OpenTuition.com Free Accountancy Education
Free ACCA lectures and course notes | ACCA AAT FIA resources and forums | ACCA Global Community
Dear Mr. Little
Thank you for your lectures!!! They are so helpful.
Do we have to do W3 Cons Ret Ears, when calculating the Consolidated Statement of Comprehensive Income, or is this just an additional calculation (for myself) to see if my CSofCI calculation is correct? If I do not have to calculate W3 I would rather not do so, because of timings.
Thank you & many blessings to you!
May I ask why do we adjust all the intra group inventory sale (14,000) instead of the left over after the further (extra group sale of 2/3) which is 1/3? Hence, 4,667 instead of 14,000. The result is the same since one offsets the other but which is the right one?
By the way….there are various ways of reading F in the RTFQ… I had a great laugh..hahaha..cheers!
@chrispantazis, I’m not sure exactly what you mean about the “F” – it is the abbreviation for “full”
Cancellation of the intra-group sale IN FULL is the correct way. Look on it as two separate adjustments to make :-
a) cancel the intra-group transaction in full ( otherwise you’re showing me selling to myself and buying goods from myself, neither of which makes ANY sense at all )
b) adjust for the intra-group pup in closing inventory
@MikeLittle, I thought the F was for “Freaking” as Mitt Romney might have said….or people from the 50s….hahaha..
I understand the logic but as at year end within the group as a whole we are overstating revenue and cost of sales of the selling entity by what is left after sales outside the group. If I sell 10 to my wife and she sells 8 of those outside the household then when we merge our accounts at Xmas the Family revenue will be overstated by (10-8) 2 (my revenue) and so is cost of sales (my wife’s). If she sold to our son then that is a different story…(pup duplication) I do not understand what I am missing but I cannot get my head around using the full sale since some or all of it has been sold outside the group….
I take your word for it though and will proceed with the full sale…
@chrispantazis, Ok, here we go!
I buy 10,000 goods – double entry, Dr Purchases Cr Cash
I sell all these goods to my subsidiary for 12,000 Dr Cash Cr Revenue
In the subsidiary’s records Dr Purchases Cr Cash 12,000
The subsidiary sell all of these goods for 15,000 Dr Cash Cr Revenue
Now, can you see that the same goods are included in Revenue twice – once in my records at 12,000 and again in the subsidiary revenue at 15,000.
Also, they are included twice in Purchases – once in my records at 10,000 and also in the subsidiary’s records at 12,000
Surely these goods are only bought from outside by the group ONCE and only sold outside the group ONCE
So we need to eliminate the FULL intra-group transaction by reducing Revenue and Purchases ( Cost of Sales ) by the value of the intra-group transaction
When we do that, we are left with one Purchases 10,000 and one Revenue 15,000
@MikeLittle, Yes thank you
If K acq Irina at 1June 2008 and the CS of CI statement is at 31May 2009, why we dont consider just 10/12 (post-Acq) of Irina’s revenue or COS and so on?
If you count (use your fingers) from 01/06/08 to 31/05/09 you will see that it is 12 months hence 1 full (financial) year. If you were to apportion it would be 12/12 which is one. So you do not need to time apportion.
@chrispantazis, Thank you so much for your reply, that’s right. i didn’t pay good attention to date as i read 31may and i calculate for 31 march. My silly mistake!
@serina1800, @serina1800, sorry for the instructive tone (below)…I hope my answer helps you…. it would be 10/12 if the purchase was on 31 July 2008 or 1 August 2008…. I have screwed up many times during the solution because I did not pay good attention to the dates….
I’d better not say what I thought it could be. I don’t know if swear words are allowed on this site!
@neilsolaris, I simply cannot imagine what you were possibly thinking!
Was it just me, or was anyone else concerned what the “F” was going to stand for, in “read the F question”?
@neilsolaris, “Full” – what else could it be?
You must be logged in to post a comment.
December 2012 ACCA Exams - Genius Hunt Competition Results
OpenTuition.com Site Map
Free ACCA P1 lectures
Return to top of page
Copyright © 2013 · Privacy and Cookies · Advertising · Recommend this site · Contact us · Sitemap · Log in