ACCA F4 Corporate & Business Law (ENG) Exam Evaluation June 2014 Question 1 An anticipated question about civil law and criminal law in part (a). For students who knew this, it was a gift in the exam. Part (b) asked about the court system. Candidates had to ensure they named the courts correctly to get the marks. Question 2 A slightly unusual question on offer as it concentrated on acceptance and revocation rather than offer vs invitation to treat. Stating a few points on each part and explaining relevant case law was what was required. Question 3 A question which tested two of the elements of the tort of negligence, standard of care and remoteness of damage. We would not really have expected to see standard of care so soon after the December 2013 sitting. However, this was an easy question which candidates should have been able to score well on. Question 4 This was an area that had not been tested for a while and so was expected. Candidates might have struggled to make enough points on parts (b) and (c) to get full marks, but a pass was very achievable. Question 5 This was a knowledge question on partnerships, and in particular focused on liability of members. Candidates had to be conscious of the mark allocation, so write a couple of points for part (a) on ordinary partnerships but a lot more for part (c) on limited liability partnership. Question 6 This question was on liquidation and probably was the one which caused students the most problems. This is not because it is a difficult area of the syllabus but possibly because students would have found it difficult to know how to answer each requirement. As long as the relevant points were made in the answer, credit will be given. Question 7 This was an area that had not been tested for a while and so was expected. A good answer would explain redundancy, the minimum employment period and the remedies. Question 8 This was a typical contract law scenario question on anticipatory breach. There were lots of marks available in this question. Candidates would need to ensure that they correctly identified the issue and then ensured that they dealt with the issue correctly by stating the law, applying it to the scenario and then coming to a conclusion. Question 9 A question on directors duties, a favourite which has been tested time and time again. Candidates should have been able to identify the issue easily here. Question 10 A question on fraudulent and wrongful trading, which shouldn t have caused candidates any problems. Normally in a question like this one person is guilty of fraudulent trading and one of wrongful trading. However, in this scenario both the individuals were liable for wrongful trading.
Conclusion Overall this was a very fair paper with no surprises. A student who had studied and revised the core areas of the syllabus would have been able to achieve a pass on this paper.
ACCA F6 Taxation (UK) Exam Evaluation June 2014 Question 1 A detailed income tax question, presented in an unusual format. The examiner provided the client s income tax computation, but with a number of omissions. The question specifically stated that the figures provided were correct, so these did not need to be reviewed. This presentation should not have caused too much concern for well-prepared students, as it is similar to question 2 from December 2012. The trading income figures were adjusted for tax purposes, but were before capital allowances, which needed to be deducted. This calculation was straightforward, since there were no additions in the first short period, and did not require a full computation. It was then necessary to apply the opening year rules, and tax the first 12 months of trading in the second tax year. The employment income included benefits which should not have caused much difficulty provided students were not caught out by the irrelevant figure for the market value of the living accommodation, which was not owned by the employer. The property income calculation was straightforward, testing the distinction between capital and revenue repairs. It also tested lease premiums, which although not popular with students, are common at F6. Students may have been caught out by the dividend figure, as no narrative was provided in respect of this and the gross taxable amount needed to be calculated from the tax credit figure provided in the computation. Part (b) tested the new rules on the child benefit tax charge, but was not complicated and only worth two marks. The question ended with 4 marks regarding pensions. It covered the amount eligible for tax relief as well as the operation of that relief, representing easy marks. Question 2 Part (a) of this question was unusual for question 2, as it tested three different companies in a group and required all three tax computations. These computations were to be prepared after any available reliefs claimed on the most beneficial basis. Therefore, it was necessary to calculate each company s taxable total profits before any group relief or gains planning, and then to consider how best to deal with Road Ltd s trading loss and Long Ltd s capital loss. The TTP calculations were mostly straightforward. There was a deduction for a lease premium, but since the amount assessed as income on the landlord was provided, this calculation simply involved spreading that amount over the life of the lease. One of the capital allowance computations involved the small pools WDA, which many students probably missed, however this was only worth one mark. The group relief and capital loss planning were also straightforward, since one company was paying tax at the marginal rate and the other two were at the small companies rate. Although the losses arose in a short accounting period, group relief was not restricted because the claimant company had ample profits. The technical elements of this question should not have caused too much trouble but some students may have struggled with planning how to approach this question as well as with the timing.
Part (b) was 3 marks on the new topic of PAYE real time reporting, however the details regarding PAYE forms have appeared in the F6 exam before. Part (c) involved calculating the VAT payable, again for all three companies. Many students are likely to have found this a manageable VAT question. It was important to remember that a company making only exempt supplies can t recover any input VAT, whereas a company making zero rated supplies can recover them all. Many students will not have learnt the rule that refunds of VAT are subject to a four-year time limit, and may have needed to guess how much of the underclaimed input VAT in respect of the photocopier was recoverable. Question 3 This was a typical CGT question involving a number of disposals by an individual. There were 9 marks in part (a) for calculating the gains without considering any available reliefs, and many students should have scored well on this part. The calculations included a part disposal, a share valuation and a share pool. Part (b) required students to identify any reliefs available and the further information which may be required to establish the availability of the relief as well as any restrictions. The two reliefs to be discussed were rollover and Entrepreneurs relief. Whilst these should have been easy enough to spot, students may have found it more difficult to identify all the additional information required. Students may also have been caught out by suggesting gift relief was available for the gift of shares, however this was an investment company. Question 4 Parts (a) and (b) of this question were a simple income tax computation for 2 marks, normal NIC calculations for 3 marks and relatively simple self-assessment testing payments on account and balancing payments for 3 marks and tax return due dates and amendments for 2 marks. Although students often dislike self-assessment, these aspects are fundamental and should have been no problem. Part (c) then tested the new cash basis rules for 5 marks. For students that had studied this new topic this should not have caused any problems. The marks in this section were relatively generous for a straightforward computation. Question 5 This was a 15 mark question on inheritance tax which would please many students. It involved the calculation of death tax on two lifetime transfers (the first of which was covered by the nil rate band) and the death estate for 10 marks. There were no particularly unusual elements to these calculations and students who had prepared well for inheritance tax should have scored very well here. Part (b) was slightly more advisory, in that it asked why property should not be immediately transferred to the children, (which goes against typical inheritance tax advice) and it asked students to consider both capital gains tax and inheritance tax. However, since the capital gain which would arise on disposal of the property was stated in the question, part of the answer at least should be fairly obvious. Part (c) was also advisory, looking at changing the terms of her will to skip a generation, which is fairly standard inheritance tax advice and is covered in the examiner s IHT article (part 2). However, the question did not specify that the children were independently wealthy so some students may not have been clear on the benefits of this advice.
Conclusion A fair examination, testing a reasonable breadth of the F6 syllabus, including some new topics introduced in FA13. There were not many obscure topics, although many students may have struggled with the large group scenario in question 2. It is a good paper, which a well-prepared student should score relatively highly on and many students are likely to pass. The increased emphasis on tax planning should also help students better prepare for P6.
ACCA P2 Corporated Reporting (Int) Exam Evaluation June 2014 Question 1 Students should have been well prepared for a statement of profit or loss and other comprehensive income and many will have scored high marks. Moreover, many of the adjustments, such as accounting for a defined benefit pension scheme and property, plant and equipment, have been tested frequently in past exams. However, the mark allocation of 30 for the statement itself would have left many feeling time-pressured. Part b required discussion of whether IFRSs and their increasing emphasis on fair values reflect the financial value of an entity. Students may have been thrown by the somewhat open-ended nature of the requirement, as well as the use of the term financial value. Part c, like recent exams, tested ethics and students should have scored highly here. Question 2 Question 2 was largely concerned with foreign exchange, a topic which many were expecting to come up. Determining a functional currency and calculating the goodwill arising on the purchase of an overseas subsidiary are core P2 topics, and well-prepared students would have seen similar requirements in past papers. The deferred tax requirement was trickier, but solid marks could have been scored based on brought forward knowledge from F7. Question 3 This question was harder than question 2, but much more accessible than question 3 in the December 2013 exam. Revenue, provisions and assets held for sale have been tested frequently in recent P2 exams. Students should therefore have scored solidly through their knowledge of the relevant rules from these standards, even if they made mistakes when applying them to the scenario. Question 4 This question tested the rules governing the classification of financial instruments as debt or equity and was based on an article written by the examiner and available on the ACCA website. However, the article was published in 2013 and its contents featured in question 3 of the December 2013 P2 exam. Therefore, basing a whole question on this article in the June 2014 exam will have taken many by surprise. Those with a strong knowledge of the relevant rules from IAS 32 would have found this question straight forward. However, the rules in this standard are very detailed and most students would have probably attempted question 3 instead. Conclusion The exam was fairer and more well-balanced than in the previous sitting. Well prepared students should have coped well with questions 1 and 2, which covered core areas of the syllabus that were widely tipped in advance of the exam. Questions 3 and 4 were harder, requiring greater application skills. Nonetheless, the relevant accounting standards within these questions were relatively clear and students could have scored solidly by demonstrating their knowledge of the relevant rules within these standards.