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Dear Mike,
Ch#8, example 1; notes (i) what does that mean. I am not understanding cash transit.
Many Thanks
I am a little confused as to why no adjustments are made to Jurate regarding the 10,000 worth of goods sold to Doville? Shouldn’t Jurates Inventory decrease by 10,000 and cash increase by 10,000 aslo ………Please someone if they can help
The question indicates that the transaction has already taken place and has therefore already been recorded
Ok?
Thank you sir.
Sir,
I am confused in the example 1 regarding not entering receivable 30+30 of Jurate and 20 of Dovile; and in the same way trade payable 50+10 of Jurate in the CS of FS.
Sorry sir, I have asked the wrong question.
My confusion is Receivable 90-30 of Jurate and payable 50+10 of Dovile.
Why have not we included in the CS of FP?
Because when we consolidate the group accounts are presented as those of a single company. The amounts owed by / to Dovile / Jurate are effectively owed by a company to themselves.
It’s like saying that your left trouser pocket owes your right trouser pocket $5,000. So, does that make you $5,000 richer?
Dear Mike Sir,
I have a small doubt in the Mini Exercise Question (Page 203, Paper F7, Question # 3 Patricija & Sergejus) It is the ques of ‘share exchange’ case at the time of calculating Goodwill.
My doubt is- While calculating the FV of TNA of this Subsidiary @ doa, how have you calculated Ret. Ear b/f. as 3.5 million ? I understand it is the mid-yr acquisition, so its supposed to be 6/12. But don’t we do 6/12 * 6.5 million which will be 3.25 million?
Ques says:
On 1 November, 2009 Patricija acquired 60% of the 4 million $ equity shares of Sergejus in a share exchange of two shares is Patricija for three shares in Sergejus. At the date of acquisition shares in Patricija had a market value of $6 each.Sergejus pro?t for the year ended 30 April, 2010 was $3 million and retained earnings at that date were $6.5 million. At the date of acquisition, the fair values of Sergejus‘ assets were equal to their carrying amounts with the exception of an item of plant which had a fair value of $2 million is excess of its carrying amount. The non-controlling interest is to be accounted for at fair value. For this purpose, the fair value of the goodwill attributable to the non-controlling interest is $1.5 million, and goodwill is not impaired as at 30 April, 2010.
Please solve this doubt.
Thanks a lot,
Regards,
Swati
Hi (again!)
“profit for the year ended 30 April, 2010 was $3 million and retained earnings at that date were $6.5 million.”
OK, of that $6.5m, $3 was retained THIS YEAR. Therefore, at the start of this year, the retained earnings figure must have been $3.5m and that is entirely pre-acquisition. Now, this year’s retained earnings are $3m and half of that was achieved pre-acquisition
So total pre-acquisition retained earnings are $3.5m + (6/12 x $3m) giving a total of $5m
OK?
Yes! Thank you very much, Mike Sir.
The same issue, I was facing in the Ques # 7 of the same Mini Exercise. And now that is clear too
Regards,
Swati
Good! Remember, the more you practice, the easier these questions become!
I hope someone can help me with this!
in example 1, when doing the FV at DOA why inventory 60k,cash 20k,receivables 70k and non-current assets Tangible of 150k are not included in the answer?
Is it because they are current assets?
Do we only include Non-current assets? Because in chapter 7 example 11 page 46we included Non-dep non-cur assets and Dep non-cur assets.
I am confused now, can someone help me please?
Hi there,
In example 1, the DOA happened at incorporation of the subsidiary. Therefore, there was no retained earnings or anything brought forward from before. Since the company was “born” on the date of acquisition, it did not had any inventory/cash/etc to be adjusted to.
In example 11 of chapter 7, the DOA was 2 years ago which is why it had depreciation/inventory etc.
Hope this helps
how can I watch online? I have logged in but I can’t watch the video except introduction video
The lectures are working fine – it must be a problem at your end.
Have you looked at the technical support? The link is above (just below the video)
Please mr.mike
i found this in practies note questions and i can not under stand
(1) Included in receivables of August are amounts owed by Scone of $75,000. The current accounts do not at present balance due to
a payment for $39,000 being in transit at the year end from Scone.
i know i will cancel 75 of receivables A with payaples S
but about cash transit . cash of A will incret another side?
please help
Deal with the in-transit item first. So, in A’s records (on the face of the question) Dr Cash and Credit Receivables with the $39,000 in transit. That now leaves $75,000 – $39,000 receivable from Scone and that’s the same amount in Scone’s records shown as payable to August.
So now cancel from Total Receivables and from Total Payables the amount of $(75 – 39) $36,000
OK?
yes thanks mr mike
Sir, please tell me if Im right!
If P sells to A, then SFP treatment is to deduct P’s share of PURP from the RE, and the same amount is deducted from the investment in associate. SOCI treatment is to add the amount to cost of sales of P
If A sells to P, then SFP treatment is to deduct P’s share of PURP from the RE, and the same amount will be deducted from the group inventory. SOCI treatment is to add the amount to the cost of sales of P
its great and very helpful
“OpenTuition” has “opened my intuition”
thanks
how can i download these videos?
You cannot download ‘em. They are flash videos.
Hi Mike, i am on page 48 of chapter 8. I am referring to the answer for example 1 . Just wondering why is the retained earning W3, the pre-acqn re is nil? In what circumstances in the exam question that we assume its nil? I hope u understand my question. Thank u. Btw, greattttttt video. Loving it.
Sorry, just realized p acquired s on its incorporation. Hehehe.
Brilliant! Thank you.
Why in example 1 consolidated SOFP we do not include receivable of dovile and payable of jurate(in excess)??
O!
h I forgot to say …back of BPP Text book
I am confused! I thought that as long as goods are sold it is not deducted in the Consolidated income statement! Looking at Question 11 Fallowfield……only half of goods remain..why was the entire 40000 deducted?….Help
guys when u have inter co revenue, and they mention in the exercise :”the current account in that day of the transaction was…xxx.”u need to adjust Group A/R and Group Liabilities when you consolidate by minusing in both acounts the same xxx mentioned, as is an inter co revenue, is not payable and is not collectable.Just fyi!
Thank you