Financial Reporting (FR) Mar / June 2021 Examiner’s report
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Requirement (a) – 6 marks Requirement (a) involved some restating of financial statements to make them comparable. In a single entity interpretation question, it is not uncommon for candidates to be asked to make some adjustments to figures before calculating ratios. These adjustments could be to alter financial statements for an accounting policy (e.g. to remove a revaluation, as in this question) or to correct errors in order to make Examiner’s report – FR March/June 2021 17 financial statements more comparable. This is done to test a candidate’s knowledge of double-entry and IFRS Standards, in addition to providing the analysis required. The adjustments in (a) had mixed results. Some candidates applied another revaluation, rather than removing the revaluation to prepare the results as if Dough Co had used the cost model. Other candidates omitted the adjustments completely, scoring no marks on the section. A trickier area that candidates struggled with was to adjust for the extra depreciation that would no longer be incurred if the cost model had been used. Also, only a minority of candidates remembered that any adjustment they made to the statement of profit or loss would also be reflected within the retained earnings. Candidates were then required to recalculate ratios based on their adjustments in (a). As always, the ‘own figure’ rule was applied here. This means that if candidates had made errors on the earlier adjustments of their financial statements they were given the marks for using their own adjusted figures, even if they were incorrect. As an example, a candidate may have added $30 million to the revaluation surplus, rather than deducting it as they should have done. As long as they showed their working in their return on capital employed (ROCE) calculation, they would get the full follow through marks, even though their capital employed figure was $60m higher than it should have been. The use of the ‘own figure’ rule means that the only candidates who would not score full marks on the ratio calculations were those who either did not know the formulae for those ratios or those who did not provide workings. If a candidate made an error in adjusting their figures and then did not provide a working for their adjusted ratio, it was difficult to see how they had arrived at the calculations. Markers will not try to guess or assume what the candidate has done, so it is essential that detailed workings are shown. tải về 0.8 Mb. Chia sẻ với bạn bè của bạn:
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