SBR June 23 exam “hot review”

[@omzy24]

I want to say God bless you Tom. I passed my exam today for the June 2023. I listened to your podcasts on Spotify and it was extremely helpful. Thank you very much.

[@tomclendonaccasbronlinelec7226]

Wonderful! I am so pleased for you. Onwards & upwards.

[@zan1971]

We also got a question of a disguised operating lease. I guess that was the investment property they are talking about? I think it was inventory actually. The question was that Company A purchased a retail unit from Company B. Company B had leased it out on an operating lease to company C. Company A had to pay the entire value of the rent payments that would be received from the lease to company B at the acquisition date. Company A then refurbished the retail unit for sale. Company A thus accounted the rent payments to be received as a pre payment and accounted for the retail unit as inventory. Explain if this treatment is correct? Company A values investments at fair value. Many people thought it was investment property. I personally think that since company's business model seems to be buying assets and refurbishing them and then selling them, it can be seen as inventory since it doesn't seem like it is doing an activity outside of the scope of the business. And investment at fair value is just given to confuse us.

[@slavkadamaskova2403]

I think thwre was also mentiined if it was consudered a sale or not. I accounted it as a leaseback sale

[@zan1971]

We also got a very interesting question on development costs. A satellite company was building mapping technology and the development costs were confirmed to meet the criteria of ias 38 as an intangible asset. The technology is rapidly evolving and competitors are making new products thus forcing the company to update it's technology. The director wants to say that development costs have indefinite useful life and thus should not be amortized. Is this correct? I wrote that since development costs are capitalized to the cost of the asset, and the asset in this case is a satellite technology that seems to be rapidly declining in value, it is obvious that there is a set useful life of the asset. Development costs and an asset cannot be accounted for separately so they both have to be amortized over the useful life of the asset. My friend however wrote that development costs are immediately expensed to the profit and loss because the economic environment around the technology seems very unstable and it may not bring future benefits to continue using it. I have no clue which one is correct.

[@slavkadamaskova2403]

Can someone link me to the LinkedIn post on share options. I couldn't find it

[@tomclendonaccasbronlinelec7226]

www.linkedin.com/pulse/equity-settled-share-based-payments-part-2-tom-clendon/?trk=portfolio_article-card_title