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- May 4, 2016 at 1:20 pm #313679
For the following question the estimated PAT i got from newly acquired operations is
450 000 x 8/12 mths x 1.08= $324 000But in the suggested answer the working shows
$450 000 x 12/8 × 1.08 = $729 000I dont understand why.
Qn)The following summarised information is available in relation to Rebound, a publicly listed company.
Statement of profit or loss extracts year ended 31 march:
Continuing
Profit after tax
Existing operations 2000 000
Acquired operations 450 000
(On 1 august 2010)Analysts expect profits from the market sector in which Rebound’s existing operations are based to increase by 6% in the year to 31 march 2012 and by 8% in the sector of its newly acquired operations.
Calculate Rebound’s estimated profit after tax for the year ending 31 march 2012 assuming the analysts expectations prove correct.
May 4, 2016 at 1:30 pm #313681If the newly acquired operations were only acquired 8 months before the year end, then to get an annualised figure we need to divide by 8 to get a monthly average and then annualise by multiplying by 12
That 450,000 achieved in the 8 months SINCE 1 August would, at the same monthly rate, equate to 675,000
675,000 x 1.08 = 729,000
Better?
May 4, 2016 at 1:39 pm #313684Yes i got it. Thanks.
May 4, 2016 at 1:51 pm #313685You’re welcome
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