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An introduction to ACCA P2 Corporate reporting

P2 is the follow on paper from F7 Financial reporting. The good news is that the pass rate for P2 is

higher than that of F7 in other words, its easier to pass than F7! The bad news.everthing that was

eaminable at F7 is still eaminable at P2 "with the eception of #$% && 'onstr(ction contracts). This

can present the first h(rdle for st(dents as there is often at least one eam sitting between F7 and P2 for

them which means the ma have forgotten their F7 *nowledge. #t is therefore worth digging o(t o(rF7 revision notes prior to st(ding P2 and refreshing some of o(r *nowledge partic(larl in the areas

of+

ro(p acco(nts-

'oncept(al framewor*- and

$cco(nting standards s(ch as PP, intangible assets, impairment, provisions, leases, reven(e

and deferred ta and financial instr(ments

Section A of the exam contains 1 compulsory 50 mark question.

uestion 1

/(estion & is comprises 01 mar*s of preparing gro(p acco(nts and &1 mar*s of writing. For 01 mar*s

o( ma be as*ed to prepare a consolidated statement of financial position, consolidated statement of

comprehensive income or a consolidated statement of cash flows. The gro(p str(ct(re will be more

advanced compared to F7 and will tpicall incl(de either a change in the gro(p str(ct(re, a comple

gro(p str(ct(re or a foreign s(bsidiar. This means that the (estion normall contains two

s(bsidiaries and possibl a third entit too. The (estion will also test acco(nting standards. The

parent entit within the gro(p will be facing some acco(nting iss(es "normall between 2 and 3) which

o( will also have to deal with.

The &1 mar*s written element is normall made (p of two ro(ghl e(al elements firstl an

acco(nting iss(e i.e. a disc(ssion on a partic(lar topic and then a scenario where o( m(st disc(ss the

ethical implications.

!ip (estion & is not 4(st gro(ps! 5o( will have acco(nting standard iss(es in the (estion too so be

prepared for this part of the (estion. The vol(me of the (estion can be intimidating, so splitting the

(estion clearl into these two elements will help to brea* it down into two smaller and so more

achievable (estions. Time management is *e o( sho(ld spend no more than 60 min(tes on the

n(merical part of the (estion so that o( have 27 min(tes to attempt the written parts. %t(dents tend

to score poorl on the ethical part of the (estion. This is often d(e to lac* of time to write a good

answer rather than lac* of *nowledge or abilit.

Section " of the exam contains # x 25 mark questions. Students must choose 2 questions.

ach (estion in section contains 2 8professional9 mar*s for the clarit and (alit of presentation.

uestions 2 and #

oth of these (estions tend to foc(s on acco(nting standards. :owever, it is possible that one of the

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(estions ma test another element of the sllab(s s(ch as gro(p reorganisations or entit

reconstr(ctions.

The re(irement for a (estion based on acco(nting standards is along the lines of 8disc(ss ; advise

how the acco(nting iss(es sho(ld be dealt with in the financial statements9

$cco(nting standard (estions will tend to be made (p of several parts "between 2 and 1) and each part

of the (estion will contain separate scenarios and so test different acco(nting standards. For eample,

part a) ma relate to deferred ta, part b) ma relate to pensions and part c) ma relate to PP. :aving

said that, parts of a (estion ma re(ire o( to disc(ss more than one acco(nting standard. For

eample, in part c) on PP it ma also be appropriate to be disc(ssing impairment and non