1. avatar says

    the answer to this question provided on ACCA page, does not cancel the interests on the loan notes of 275 and gives therefore different values of NCI – 8,480 and Retained Earnings – 36,380, which approach is correct then…?

  2. avatar says

    I think it would be a good idea if you did a few mini questions on reconciling current accounts… That area in F7 questions is a pain in the butt. I am now confident in all other workings and I would have balanced the question had it not been for the current accounts.

    Kudos to you sir

    • Profile photo of nkmile64 says

      Sales from P to S were $16,000 and P had correctly recorded that. However, the goods were still in-transit and had not arrived at S, which means S’s accounts lagged behind by exactly the amount of this last unrecorded purchase which has to be $1,500 since then by adding it to S’s current balance of $14,500, they will have recorded the same amount i.e. $16,000.

      But as the question mentions “S’s inventory was counted on 31 Mar 2012 and DOES NOT INCLUDE ANY GOODS purchased from Pyramid” anymore I would add, since they were all sold out. Thus, the PURP will be calculated only on the new goods that were received on the 4 Apr 2012, i.e. the $1,500 goods-in-transit.

      Hope that answers your question.

  3. Profile photo of angelcorpse says

    I’m sorry this might be a stupid question but I really didn’t understand, from point no.3, why only $1500 was accounted for pup! There’s no mention of selling the rest $14500 goods that I might assume only $1500 left in inventory to be dealt with. So, if Square didn’t sell any of the $16000 goods purchased, why should we not calculate the pup on full amount but only on $1500?

    And that you calculated the cost of investment, on g/w section, exploring share and share premium separately taking the 80% of Square’s share owned by P, why doesn’t the same method work with the examples in the course note? Example 1 of chapter 9 from the course note for an instance.
    Please spend a few minutes and explain these two issues briefly when you’re free. Please

    • Profile photo of MikeLittle says

      The question mentions “S’s inventory was counted on 31 Mar 2012 and DOES NOT INCLUDE ANY GOODS purchased from Pyramid” so the only goods that contain unrealised profits are the goods in transit as at the year end ie $1,500


  4. Profile photo of MikeLittle says

    Look at the question, note 3. You see how it says “Sales to Square 16,000″ and “Purchases from Pyramid 14,500″?

    Does that answer your question?

    It’s even explained for you in the two lines after the table of figures: “On 26 March 2012, Pyramid sold and despatched goods to Square, which Square did not record until they were received on 2 April 2012″

    Clear now?

  5. avatar says

    Hi Mike/or any of you guys who might know what is going on!
    i am trying to work through quest 1 from the june 12 past paper (Pyramid) and got tatally lost regarding note 3..the purchase of 1500 and hence the calculation of the pup. Can you explain where the 1500 come from.
    any help will be really appreciated, thanks

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