cost me. Yesterday was a bit iffy but I made a serious push today, gave it absolutely every ounce of sweat I had and if it comes down to IP, it'd just kill me

I'm on the same boat!! know your feeling…..

ashmcg9

Yeah does anyone know if you get RC and NC in a subject with two indicators what that will get you?