# Preparation of the CS of Comprehensive Income Example 4

1. says

I have got problems of example 5 in Chapter 10:
1. W3 a retained earnings brought forward: from OUR SHARES direct minus the 100% of the impaired Goodwill, why not the 75% of the impaired GOODWILL and the rest 25% subtracted from W4 NCI (25%) brought forward?

2. Dividends: the dividends has been paid ,therefore should be recorded dividend receivable from subsidiary rather than subtracted respectively in the answer W3b?

• says

Is the nci on a proportionate basis?

Re the dividend – it’s not been subtracted! It’s been added into the Didzis retained earnings.

The dividend from Ansis has not been reflected within the Didzis figures – it should have been shown as investment income in Didzis’ profit or loss account, and it wasn’t!

Ok?

• says

I got that, thank a lot! : )

2. says

I wonder why the dividend relating to the NCI is not considered at the final calculation for the pure profit of the NCI as we do for the group.

In example 4 it should be 7720. Or is it completely irrelevant from the group point of view?

• says

The dividends are appropriated (debited) out of profit AFTER tax so by giving the nci their share of profit after tax, we are automatically giving them their share of the dividend

Is that ok?

3. says

Hello Sir,
In example 4 of the course note, its written out of the 77300, 15720 relates to the NC interest. I thought it should be 16800 (ie 42000×40%) or am I missing out on something.

• says

Natalija’s profit figure includes the \$2700 unrealised profit, which should be removed. Natalija (the subsidiary) was the selling entity, to which W4B refers to. This is different from example 3 where the parent company was the selling entity.

I fell in the same “trap”.

4. says

Sir, i have a question for example 5, why don’t you include dividend payable in W3b? In other example, when calculate retained earning, you always include both div rble and div pble, but not for this example 5. I feel a little confused.

• says

Without the course notes in front of me, do I remember correctly that this dividend has already been paid and accounted for?

If I’m wrong, post again

• says

Thank you, sir. Now i understand the answer, because the dividend has already been paid, so i don’t have to include it in working 3b.
Can i ask you a question about example 5 again? Why impaired goodwill is included in Cost of sale when preparing the CS of Comprehensive Income?

• says

Sometimes (mostly) the examiner will state “any depreciation and goodwill impairment should be included in cost of sales”

Is that not the case in this question?

If there is no direction for where to include the goodwill impairment, then cost of sales is as good a place as any.

I imagine that, if there is no specific direction, then to include as a separately identified expense within the Statement of Profit or Loss would be just as acceptable

• says

Yes, it is not stated in the question. But your explanation helps me a lot.
Thank you for your help.

5. says

Hi there,

First of all, thank you so much for your videos and thanks to all the people behind this website – great stuff and it helps me save a lot of money from day release courses!

Anyway, example 4 on page 62 (Dec 2014 version) states that Viktorija had sold two thirds of these goods so does this mean pup should be £5400 and not £2700? I looked at the answers at the back and it still says £2700 – I am confused.

Thank you in advance ^_^

• says

Hi, we only need the pup on the goods that HAVE NOT been sold to the outside World. So, how much of these goods are still in inventory? One third (if she’s sold two thirds, then one third is left)

Ok?

6. says

Sir,

Is the ‘retained earnings brought forward’ question (Example 5, Ch 10 on Pg 63 F7 notes – is this a part of DipIfr exam December 2014? Because this particular topic was not given in the BPP book.

regards,

Swati

• says

Surely you will use it where a question asks for a statement of changes in equity – a quote from the syllabus

“Prepare a consolidated statement of profit or loss, statement of profit or loss and other comprehensive income and statement of changes in equity for a simple group, including an example where an acquisition occurs during the year where there is a non-controlling interest.”

OK?