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Answers 3 Strategic Professional – Essentials, SBR – INT Strategic Business Reporting – International (SBR – INT) September/December 2025 Sample Answers 1 (a) (i) Carrying amount of the investment in Barton and the exchange loss at 31 December 20X4 Dinar m Rate $m Cost of investment on 1 January 20X4 120·00 11·2 10·71 Share of movement in Barton’s reserves 40% x (89m dinar – 42m dinar) 18·80 12·9 1·46 Exchange loss (balancing figure) (2·60) ––––––– ––––– Carrying amount of investment on 31 December 20X4 138·80 14·5 9·57 ––––––– ––––– (ii) Accounting treatment of Barton for the year ended 31 December 20X5 1 January 20X5 to 31 July 20X5 Barton Co was an associate for the first seven months of the accounting period. It should be accounted for using the equity method. A share of profit of associate of $0·35 million (40% x (23m dinar/15·3) x 7/12), translated at an average rate for the seven-month period, should be presented within the investing section of the consolidated statement of profit or loss. A further exchange loss of $0·74 million arises, calculated as follows: Dinar m Rate $m Carrying amount of investment on 31 December 20X4 138·80 14·5 9·57 Share of Barton’s profit from 1 January to 31 July 20X5 (40% x 23m dinar x 7/12) 5·37 15·3 0·35 Exchange loss (balancing figure) (0·74) ––––––– ––––– Carrying amount of investment on 1 August 20X5 144·17 15·7 9·18 ––––––– ––––– This exchange loss should be recognised in other comprehensive income (OCI) in the consolidated statement of profit or loss and other comprehensive income. It should be presented as an item which might be reclassified to profit or loss in future periods. Disposal of Barton’s shares on 1 August 20X5 On disposal of the 30% holding of shares, Woodfleet loses its ability to exercise significant influence and therefore it must derecognise the investment in the associate. A profit or loss on disposal is recognised in the investing section of the consolidated statement of profit or loss. This is calculated as follows: Dinar m Rate $m Sale proceeds 140·0 15·7 8·92 Fair value of remaining 10% holding 40·0 15·7 2·55 Less carrying amount at date of disposal (9·18) Foreign exchange losses reclassified from OCI ($2·60m + $0·74m) (3·34) ––––– Loss (1·05) ––––– The exchange losses previously recognised through other comprehensive income are reclassified to profit or loss upon disposal of the associate and presented as a reclassification adjustment in OCI. The $8·92 million proceeds recognised in other investment income in the statement of profit or loss must be removed. From 1 August 20X5 to 31 December 20X5 In accordance with IFRS 9 Financial Instruments, Woodfleet should initially recognise its remaining investment in Barton’s equity shares as a financial asset, measured using the fair value of $2·55 million (40m dinar/15·7). It should then remeasure the investment to its fair value at the reporting date, with the gain or loss in the statement of profit or loss. The investment in Barton’s equity shares represents a non-monetary financial asset which is measured using a fair value model. Because the fair value is denominated in a foreign currency, this must be translated using the spot exchange rate at the date of the remeasurement. This amounts to $2·28 million (47m dinar/20·6). A loss of $0·27 million ($2·28m – $2·55m) is recognised in the investing section of the consolidated statement of profit or loss. The exchange differences arising on the retranslation of a non-monetary asset are recognised in the same way as the gain or loss on the remeasurement to fair value of the underlying item, and so there is no need to break down further the loss of $0·27 million. 4 (b) Hedge accounting In accordance with IFRS 9, the cash flow hedge reserve within other components of equity is adjusted to the lower of the cumulative gain or loss on the hedging instrument from inception of the hedge and the cumulative change in the fair value of the hedged item from inception of the hedge. The portion of the gain or loss on the hedging instrument which is determined to be an effective hedge, i.e. the lower of the cumulative gain or loss on the instrument and item as explained above, is recognised in other comprehensive income. Any remaining gain or loss on the hedging instrument is recognised in the operating section of the statement of profit or loss. Woodfleet recognised the entire gain on the remeasurement of the forward contract of $5·4 million in profit or loss. However, $5 million of the gain should have been recognised through other comprehensive income instead. This is presented as an item which may be reclassified to profit or loss. The remaining $0·4 million ($5·4m – $5m) of the gain is recognised in the operating section of the statement of profit or loss as it represents an excess over the change in value of the item. (c) Consolidated statement of profit or loss and other comprehensive income for the Woodfleet Group for the year ended 31 December 20X5 Woodfleet Intra-group PURP Share of Disposal of FVPL Cash Woodfleet Group sale associate associate loss flow Group draft (W1) (W1) profit hedge redrafted $m $m $m $m $m $m $m $m Revenue 12,852·00 (70·00) 12,782.00 Cost of sales 9,582·00 70·00 (1·70) (9,513·70 ) –––––––––– –––––––––– Gross profit 3,270·00 3,268·30 Administrative expenses (1,362·00 ) (1,362·00 ) Selling expenses (1,014·00 ) (1,014·00 ) Other operating expenses (245·00 ) (245·00 ) –––––––––– –––––––––– Operating profit 649·00 647·30 Share of profit or loss of associates 113·00 0·35 113·35 Loss on disposal of associate (1·05) (1·05 ) Other investment income 58·00 (8·92) (0·27) (5·00) 43·81 –––––––––– –––––––––– Profit before financing and income taxes 820·00 803·41 Interest expenses on borrowings (22·00 ) (22·00 ) –––––––––– –––––––––– Profit before income taxes 798·00 781·41 Income tax expense (216·00 ) (216·00 ) –––––––––– –––––––––– Profit for the year 582·00 565·41 Other comprehensive income Income and expenses which will be reclassified to profit or loss when specific conditions are met Exchange differences on translating foreign operations (79·00 ) (0·74) 3·34 (76·40 ) Gains on cash flow hedges 5·00 5·00 –––––––––– –––––––––– Total comprehensive income for the year 503·00 494·01 –––––––––– –––––––––––––––––––– –––––––––– Workings W1 – Intragroup sales and unrealised profits Amount to be eliminated from sales and cost of sales: 56m krone/0·8 average rate 70·00 $m % Sales 13·00 115 Cost 11·30 (100) ––––– –––– Profit 1·70 15 ––––– –––– 5 2 (a) Ethics Accountants have a responsibility to produce financial statements which provide useful information to the primary users. To be useful, they should offer a faithful representation, which means they should be free from material errors. As noted by IFRS Practice Statement 2: Making Materiality Judgements, immaterial errors do not need to be corrected to ensure compliance with IFRS® Accounting Standards. However, correcting all errors lowers the risk that cumulative immaterial errors will become material. In the case of Tacoco Co (Tacoco), there is a risk that IFRS Accounting Standards have not been complied with. In accordance with IAS 2 Inventories, inventory must be valued at the lower of its cost and net realisable value. The fact that X5021 is over two years old, and that no sales have occurred, suggests that these inventories may need writing down, with a loss recognised in the operating category of the statement of profit or loss. It is, however, possible that no writing down is required. It may be that these parts are held as spares, and that future sales may occur at a price higher than cost. More information is therefore required. The financial accountant (FA) knows that some of the data on the inventory report is inaccurate. She has a responsibility to inform the financial controller (FC) of this. However, the fact that she wishes to have a permanent contract at Tacoco gives rise to a self-interest threat to objectivity because she will not want to take any action which threatens her future job prospects. It is important that she does not let this influence her decisions. It may be that the FA needs to explain the issue instead to one of the directors. The FA should urge the FC to investigate the issue and to write down the inventory if required. This discussion should be documented. Although the particular line item is not material to the financial statements, the total inventory balance is material, and it may be that errors are more widespread. It is therefore vital that the matter is more fully investigated. This might include inspecting items of inventory in the warehouse, entering discussions with the production directors, or reviewing sales data. The FC was part of the conversation with the production director and so should know that X5021 is no longer being produced or sold. However, it may be that the FC has simply forgotten this information. Alternatively, it may be that the FC is not keeping accurate records and notes, which may suggest that the ethical principle of professional competence is being breached. Finally, it may be that the FC is purposefully ignoring this information. This would demonstrate a lack of integrity. Moreover, the fact that the FC is part of a bonus scheme based on profits may have given rise to a self-interest threat to her objectivity. (b) Performance obligations A performance obligation is a promise in a contract with a customer to transfer a good or service to a customer. Tacoco must therefore assess whether the up-front fee relates to the transfer of a promised good or service to the customer, in order for it to represent a separate performance obligation. In many cases, even though a non-refundable up-front fee relates to an activity which the entity is required to undertake at or near contract inception to fulfil the contract, that activity does not result in the transfer of a promised good or service to the customer. Instead, the up-front fee is an advance payment for future goods or services and, therefore, would be recognised as revenue when those future goods or services are provided. This would appear to be the case in this particular contract, since the contract set up activities do not result in the transfer of a separate good or service to Nancha. Accounting treatment As such, in accordance with IFRS 15 Revenue from Contracts with Customers, Tacoco should treat the up-front fee as an advance payment on the one-year contract and recognise it as revenue over that period, as the goods are transferred. Year ended 31 December 20X7 The parts will be delivered to Nancha Co evenly over the year from 1 December 20X7. In the year ended 31 December 20X7, one month’s portion of the up-front fee should be recognised as revenue, which amounts to $10,000 ($120,000 x 1/12). The balance of $110,000 ($120,000 – $10,000) will be shown as a contract liability (deferred income) in the statement of financial position. Deferred tax is recognised on temporary differences, which are differences between the carrying amount of an asset or liability and its tax base. The carrying amount of the contract liability is $110,000 at 31 December 20X7. The tax base of revenue received in advance is the carrying amount of the contract liability less any amount of revenue which will not be taxable in future periods, which equates to nil. This creates a deductible temporary difference of $110,000. A deferred tax asset of $22,000 ($110,000 x 20%) should be recognised, with a corresponding credit to the income tax expense in the statement of profit or loss. Year ended 31 December 20X8 In the year ended 31 December 20X8, the contract liability will be derecognised. Revenue of $110,000 will be recognised. At this point, the temporary difference has reversed. As such, the deferred tax asset of $22,000 should be derecognised, with a corresponding expense recognised in the income tax line in the statement of profit or loss. 6 3 (a) (i) Plant and equipment In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the plant and equipment should be classified as assets held for sale on 30 April 20X7. This is because the items of plant and equipment are available for immediate sale as they are no longer being used. A sale is also highly probable, because management is committed to the sale plan, there is an active plan to find a buyer, the price is equal to fair value and a sale is expected within 12 months. The plant and equipment do not form a disposal group because each item is for sale individually. On classification as held for sale, the plant and equipment should be measured at the lower of carrying amount and fair value less costs to sell. Carrying amount is $855,000 and fair value less costs to sell is $835,200 ($870,000 x 96%). The plant and equipment is therefore measured at $835,200. An impairment loss of $19,800 ($855,000 – $835,200) is recognised in the operating section of the statement of profit or loss. Subsequently, the plant and equipment is not depreciated. At 31 December 20X7, the plant and equipment remains unsold and its fair value less costs to sell should be remeasured. The fair value has increased and fair value less costs to sell is $859,200 ($895,000 x 96%). The impairment loss originally recognised at 30 April 20X7 should be reversed, but only to the extent that it does not exceed the previous loss. A reversal gain of $19,800 is therefore recognised in the operating section of the statement of profit or loss and the carrying amount of the plant and equipment at 31 December 20X7 is $855,000. This is presented in the statement of financial position within current assets, separately from other assets. (ii) Factory building According to IAS 40 Investment Property, an investment property is a property held to earn rentals or for capital appreciation. A factory which is rented to tenants under operating leases meets this definition. IAS 40 states that a transfer is made from property, plant and equipment to investment property when a building meets the definition of investment property and there is evidence of the change in use. Management intentions are not evidence of a change in use. Therefore, the factory was not transferred to investment property on 1 February 20X7. On 30 April 20X7, owner occupation ceased and development started to convert the building for rental. This does provide evidence of a change in use, and this is the date when the property should be reclassified as an investment property. Prior to the transfer, the building was an item of property, plant and equipment which was measured using the cost model, and which had a carrying amount of $1,579,500. Arundel measures investment property using the fair value model and therefore, on transfer to the investment property category, the building should have been remeasured to fair value and the gain recognised as a revaluation surplus in accordance with IAS 16 Property, Plant and Equipment. The building’s fair value was $1·75 million on 30 April 20X7 and so a revaluation gain of $170,500 ($1·75m – $1,579,500) should be recognised in other comprehensive income. The gain will be presented as an item which will not be reclassified to profit or loss. The building is initially recognised as investment property at its fair value of $1·75 million. The $300,000 spent to divide the property into smaller units should be added to the carrying amount of the property. IAS 23 Borrowing Costs requires that eligible borrowing costs incurred in relation to the development of qualifying assets form part of the cost of that asset. Investment property is a qualifying asset; however, IAS 23 permits qualifying assets measured at fair value to be scoped out of its requirements. Arundel may therefore choose to recognise eligible borrowing costs on the loan to fund the development as part of the cost of the investment property or recognise them in the financing section of the statement of profit or loss. If Arundel chooses to capitalise the borrowing costs, the amount which increases the cost of the investment property is $12,000 (6% x $300,000 x 8/12). This relates to the eight-month period when the loan was outstanding and development activities were underway. Depending on whether borrowing costs are recognised as part of the cost of the asset, when development is complete, the carrying amount of the property is $2,050,000 ($1·75m + $300,000) or $2,062,000 ($2·05m + $12,000). Subsequently, at 31 December 20X7, the property should be remeasured to its revised fair value of $2,120,000. A gain of either $70,000 or $58,000 is recognised in the investing section of the statement of profit or loss. (b) New legislation Arundel identified that the new legislation was an indicator of impairment for the oil palm division. On 31 December 20X7, and in accordance with IAS 36 Impairment of Assets, the division, a cash-generating unit (CGU), should have been tested for impairment by comparing its carrying amount with its recoverable amount. Recoverable amount is the higher of the $3·15 million value in use and the $5·1 million fair value less costs of disposal and is therefore $5·1 million. The carrying amount of the CGU should be calculated on a consistent basis with the recoverable amount. It should include the non-current assets which are included in the recoverable amount calculation. It should also include the reforestation provision, since this cannot be separated from the land which it relates to, and because any buyer of the land would have to assume the associated liability. 7 The carrying amount of the CGU excludes the inventories of fruit and extracted palm oil. This is because these generate independent cash flows on sale, and do not contribute to the calculation of recoverable amount. The carrying amount of the CGU is therefore: $000 Land, property and equipment 5,408 Oil palm trees 594 Reforestation provision (450) –––––– 5,552 –––––– An impairment loss of $452,000 ($5·552m – $5·1m) arises. Arundel should recognise this in the operating section of the statement of the statement of profit or loss. The impairment loss should be allocated to the assets of the CGU which are within the scope of IAS 36 in proportion to their carrying amounts. The oil palm trees are bearer plants, because they are used to produce agricultural produce for more than one period. Bearer plants are accounted for as assets within the scope of IAS 16, rather than as biological assets within the scope of IAS 41 Agriculture, and therefore IAS 36 does apply to them. The allocation of the impairment loss is as follows: Carrying amount Loss allocation Carrying amount before allocation after loss $000 $000 $000 Land, property and equipment 5,408 $452,000 x (407) 5,001 ($5,408,000/$6,002,000) Bearer plants – oil palm trees 594 $452,000 x (45) 549 ($594,000/$6,002,000) –––––– ––––– 6,002 (452) –––––– ––––– After recognition of the impairment loss, the non-current assets should be depreciated over their remaining useful lives. Arundel is required to review this at each financial year end. Based on the information provided, the remaining useful life of the oil palm trees is four years, and the useful life of land, property and equipment is also likely to have reduced. The provision was originally recognised to reflect the discounted value of reforestation costs after 25 years of use. The new legislation means that the obligation to reforest the land will now have to be met in four years’ time. As a result, the carrying amount of the provision should be increased so that it is equal to the future expected costs discounted for four years. Tutorial note: The revised timing of the payments to reforest the land means that the provision must be remeasured. As a result, the provision will increase (a credit entry). However, IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities is not an examinable document, and candidates are not, therefore, required to discuss the impact of this remeasurement on the carrying amount of the land (the corresponding debit entry). For this reason, the original carrying amount of the land, property and equipment is used in calculations to allocate the impairment loss. Credit would also be given to any candidate who did identify and explain the requirements of IFRIC 1 in relation to the scenario. 4 (a) IAS 32 Financial Instruments: Presentation requires that the terms of a convertible instrument are analysed and each component classified in accordance with the definitions of a financial liability and equity. Classification of convertible loan notes as a liability The IAS 32 definition of a financial liability includes a contractual obligation to deliver cash to another entity. The requirement for Carroll to pay interest at 9% per annum and to pay $5 million if holders choose to redeem their loan notes meets this definition and the instrument therefore contains a liability element. The instrument also includes an option for holders to convert their loan notes into Carroll ordinary shares at a rate which depends on the ordinary share price on the conversion date. The IAS 32 definition of a liability refers to contracts which will or may be settled in the entity’s own equity instruments, and these are a liability if: – the conversion option is not a derivative and will result in the issue of a variable number of ordinary shares, or – the conversion option is a derivative and conversion will not result in the exchange of a fixed amount of cash or other financial asset for a fixed number of ordinary shares. A derivative is a financial instrument whose value changes in response to changes in underlying variables, which is settled at a future date, and which requires no initial investment, or an initial investment which is less than would be expected for similar contracts. In the case of the convertible loan notes, the option to convert is not a derivative, because its value does not change in response to the average share price and holders who opt to convert will always receive shares equal to $1,000 in exchange for each loan note. Conversion will result in the issue of a variable number of ordinary shares, dependent on the share price on that date. Therefore, the convertible loan notes should be classified as a liability in their entirety. 8 Classification of convertible preference shares as a compound instrument A compound financial instrument has both a liability and an equity component. The requirement for Carroll to pay a dividend of 9% is a contractual obligation to deliver cash and meets the definition of a financial liability, meaning that the convertible instrument includes a liability component. The conversion feature will result in the issue of a fixed number of ordinary shares in exchange for a fixed number of preference shares. In this case, the conversion feature is a liability only if it is a derivative. The conversion feature attached to the convertible preference shares is not a derivative because, although its value varies depending on the ordinary share price and it is settled at a future date, it requires an initial investment of $5 million. Therefore, the conversion feature is classified as equity meaning that the instrument is a compound instrument. Financial statements for the year ended 31 December 20X8 Convertible loan notes IFRS 9 requires that financial liabilities are initially measured at fair value. This means that the convertible loan notes would be recognised initially at $5 million. An interest expense of $450,000 ($5m x 9%) would be recognised in the financing section of the statement of profit or loss for the year ended 31 December 20X8. Convertible preference shares The liability component of the convertible preference shares should be measured initially at the fair value of a similar instrument without a conversion option. This is calculated as follows: Date Cash flow Discount factor Present value ($5m x 9%) $ $ 31 December 20X8 450,000 1/1·12 401,786 31 December 20X9 450,000 1/1·122 358,737 31 December 20Y0 450,000 1/1·123 320,301 –––––––––– 1,080,824 –––––––––– The liability would be initially recognised at $1,080,824. The balance of proceeds of $3,919,176 ($5m – $1,080,824) would be recognised as equity. Equity at 31 December 20X8 would be unchanged from its initial measurement of $3,919,176. The liability would be measured at amortised cost, meaning that interest is charged at the effective rate. Interest of $129,699 ($1,080,824 x 12%) would be charged to the financing section of the statement of profit or loss in the year ended 31 December 20X8 and would be added to the carrying amount of the liability. The cash payment of $450,000 would reduce the carrying amount of the liability. The liability would therefore have a carrying amount of $760,523 ($1,080,824 + $129,699 – $450,000) at 31 December 20X8. (b) Impact of convertible instruments on gearing The issue of the convertible loan notes would result in an additional liability of $5 million at 1 January 20X8. This increase to debt without a proportionate increase to equity would result in an increase to the gearing ratio. This cannot be quantified without additional information. The issue of the convertible preference shares would result in an additional liability and additional equity. At the issue date, the standalone gearing ratio for the convertible preference shares is 21·6% ($1,080,824/($1,080,824 + $3,919,176)) indicating that an issue of convertible preference shares would reduce the overall gearing ratio. The standalone gearing ratio for the convertible preference shares at 31 December 20X8 is 16·7% ($760,523/($760,523 + ($3,919,176 – $129,699))). Impact of convertible instruments on adjusted profit before income taxes Profit before income taxes and adjusted profit before income taxes for the year ended 31 December 20X8 would both be affected by the interest expense recognised in relation to each instrument. The issue of the convertible loan notes would result in an additional interest expense of $450,000, whilst the convertible preference shares would result in an additional interest expense of $129,699. In both cases, therefore, adjusted profit before income taxes would reduce, although the decrease would be greater if the convertible loan notes were issued. Tutorial note: Alternative ways of calculating/quantifying gearing on the convertible preference shares would receive credit. (c) Definition of management-defined performance measures According to IFRS 18 Presentation and Disclosure in Financial Statements, a management-defined performance measure (MPM) is a subtotal of income and expenses which is used in public communications outside financial statements and which complements IFRS Accounting Standard subtotals. 9 Adjusted profit before income taxes meets the definition of an MPM because it is a subtotal of income and expenses and it is used in public communications, such as press releases and investor presentations. Gearing does not meet the definition of an MPM because it uses balances from the statement of financial position, rather than being a subtotal of income and expenses. Disclosure of MPMs IFRS 18 requires that Carroll discloses information about adjusted profit before income taxes in a single note within its financial statements. This is useful to investors, who are provided with a single source of information on MPMs. Carroll’s MPM disclosure note must identify that adjusted profit before income taxes provides the management’s view of the company and explain why this measure is useful in providing information about Carroll’s performance. It should also disclose information about how the MPM is calculated. This is likely to involve an explanation of why adjustments are made for fair value movements and non-recurring items and why these adjustments are relevant to management. This explanation allows Carroll’s investors to see the company through management eyes and so better understand the company’s performance objectives and achievements. By understanding the types of adjustment made, users can also determine whether those adjustments are relevant to their own understanding and assessment of company performance. IFRS 18 also requires that Carroll presents a reconciliation of adjusted profit before income taxes to the nearest measure reported in accordance with IFRS Accounting Standards. This is profit before income taxes reported in the statement of profit or loss. In the reconciliation, Carroll should also disclose the income tax effects of each adjustment. The reconciliation indicates how the MPM has been calculated in numerical terms and highlights to the users the adjustments which have been made to profit before income taxes, such as for non-recurring costs. This allows them to assess whether adjustments are adequate and appropriate. It also provides them with data to calculate adjusted profit measures which are useful to them when forming opinions and expectations of future profits. An investor may, for example, adjust for some, but not all of the items which are highlighted in the reconciliation when estimating future levels of profit. The numerical reconciliation and narrative explanation of the MPM also means that investors can compare Carroll’s reported MPM year on year. In addition, given the lack of standard formulae for MPMs, this information also enables them to compare Carroll’s performance with other companies which use similar, but not identical, MPMs, or which calculate their own version of adjusted profit before income taxes using a different method. Overall, information provided about MPMs allows Carroll’s investors to better understand the elements of reported profit before income taxes, what drives management decisions and how relevant to them those drivers are. 11 Strategic Professional – Essentials, SBR – INT Strategic Business Reporting – International (SBR – INT) September/December 2025 Sample Marking Scheme Marks 1 (a) (i) Calculations: Cost translated at 11·2 1 40% reserve movement 1 Profit translated at 12·9 1 Carrying amount translated at 14·5 1 Foreign exchange loss included as a balancing figure 1 ––– Max 4 ––– (ii) 1 January–31 July 20X5 7 Sale 5 Financial asset 4 ––– Max 12 ––– (b) IFRS 9 principles 3 Profit or loss impact 1 Other comprehensive income impact 1 ––– Max 4 ––– (c) Adjustments to financial statements: Revenue working 1 PURP working 1 Revenue adjustment 1 Cost of sales adjustments 2 Share of profit of associate 1 Loss on disposal of associate 1 Other investment income 3 Other comprehensive income label 1 Exchange difference 1 Cash flow hedge gain 1 ––– Max 10 ––– 30 ––– 2 (a) IAS 2 principles and application 3 Application of materiality concept 2 Ethical principles 5 Actions 5 ––– Max 10 ––– (b) Performance obligations 3 Revenue in y/e 31 December 20X7 2 Deferred tax in y/e 31 December 20X7 3 Revenue in y/e 31 December 20X8 1 Deferred tax in y/e 31 December 20X8 1 ––– Max 8 ––– Professional skills marks 2 ––– 20 ––– 12 Marks 3 (a) (i) Classification as held for sale 2 Measurement and impairment on classification as held for sale 4 Remeasurement and reversal of impairment 3 Presentation on statement of financial position 1 ––– Max 8 ––– (ii) Discussion of change in use 3 Remeasurement on change in use 3 Subsequent costs and borrowing costs 4 Remeasurement at reporting date 2 ––– Max 9 ––– (b) Discussion and calculation of carrying amount of CGU 6 Measure and account for impairment loss 4 Remeasurement at reporting date 2 ––– Max 8 ––– 25 ––– 4 (a) Classification of convertible loan notes as a liability 3 Classification of convertible preference shares as compound instrument 3 Accounting treatment of convertible loan notes 3 Accounting treatment of convertible preference shares 6 ––– Max 11 ––– (b) Impact on gearing 5 Impact on adjusted profit 3 ––– Max 5 ––– (c) Explanation of whether ratios are MPMs 3 MPM disclosure requirements 3 Discussion of usefulness 6 ––– Max 7 ––– Professional skills marks 2 ––– 25 –––