OpenTuition.com Free resources for accountancy students
Free ACCA lectures and course notes | ACCA AAT FIA resources and forums | ACCA Global Community
ACCA F7 past exams lectures Download ACCA F7 Q&A
May 15, 2014 at 9:08 pm
I didnt got the treatment of preference shares a bit.. I calculated the value for interest and closing liability via amortised cost method correctly.. But what im not getting is that in statement of changes in equity the equity dividend is deducted from retained earnings but why preference dividend os not deducted? Rather it is not accounted for in any of three statements.. Kindly help please 🙂
May 11, 2014 at 7:04 am
Why is Preference dividend paid was added to Finance Cost in Statement of Comprehensive Income instead same treatment as Equity dividend paid that was deducted from Retained Earnings in Statement of Changes in Equity? Is there difference treatment on Redeemable Preference Shares Dividend and Non-Redeemable Preference Shares Dividend?
I understand Preference Shares has many types, ie.
Redeemable and Non-Redeemable
Cumulative and Non-cumulative
Participating and Non-Participating
Convertible and Non-convertible
Any difference on accounting treatmment on above dividend paid?
May 15, 2014 at 9:10 pm
Im also confused that why it is not accounted for.
May 15, 2014 at 9:14 pm
@annz2020 preference dividend is not added to finance cost nor it can be.. The value of interest found through amortozed cost method is added to finace cost.. It goes like this..
20000x(8%x6/12)=800 -> payment
20000x(12%x6/12)=1200 -> interest figure via effective rate
20000+1200-800=20400 -> this ll go as closing liability in NCL.. It is grossed up by 6/12 coz 6 months r there..
i hope i got it 🙂
December 3, 2013 at 6:43 pm
why is the loss on revaluation of 4500 taken out from both the p + l and the reval reserve? i thought it would have been cr to the property and dr to the reval reserve
December 3, 2013 at 7:02 pm
It isn’t! You are correct in that it is debited to revaluation reserve and credited to TNCA
What’s the retained earnings figure for the year? Is it 22,700 ie BEFORE the other comprehensive income revaluation figure or is it 18,000 ie the amount AFTER the other comprehensive income revaluation
Well, look in the Statement of Changes in Equity and there you’ll see that the retained earnings for the year is the figure from the foot of the Statement of Income BEFORE we get to the Statement of Comprehensive Income.
So, in Statement of Changes we see 22,700 from which is deducted the 4,500 revaluation deficit AND ….
….in Statement of Comprehensive we see 4,500 being deducted from that 22,700.
The figures in Comprehensive Income are replicated in the Statement of Changes – they are NOT part of the calculation of retained earnings for the year
December 3, 2013 at 7:18 pm
meant oci , not p+l.
December 3, 2013 at 7:21 pm
thanks again mike!
December 3, 2013 at 8:34 pm
November 30, 2013 at 12:41 am
@MikeLittle You are good in adding numbers and I think that saves a lot of time. I always find myself getting a calculator to add even a simple calculation and given the pace of the exam, it could take unnecessary time. How do you do it? I happen to have all the confidence in a calculator than I would do it for myself. Thank you for this great lecture.
I think I should master the routine workings to avoid too much thinking in the exam.
December 3, 2013 at 7:05 pm
Mental arithmetic is just practice – and, in addition, you’ll find that most of it is simply the application of the two-times table!
September 18, 2012 at 2:50 pm
At the end of the course notes, I seem to remember a section on “Mini Exercises”, probably mini exercises 6 ( but I’m not sure ) where there are 5 or 6 calculation questions concerning share for share exchanges.
Try to do some of those and, if you’re still struggling, post again.
The double entry – because it is invariably the case that the share element of the cost of acquisition has not been recorded in “the above figures” – is likely to be:
Dr Cost of Acquisition Account with the number of shares issued * their fair market value ( will be given in a question )
Cr Share Capital Account with the number of shares issued * their nominal value per share, and
Cr Share Premium Account with the number of shares issued * the difference between fair market value per share less nominal value per share
September 18, 2012 at 12:06 pm
i cant understand the shares calculation, plus the double entry in the solution,
You must be logged in to post a comment.