ACCA P2 Corporate Reporting Study Text

747 Pages·2015·12.286 MB·English

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PAPER P2 i T oo
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CORPORATE REPORTING a oo
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(INTERNATIONAL AND m v v
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UNITED KINGDOM)
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BPP Learning Media is an ACCA Approved Content Provider. This means we work cc
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 Highlight the most important elemenats in the syllabus and the key skills you need mm
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 Signpost how each chapter links to the syllabus and the study guide
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 Provide lots of exam focus points demonstrating what is expected of you in the exam riri
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 Emphasise key points in rcegular fast forward summaries l.cl.c
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 Test your knowledge ain quick quizzes mm
 Examine your understanding in our practice question bank
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 Reference all the important topics in our full index
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BPP's Practice & Revision Kit also supports this paper.
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FOR EXAMS FROM 1 SEPTEMBER 2015 TO 31 August 2016
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First edition 2007 All rights reserved. No part of this publication may be
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Contents
Page
Introduction
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Helping you to pass v
Studying P2 vii
Important note for UK students viii
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The exam paper xxxiii
Part A Regulatory and ethical framework c
1 Financial reporting framework 3
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2 Professional and ethical duty of the accountant 37
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Part B Accounting standards a TT
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3 Non-current assets 69
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4 Employee benefits i 115 oo
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5 Provisions, contingencies and events after the reporting period 137
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6 Income taxes e 153 ll
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7 Financial instruments 181 aa
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8 Leases t 237
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9 Share-based payment a 257
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10 Performance reporting 271 rr
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11 Related parties m 329 v v
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Part C Group financial statements ii
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12 Revision of basic groups 339
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13 Complex groups and joint arrangements 385 pp
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14 Changes in group structures d 411 //f//f
15 Continuing and discontinued interests 439 rere
16 Foreign currency transactions and entities 447 ee
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17 Group statements of cash flows 469 cc
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Part D Developments in treporting ss
18 Environmental and social reposrting 495 tutu
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19 Current developments 523 yy
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20 Reporting for specialised entities 549
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21 Reporting for small and medium-sized entities 575 tt
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Practice questcion and answer bank 589 l.cl.c
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Mathematicaal tables 679 mm
Index 683
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Review form

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Contents i ii
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Helping you to pass
BPP Learning Media – ACCA Approved
Content Provider
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As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use study
materials reviewed by the ACCA examination team. By incorporating the examination team’s comments
and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Study
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Text provides excellent, ACCA-approved support for your studies.
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The PER alert
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Before you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a three
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year practical experience requirement (PER). To help you to recognise areas of the syllabus that you oo
might be able to apply in the workplace to achieve different performance objectives, we have introduced d d
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the ‘PER alert’ feature. You will find this feature throughout the Study Text to remind you that what you
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Tackling studying oo
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Studying can be a daunting prospect, particularly when you have lots of other commitments. The ii
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different features of the text, the purposes of which are explained fully on the Chapter features page, will itit

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help you whilst studying and improve your chances of exam success.
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Developing exam awareness d /fr/fr
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Our Texts are completely focused on helping you pass your exam. cc
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Our advice on Studying P2 outlinets the content of the paper, the necessary skills you are expected to be ss
able to demonstrate and any brosught forward knowledge you are expected to have. tutu
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Exam focus points are incluaded within the chapters to highlight when and how specific topics were mm
examined, or how they might be examined in the future. aa
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Using the Syllabus and Study Guide
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You can find thea syllabus and Study Guide on pages ix – xxxii of this Study Text.
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Testing what you can do
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Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can
recall what you have learnt.
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fWe include Questions – lots of them – both within chapters and in the Practice Question Bank, as well as
Quick Quizzes at the end of each chapter to test your knowledge of the chapter content.

Introduction v
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Chapter features
Each chapter contains a number of helpful features to guide you through each topic.
Topic list
Topic list Syllabus reference What you will be studying in this chapter and the relevant
section numbers, together with ACCA syllabus references.
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Puts the chapter content in the context of the syllabus as
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a whole.
Study Guide Links the chapter content with AcCCA guidance.
Highlights how examinable .the chapter content is likely to
Exam Guide
be and the ways in whichl it could be examined.
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What you are assumed to know from previous oo
Knowledge brought forward from earlier studies
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studies/exams. i oo
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Summarises the content of main chapter headings,
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FAST FORWARD allowing you toe preview and review each section easily. lolo
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Examples Demonstratte how to apply key knowledge and d d
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techniquaes.
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Definitions of important concepts that can often earn you ee
Key terms easym marks in exams. v v
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When and how specific topics were examined, or how tt
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Formulae that are not given in the exam but which have to :/:/
Formula to learn d /f/f
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closely relate to performance objectives in your Practical cc
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Case Studcy Real world examples of theories and techniques. ee
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Chapter Roundup A full list of the Fast Forwards included in the chapter, mm
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providing an easy source of review.

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A quick test of your knowledge of the main topics in the
Quick Quiz
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Found at the back of the Study Text with more
fExam Question Bank comprehensive chapter questions. Cross referenced for
easy navigation.

vi Introduction
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Studying P2
Paper P2 Corporate Reporting is a tough paper, reflecting the demands that will be made upon the
professional accountant in his or her working life. At the Fundamentals level, you will have studied the
essentials of financial statement preparation and analysis, including those of group accounts. At the
Professional level, these essentials will be assumed knowledge. You will be required to apply them,
assuming the role of a professional adviser and analyst to the management as well as the shareholders
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and other stakeholders.
1 What P2 is about
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The P2 syllabus comprises eight main areas:
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A The professional and ethical duty of the accountant
B The financial reporting framework .
C Reporting the financial performance of entities l
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D Financial statements of groups of entities
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E Specialised entities d d
F Implications of changes in accounting regulation on financiali reporting oo
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G The appraisal of financial performance and position of entities
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H Current developments e lolo
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There is, of course, some overlap between these areas. For example, if you are discussing current dd
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developments (H), you might be talking about the proposed changes to accounting for business mm
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combinations (D) and considering the implications of changes in accounting regulation (F) and perhaps
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even the ethical duty of the accountant to report those changes fairly and accurately (A).
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2 Skills you have to demonstrate itit

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At the Fundamentals level, the questions would be more easily categorised into syllabus areas. However,
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at this level you may need to demonstrate dknowledge, skills and thinking from outside the syllabus area /f/f
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that the question seems to be about on the surface. The examination team has stated: ee
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Students should be capable of relating professional issues to relevant concepts and practical
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situations. The evaluation of alternative accounting practices and the identification and cc
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prioritisation of issues will be a key element of the paper. Professional and ethical judgement will ss
need to be exercised, togsether with the integration of technical knowledge when addressing tutu
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corporate reporting issues in a business context. yy
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So the paper is not predictable. That said, clear guidance has been given. The compulsory Section A aa
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question, worth 50 marcks, will always be on group accounts. It will also deal with issues in financial ee
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reporting and will be case study based. In Section B, questions could be on any area of the syllabus, but ii
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we have been told thcat two questions will be scenario based and one question will be an essay. You have a l.l.
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choice of two from three. oo
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Increasingly, questions are discursive rather than numerical, so it is vital that you get practice at
answering this type of question.
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Introduction v ii
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Important note for UK students
If you are sitting the UK P2 paper you will be studying under International standards and up to 20 marks
will be for comparisons between International and UK GAAP. The ACCA UK Syllabus and Study Guide
gives the following advice:
International Financial Reporting Standards (IFRS) are the main accounting standards examined in the
preparation of financial information. The key differences between UK GAAP and Internatmional Financial
Reporting Standards are looked at on a subject by subject basis. The comparison between IFRS and
UK GAAP will be based on the new UK GAAP as set out in FRSs 100-102, so the standard by standard
comparisons that appeared in previous editions of this study guide are now comboined in outcome C11
(d): Discuss the key differences between the IFRS for SMEs and UK GAAP.
This Study Text covers all the topics you need to know under International Financcial Reporting Standards.
An online supplement will be available at www.bpp.com/learning-media, covering the additional UK issues.
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Exam technique for P2
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Do not be needlessly intimidated i oo
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There is no shortcut to passing this exam. It looks very difficult eindeed, and many students wonder if they lolo
will ever pass. But many do. How do they do this? aa
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Easy marks a oo
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All the questions are demanding, but there are many measy marks to be gained. Suppose, for example, you v v
had a consolidated statement of cash flows with a disposal, some foreign exchange complications and an isis
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impairment calculation. There will be easy marks available simply for the basic cash flow aspects, setting t t
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out the proforma, setting up your workings, pryesenting your work neatly. If you recognise, as you should, tt
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that the disposal needs to be taken into account, of course you will get marks for that, even if you make a
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mistake in the arithmetic. If you get the fordeign exchange right, so much the better, but you could pass the /f/f
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question comfortably omitting this altogether. If you’re short of time, this is what you should do. ee
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Be ruthless in ignoring the complications cc
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Look at the question. Within reasson, if there are complications – often only worth a few marks – that you tutu
know you will not have time or knowledge to do, cross them out. It will make you feel better. Than tackle dd
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the bits you can do. This is haow people pass a seemingly impossible paper. mm
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Answer all questcions and all parts of questions ee
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The examination teacm frequently comments that students don't do this, so they miss easy opportunities to l.l.
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gain marks. oo
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Be ruthless in allocating your time
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At BPP, we have seen how very intelligent students do one almost perfect question, one averagely good
and onee sketchy. For a fifty mark question, the first twenty marks are the easiest to get. Then you have to
push it up to what you think is thirty to get yourself a clear pass. For a twenty-five mark question, the first
eigrht to ten marks are the easiest to get, and then you must try to push it up to fifteen.
fDo your best question either first or second, and the compulsory question either first or second. The
compulsory question, being on groups, will always have some easy marks available for consolidation
techniques.
viii Introduction
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