1. Profile photo of Swati says

    Dear Sir,

    My another doubt in this ques is regarding the depreciation.
    We have considered it into the cost of sales — is it because the ques says so? What to do if nothing is mentioned in the question. Do we then deduct it from G.Profit?


  2. Profile photo of Swati says

    Dear Sir,

    I am so sorry for the doubt related to ‘Finance cost’. I saw that later that you have added the subsidiary share also.

    Just the doubt of why goodwill impairment deducted from G.profits?


    • Profile photo of MikeLittle says

      Good news about the finance costs :-)

      Re the goodwill impairment – where else would you deduct it from? Quite often a question will say that any impairment is to be included within cost of sales.

      Otherwise, I feel that I would show it separately as an expense within the statement of profit or loss

  3. Profile photo of Swati says

    Dear Mike Sir,

    In this F7 June 2008 Question 1 Patronic, I have a few doubts:
    1) Why are we not adding the 8/12 of 900 (Subsidiary share) when we are talking about the Finance cost. You have just taken the Parent’s share & unrolled disct (i.e 2 +2.4)

    2) Secondly, why do we deduct the goodwill impairment from the Gross profits? Is it the rule & do we always have to deduct the goodwill impairment from Gross profits?


  4. Profile photo of tauraiversatile says

    I am happy, thanks Mike. However, the question reads differently from the one on the ACCA website…2 things, the one on the website is different from the one you are reading which is still different from the one in BPP revision kit. Kinda confused! Hope to pass, thanks once again :)

    • Profile photo of MikeLittle says

      I don’t believe that goodwill fits anywhere into W4B. W4B is the nci share of this year’s subsidiary adjusted, time-apportioned profits after tax. Whereabouts are you trying to fit goodwill into that calculation?

      And why?

    • Profile photo of MikeLittle says

      The deferred consideration is $2 per share on 18 million shares = 36 million. That’s the present value. To unroll it, we take 36 million x 10% = 3.6 million. But it’s only unrolled for 8 months until the year end So the finance cost is 3.6 million x 8 / 12 = 2.4 million finance charge and that’s added to the long term liability of “Deferred payment”


    • Profile photo of MikeLittle says

      Point number (iv) in the Kaplan 2012 edition states “The nci has been valued at 30.5 million” and I believe that that was the source from which I prepared the answer. Kaplan were not allowed to reproduce the ACCA questions precisely so this must have been one of their “amendments”

      Sorry that this has resulted in your general confusion!

  5. Profile photo of marky123 says

    Yes I calculated G/will to be 27,000 too. Im just wondering if Mike maybe using an old unmodified/modified version of the question from a text book maybe instead of ACCA ??
    Be interesting to know what that 30.5 was though :-)

  6. Profile photo of marky123 says

    Hi just a quick one. In the video at 12m 40s, Mike writes in a figure of 30.5 bringing the total to 135.5. Where does this figure come from???? I cant see it or calculate it.
    Also, at around 17m, Mike gets Goodwill to be 29,500 yet ACCA standard answer is 27,000 ?? Why the differences?
    Any help appreciated thanks :-)

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