ACCA考试P1-P3模拟题及解析18

　　以下是高顿网校小编为学员整理的：ACCA P1-P3模拟题及解析。
　　(a) The existing standard dealing with provisions HKAS 37, Provisions, Contingent Liabilities and Contingent Assets,has been in place for many years and is sufficiently well understood and consistently applied in most areas.

　　Standard setters have felt it is time for a fundamental change in the underlying principles for the recognition and measurement of non-financial liabilities. To this end, the International Accounting Standards Board (IASB) has issued an Exposure Draft, ‘Measurement of Liabilities in IAS 37 – Proposed amendments to IAS 37’. The Hong Kong Institute of Certified Public Accountants has also invited its members and other interested parties to comment on the exposure draft.
 

　　(i) Discuss the existing guidance in HKAS 37 as regards the recognition and measurement of provisions

　　and why standard setters feel the need to replace existing guidance; (9 marks)

　　(ii) Describe the new proposals that the IASB has outlined in the Exposure Draft. (7 marks)

　　(b) Royan, a public limited company, extracts oil and has a present obligation to dismantle an oil platform at the end of the platform’s life, which is 10 years. Royan cannot cancel this obligation or transfer it. Royan intends to carry out the dismantling work itself and estimates the cost of the work to be $150 million in 10 years time. The present value of the work is $105 million.

　　A market exists for the dismantling of an oil platform and Royan could hire a third party contractor to carry out the work. The entity feels that if no risk or probability adjustment were needed then the cost of the external contractor would be $180 million in ten years time. The present value of this cost is $129 million. If risk and probability are taken into account, then there is a probability of 40% that the present value will be $129 million and 60% probability that it would be $140 million, and there is a risk that the costs may increase by $5 million.

　　Required:

　　Describe the accounting treatment of the above events under HKAS 37 and the possible outcomes under the proposed amendments in the Exposure Draft. (7 marks)

　　Professional marks will be awarded in question 4 for the quality of the discussion. (2 marks)

　　(25 marks)
 

　　(a) (i) The existing guidance requires a provision to be recognised when: (a) it is probable that an obligation exists; (b) it is probable that an outflow of resources will be required to settle that obligation; and (c) the obligation can be measured reliably. The amount recognised as a provision should be the best estimate of the expenditure required to settle the present obligation at the balance sheet date, that is, the amount that an entity would rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party. This guidance, when applied consistently, provides useful,predictive information about non-financial liabilities and the expected future cash flows, and is consistent with the recognition criteria in the Framework. Standard setters have initiated a project to replace HKAS 37 for three main reasons:

　　1. To address inconsistencies with other HKFRSs. HKAS 37 requires an entity to record an obligation as a liability only if it is probable (i.e. more than 50% likely) that the obligation will result in an outflow of cash or other resources from the entity. Other standards, such as HKFRS 3 Business Combinations and HKFRS 9 Financial

　　Instruments, do not apply this ‘probability of outflows’ criterion to liabilities.

　　2. To achieve global convergence of accounting standards. The IASB is seeking to eliminate differences between IFRSs and US generally accepted accounting principles (US GAAP). At present, IFRSs and US GAAP differ in how they treat the costs of restructuring a business.

　　3. To improve measurement of liabilities in HKAS 37. The requirements for measuring liabilities are unclear. As a result, entities use different measures, making it difficult for analysts and investors to compare their financial statements. Two aspects are particularly unclear. HKAS 37 requires entities to measure liabilities at the ‘best estimate’ of the expenditure required to settle the obligation. In practice, there are different interpretations of what ‘best estimate’ means: the most likely outcome, the weighted average of all possible outcomes or even the

　　minimum or maximum amount in the range of possible outcomes. It does not specify the costs that entities should include in the measurement of a liability. In practice, entities include different costs. Some entities include only incremental costs while others include all direct costs, plus indirect costs and overheads, or use the prices they would pay contractors to fulfil the obligation on their behalf.

　　(ii) The IASB has decided that the new IFRS will not include the ‘probability of outflows’ criterion. Instead, an entity should account for uncertainty about the amount and timing of outflows by using a measurement that reflects their expected value, i.e. the probability-weighted average of the outflows for the range of possible outcomes. Removal of this criterion focuses attention on the definition of a liability in the Framework, which is a present obligation of an entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Furthermore, the new IFRS will require an entity to record a liability for each individual cost of a restructuring only when the entity incurs that particular cost.

　　The exposure draft proposes that the measurement should be the amount that the entity would rationally pay at the measurement date to be relieved of the liability. Normally, this amount would be an estimate of the present value of the resources required to fulfil the liability. It could also be the amount that the entity would pay to cancel or fulfil the obligation, whichever is the lowest. The estimate would take into account the expected outflows of resources, the time

　　value of money and the risk that the actual outflows might ultimately differ from the expected outflows.

　　If the liability is to pay cash to a counterparty (for example to settle a legal dispute), the outflows would be the expected cash payments plus any associated costs, such as legal fees. If the liability is to undertake a service, for example to decommission plant at a future date, the outflows would be the amounts that the entity estimates it would pay a contractor at the future date to undertake the service on its behalf. Obligations involving services are to be measured by reference to the price that a contractor would charge to undertake the service, irrespective of whether the entity is carrying out the work internally or externally.

　　(b) Under HKAS 37, a provision of $105 million would be recognised since this is the estimate of the present obligation. There will be no profit or loss impact other than the adjustment of the present value of the obligation to reflect the time value of money by unwinding the discount.

　　Under the proposed approach there are a number of different outcomes:

　　– with no risk and probability adjustment, the initial liability would be recognised at $129 million which is the present value of the resources required to fulfil the obligation based upon third-party prices. This means that in 10 years the provision would have unwound to $180 million, the entity will spend $150 million in decommission costs and a profit of $30 million would be recognised. If there were no market for the dismantling of the platform, then Royan would

　　recognise a liability by estimating the price that it would charge another party to carry out the service.

　　– With risk and probability being taken into account, then the expected value would be (40% x $129m + 60% x $140m),i.e. $135·6m plus the risk adjustment of $5 million, which totals $140·6 million.

　　– $105 million being the present value of the future cashflows discounted.

　　The ED suggests within paragraph 36B that the entity should take the lower of:

　　(a) the present value of the resources required to fulfil the obligation, i.e. $105 million;

　　(b) the amount that the entity would have to pay to cancel the obligation, for which information is not available here; and

　　(c) the amount that the entity would have to pay to transfer the obligation to a third party, i.e. $140·6 million incorporating the administrative costs.

　　Therefore $105 million should be provided.

　　The ED makes specific reference to provisions relating to services such as decommissioning where it suggests that the amount to transfer to a third party would be the required liability, so $140·6 million would be provided.
 

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