Advanced Audit and Assurance (International)
Tuesday 2 December 2008
Time allowed Reading and planning: Writing:
15 minutes 3 hours
This report card is divided into two sections: scratch A BOTH questions argon compulsory and MUST be attempted Section B TWO questions ONLY to be attempted Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must(prenominal) NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.
The Association of charter Certified Accountants
Paper P7 (INT)
Section A BOTH questions argon compulsory and MUST be attempted 1 harebell Co operates a chain of 95 luxury hotels. This forms results show a return to profitability for the company, pursuit several years of losses. Hotel trade journals show that on average, tax in the industry has increased by around 20% this year. Despite improved profitability, Bluebell Co has poor liquidity, and is soon trying to secure further long-term finance. You have been the coach-and- quadruple responsible for the audit of Bluebell Co for the last four years.
Extracts from the draft financial statements for the year ended 30 November 2008 are shown below: Extracts from the Statement of Comprehensive Income Revenue (note 1) Operating expenses (note 2) early(a) operating income (note 3) Operating profit Finance charges Profit/(loss) originally tax 2008 $m 890 (835) 135 190 (45) 145 2007 $m 713 (690) 10 33 (43) (10)
Note 1: Revenue identification Revenue comprises sales of hotel rooms, conference and meeting rooms. Revenue is value when a room is occupied. A 20% deposit is taken when the room is booked. Note 2: Significant items included in operating expenses: Share-based payment expense (i) Damaged property heal expenses (ii) (i) 2008 $m 138 100 2007 $m
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