2015 ACCA p2 study text BPP

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Paper P2
Corporate Reporting
(International and United Kingdom)
Study Text for exams
up to June 2015

Free access
to our Exam
Success site
Look inside

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June 2014
£32.00

For exams up to June 2015

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Study Text

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Study Text

Contact us

ACCA Approved

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• A user-friendly format for easy navigation
• Exam focus points describing what the examining
team will want you to do
• Regular Fast Forward summaries emphasising the
key points in each chapter
• Questions and quick quizzes to test your
understanding

• A practice question bank containing exam-
standard questions with answers
• A full index
• All you need in one book

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In addition to ACCA examining team reviewed
material you get:

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Paper P2
Corporate Reporting (International and United
Kingdom)
This ACCA Study Text for Paper P2 Corporate
Reporting (International and United Kingdom)
has been comprehensively reviewed by the ACCA
examining team. This review guarantees appropriate
depth and breadth of content and comprehensive
syllabus coverage.

Corporate Reporting (International and United Kingdom)

BPP Learning Media is dedicated to supporting aspiring business professionals
with top-quality learning material as they study for demanding professional
exams, often whilst working full time. BPP Learning Media’s commitment
to student success is shown by our record of quality, innovation and market
leadership in paper-based and e-learning materials. BPP Learning Media’s study

materials are written by professionally qualified specialists who know from
personal experience the importance of top-quality materials for exam success.

ACCA P2

ACCA approved content provider

ACCA APPROVED CONTENT PROVIDER

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CORPORATE REPORTING
(INTERNATIONAL AND
UNITED KINGDOM)

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PAPER P2

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BPP Learning Media is an ACCA Approved Learning Partner – content. This means we
work closely with ACCA to ensure this Study Text contains the information you need to
pass your exam.
Highlight the most important elements in the syllabus and the key skills you need



Signpost how each chapter links to the syllabus and the study guide



Provide lots of exam focus points demonstrating what is expected of you in the exam



Emphasise key points in regular fast forward summaries



Test your knowledge in quick quizzes



Examine your understanding in our practice question bank



Reference all the important topics in our full index

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

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BPP's Practice & Revision Kit and i-Pass products also support this paper.

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FOR EXAMS IN DECEMBER 2014 AND JUNE 2015

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First edition 2007

All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior
written permission of BPP Learning Media Ltd.

Seventh edition June 2014
ISBN 9781 4727 1086 4
(Previous ISBN 9781 4453 9654 5)

We are grateful to the Association of Chartered Certified
Accountants for permission to reproduce past

examination questions. The suggested solutions in the
exam answer bank have been prepared by BPP Learning
Media Ltd, unless otherwise stated.

e-ISBN 9781 4453 6741 5

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British Library Cataloguing-in-Publication Data
A catalogue record for this book
is available from the British Library

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Published by

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BPP Learning Media Ltd
BPP House, Aldine Place
142-144 Uxbridge Road
London W12 8AA
www.bpp.com/learningmedia

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Polestar Wheatons
Hennock Road

Marsh Barton
Exeter
EX2 8RP

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Printed in the United Kingdom by

©
BPP Learning Media Ltd
2014

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Your learning materials, published by BPP Learning
Media Ltd, are printed on paper sourced from
traceable, sustainable sources.

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Contents

Page

Helping you to pass – the ONLY P2 Study Text reviewed by the examiner!
Studying P2
Important note for UK students
The exam paper

Part A Regulatory and ethical framework
1
2
3

Financial reporting framework
Professional and ethical duty of the accountant
Environmental and social reporting

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Non-current assets
Employee benefits
Income taxes
Financial instruments
Share-based payment
Provisions, contingencies and events after the reporting period
Related parties
Leases

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Part B Accounting standards
4
5
6
7
8
9
10
11

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vii
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Introduction

87
133
155
181
231
245
261
269

Part C Group financial statements
Revision of basic groups
Complex groups and joint arrangements
Changes in group structures
Continuing and discontinued interests
Foreign currency transactions and entities
Group statements of cash flows

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12
13
14
15
16
17

291
337

363
393
401
423

Performance reporting
Current developments
Reporting for specialised entities
Reporting for small and medium-sized entities

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19
20
21

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Part D Performance reporting

561
647
651

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Practice question and answer bank
Mathematical tables
Index
Review form

449
507
523
549

Contents

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A note about copyright
Dear Customer
What does the little © mean and why does it matter?

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Your market-leading BPP books, course materials and e-learning materials do not write and update
themselves. People write them: on their own behalf or as employees of an organisation that invests in this
activity. Copyright law protects their livelihoods. It does so by creating rights over the use of the content.
Breach of copyright is a form of theft – as well as being a criminal offence in some jurisdictions, it is
potentially a serious breach of professional ethics.

With current technology, things might seem a bit hazy but, basically, without the express permission of
BPP Learning Media:


Photocopying our materials is a breach of copyright



Scanning, ripcasting or conversion of our digital materials into different file formats, uploading
them to facebook or emailing them to your friends is a breach of copyright

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You can, of course, sell your books, in the form in which you have bought them – once you have finished
with them. (Is this fair to your fellow students? We update for a reason.) Please note the e-products are
sold on a single user licence basis: we do not supply ‘unlock’ codes to people who have bought them
second-hand.

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And what about outside the UK? BPP Learning Media strives to make our materials available at prices
students can afford by local printing arrangements, pricing policies and partnerships which are clearly
listed on our website. A tiny minority ignore this and indulge in criminal activity by illegally photocopying
our material or supporting organisations that do. If they act illegally and unethically in one area, can you
really trust them?

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Helping you to pass – the BPP Learning Media Study
Text reviewed by the ACCA examining-team!

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BPP Learning Media – ACCA Approved
Learning Partner - content

As ACCA’s Approved Learning Partner – content, 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 Text provides excellent, ACCA-approved support for your studies.

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
year practical experience requirement (PER). To help you to recognise areas of the syllabus that you
might be able to apply in the workplace to achieve different performance objectives, we have introduced
the ‘PER alert’ feature. You will find this feature throughout the Study Text to remind you that what you
are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement.
Your achievement of the PER should now be recorded in your on-line My Experience record.

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Tackling studying

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Studying can be a daunting prospect, particularly when you have lots of other commitments. The
different features of the text, the purposes of which are explained fully on the Chapter features page, will
help you whilst studying and improve your chances of exam success.

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Developing exam awareness

Our Texts are completely focused on helping you pass your exam.
Our advice on Studying P2 outlines the content of the paper, the necessary skills you are expected to be
able to demonstrate and any brought forward knowledge you are expected to have.

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Exam focus points are included within the chapters to highlight when and how specific topics were
examined, or how they might be examined in the future.

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Using the Syllabus and Study Guide

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You can find the syllabus and Study Guide on pages ix – xxxii of this Study Text

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Testing what you can do
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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We include Questions – lots of them – both within chapters and in the Exam Question Bank, as well as
Quick Quizzes at the end of each chapter to test your knowledge of the chapter content.

Introduction

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Chapter features
Each chapter contains a number of helpful features to guide you through each topic.
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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Topic list

Introduction

Puts the chapter content in the context of the syllabus as
a whole.

Study Guide

Links the chapter content with ACCA guidance.

Exam Guide

Highlights how examinable the chapter content is likely to
be and the ways in which it could be examined.
What you are assumed to know from previous
studies/exams.

FAST FORWARD

Summarises the content of main chapter headings,
allowing you to preview and review each section easily.

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Knowledge brought forward from earlier studies

Demonstrate how to apply key knowledge and
techniques.

Key terms

Definitions of important concepts that can often earn you
easy marks in exams.

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Examples

When and how specific topics were examined, or how
they may be examined in the future.

Exam focus points

Formulae that are not given in the exam but which have to
be learnt.

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Question

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Formula to learn

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Case Study

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Chapter Roundup

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Quick Quiz

Gives you a useful indication of syllabus areas that
closely relate to performance objectives in your Practical
Experience Requirement (PER).
Gives you essential practice of techniques covered in the
chapter.
Real world examples of theories and techniques.

A full list of the Fast Forwards included in the chapter,
providing an easy source of review.
A quick test of your knowledge of the main topics in the
chapter.
Found at the back of the Study Text with more
comprehensive chapter questions. Cross referenced for
easy navigation.

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Exam Question Bank

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Introduction

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Studying P2

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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
and other stakeholders.

What P2 is about
The P2 syllabus comprises eight main areas:

The professional and ethical duty of the accountant
The financial reporting framework
Reporting the financial performance of entities
Financial statements of groups of entities
Specialised entities
Implications of changes in accounting regulation on financial reporting
The appraisal of financial performance and position of entities
Current developments

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A
B
C
D
E
F
G
H

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There is, of course, some overlap between these areas. For example, if you are discussing current
developments (H), you might be talking about the proposed changes to accounting for business
combinations (D) and considering the implications of changes in accounting regulation (F) and perhaps

even the ethical duty of the accountant to report those changes fairly and accurately (A).

Skills you have to demonstrate

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At the Fundamentals level, the questions would be more easily categorised into syllabus areas. However,
at this level you may need to demonstrate knowledge, skills and thinking from outside the syllabus area
that the question seems to be about on the surface. The examiner has stated:

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Students should be capable of relating professional issues to relevant concepts and practical
situations. The evaluation of alternative accounting practices and the identification and
prioritisation of issues will be a key element of the paper. Professional and ethical judgement will
need to be exercised, together with the integration of technical knowledge when addressing
corporate reporting issues in a business context.

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So the paper is not predictable. That said, clear guidance has been given. The compulsory Section A
question, worth 50 marks, will always be on group accounts. It will also deal with issues in financial
reporting and will be case study based. In Section B, questions could be on any area of the syllabus, but
we have been told that two questions will be scenario based and one question will be an essay. You have a
choice of two from three.

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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.

Important note for UK students

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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 International 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
Introduction

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comparisons that appeared in previous editions of this study guide are now combined 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 Financial 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
Do not be needlessly intimidated

There is no shortcut to passing this exam. It looks very difficult indeed, and many students wonder if they
will ever pass. But many do. How do they do this?

Easy marks

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All the questions are demanding, but there are many easy marks to be gained. Suppose, for example, you
had a consolidated statement of cash flows with a disposal, some foreign exchange complications and an
impairment calculation. There will be easy marks available simply for the basic cash flow aspects, setting
out the proforma, setting up your workings, presenting your work neatly. If you recognise, as you should,
that the disposal needs to be taken into account, of course you will get marks for that, even if you make a
mistake in the arithmetic. If you get the foreign exchange right, so much the better, but you could pass the
question comfortably omitting this altogether. If you’re short of time, this is what you should do.

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Be ruthless in ignoring the complications

Look at the question. Within reason, if there are complications – often only worth a few marks – that you
know you will not have time or knowledge to do, cross them out. It will make you feel better. Than tackle
the bits you can do. This is how people pass a seemingly impossible paper.

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Answer all questions and all parts of questions

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The examiner frequently comments that students don't do this, so they miss easy opportunities to gain
marks.

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 one 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
eight to ten marks are the easiest to get, and then you must try to push it up to fifteen.

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Do 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.

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Introduction

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Syllabus and Study Guide
The P2 syllabus and study guide can be found below.

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International

Introduction

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United Kingdom

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