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For mcq qn 4) the amorization cost is supposed to be from 1 march 2014 to 30 june 2014 right ? That is 4/12 months right. But in the answer key it states 3/12 mths.
For mcq qn 13) , we have to deduct the dividends received right . Why ? I thought it would have already been adjusted in the investment income on Caddy’s individual FS.
Then why for the following qn below. We can just ignore the dividends paid ? What’s the difference between these questions ?
Burridge bought 30% of Allen on 1 july 20×4. Allen’s SOPL for the year shows a profit of $400 , 000. Allen paid a dividend to Burridge of $50 000 on 1 December. At the year end, the investment in allen was judged to have been impaired by $10 000.
What will be shown under share of profit from associate in the consolidated SOPL for the year ended 31 December 20X4 ?
The answer is 50000.
Q4 “Amortisation 160,000 (i.e. 4 x 40,000)/5 years x 3/12 (March to June)”
March to June, 4 months, and can be seen in brackets as (i.e. 4 x 40,000)
The bracketed words (March to June) are incorrect and should read July to September
The”difference” in fact does not exist
The first question is asking for the value of the investment for the sake of the statement of financial position
This second question is asking for the share of the associate’s profits so there’s no contradiction
These are two separate workings (see the course notes to find the basis for these two separate calculations)
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