The policy paragraph, in the register of the paper; the timing plan for a case exam

Three sentences

The C sub-question — “explain why the company’s treatment is appropriate under ASPE” — is worth three or four marks and is answered in three sentences: the rule (what ASPE permits or requires, with the section), the choice (what this company did), and the fact in this case that makes the choice the right one. A fourth sentence rarely earns a fourth mark. Five policy choices account for nearly every version of the question, and each has a Tamarack paragraph.

Inventory cost formula (s.3031). Rule: ASPE permits FIFO, weighted average or specific identification, chosen per class of inventory with a similar nature and use, and applied consistently. Choice: Tamarack uses weighted average for fuel and FIFO for chandlery goods. Fact: fuel is commingled in one tank, so no litre is distinguishable and average cost reflects what is physically there; chandlery goods are distinct items sold oldest-first, so FIFO matches the flow and leaves the newest costs on the balance sheet.

Amortization method (s.3061). Rule: any systematic method that reflects the pattern in which the asset’s benefits are consumed, reviewed annually. Choice: straight-line over 40 years for the building. Fact: a storage shed provides the same shelter every winter — a level pattern of benefit — so a level charge, 10,000 a year, matches it.

Development costs (s.3064). Rule: research spending is always expensed; development spending is a policy choice — expense as incurred, or capitalise once six criteria (technical feasibility, intention, ability, resources, reliable measurement, probable benefit) are all met — applied consistently. Choice: Tamarack expenses the 6,000 it spent developing a faster hull-repair process. Fact: the process is unproven and its future benefit is not yet probable, so the criteria are not met; expensing is the conservative choice and the one the marina applies to all such spending.

Revenue timing (s.3400). Rule: service revenue is recognised as performance is achieved; for an indeterminate number of similar acts over a fixed period, straight-line over the period. Choice: storage revenue is recognised by month, 14,000 a month over November to April. Fact: the service is keeping the boat safe for six months — performance accrues with time, and no month is worth more than another.

Impairment of an intangible (s.3064). Rule: an indefinite-life intangible is not amortised; it is tested for impairment only when an indicator exists, written down to fair value, and never written back up. Choice: the trademark stays at 12,000. Fact: it is renewable indefinitely and the marina trades under it; no indicator — a lost customer base, a rebranding — has arisen.

Mark each against L1.2’s scheme: one mark for the rule named, one for the choice stated, one for the fact tied to this case. A paragraph that states the rule alone earns one mark out of three; a paragraph that argues from the owner’s preference rather than a fact earns two.

Sitting the final

The final is a comprehensive case paper weighted to the second half of the course. Its length and total marks are set by the syllabus each term — the plan below uses 3 hours and 120 marks as an illustration; put the real numbers in on the day. The method is L1.4’s:

Pass one — facts. Read the whole narrative once and build the facts table: every number, every date, every rate. For Tamarack that is the trial balance, the ten facts and the prior-year balances.

Pass two — traps. Read it again for what is implied: a loan with payment dates (an accrual); a contract given in months (a fraction); a loan with an instalment due (a current-portion split); instalments already paid (tax payable is the expense less them); an asset with no amortization fact (it still wears).

Order and minutes. 180 minutes ÷ 120 marks = 1.5 minutes per mark. Answer in mark order, not printed order — the 20-mark cash-flow question gets 30 minutes and is done before the 4-mark explanation. If time runs out, the thing to skip is the lowest-mark explanation, never the entries: entries carry a mark per account-and-side and are the cheapest marks on the paper.