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1.I just want to confirm something
In the exam, will there be questions, where a company has bought another company during mid- year and we have to take only half the sales,expenses and so on of the subsidiary company?( There are certain questions in the BPP book, where a company has bought another company during mid- year or some month before the financial period)
2.”If certain criteria are met, development cost must be capitalised” In the BPP book, this statement is correct. Could you please clarify?
1. In theory there could be, but it is unlikely.
2. This is explained in chapter 21 of the free lecture notes.
Dear sir,
I do have watched your free lectures concerning IAS 38.In the note it says, “if certain conditions are not fulfilled, then the expenditure should be written off on the SOFL”
However in the BPP revision kit,it says ”If certain criteria are met, development cost must be capitalised”
Could you please clarify?
Thanks.
The note says “Development expenditure should be capitalised and shown as an asset on the Statement of Financial Position if (and only if) the following conditions apply……”
Which is exactly the same as what BPP say!!!!!(and if the conditions are not met then it is written off in the SOPL)
It depends on the context. It usually refers to the normal bank account.
A has a balance on trade receivables of $ 62,900. Bad debts is $2,000. Y was in financial difficulty and A wishes to provide an allowance of 60% on it’s balance of $1,600. A has also decided to make a general allowance of 10% on it’s remaining trade receivables
What allowance should appear on the SOFP?
The answer is $6890-How to deal with “allowance of 60% on it’s balance of $1,600”?
-How to reach the answer?There is a specific allowance of 60% x 1600 = 960.
There is a general allowance of 10% x (62900 – 2000 – 1600) = 5930
So the total is 960 + 5930 = 6890
“There is a general allowance of 10% x (62900 – 2000 – 1600) = 5930”
-Why $1,600 has been minus and not $960?If 60% is uncertain then we would assume that the remaining 40% is OK – so we don’t want even more allowance on it.
yes….but why did you minus $1600 instead of $960 in calculating the general allowance?
The specific allowance is only $960 and not $1600.
Therefore to calculate the general allowance we should take $960
Could you please clarify?
Read my previous reply carefully, because I have answered this, and think about it!!
We have decided that 60% of that debt is doubtful and therefore that the rest of that debt is OK. So we take a general 10% only of the other debts. There is no point in taking 10% of the remainder of the 1600 debt because we think only 60% of that one is doubtful.
1.A company has a year ended of 31 Jan each year. It purchased a car for $12,000 in 1 Jan 2008 and sold it for $5,000 on 31 March 2012. Depreciation is 20% reducing balance method, with a full year depreciation in the year of sales and non in the year of disposal.
What is the profit on disposal?
The answer is $1,067.84(profit)How to obtain the answer?
2. What does cash discount disallowed mean?
In future, please start a new thread when it is a new topic, and state the topic as the heading. It is because we want all students to benefit from the answers, and a heading “F3 chapters” does not let anyone know what it is about.
1. There are 5 years of depreciation – year to 31 Jan 2008, 2009, 2010, 2011 and 2012.
Calculate the written down value / carrying value after charging 5 years depreciation. The profit is the sale proceeds less the carrying value you have calculated.2. It means you have taken a cash discount when paying a supplier, but you were not entitled to it and so the supplier does not let you have the discount.
1. How can there be 5 years of depreciation? Should I assume 5 FULL year of depreciation?
The company has a year ended of 31 Jan each year. The machine was purchased on 1 Jan 2008. Therefore:
On 1 Jan 2008 the cost was $12,000
Less DEP 31 jan 2008 $200(12,000 x 20% x 1/12)
On 1 Feb 2009 CV is $11,800Is this the right way to calculate depreciation for the year 2008?
2. Therefore there is no DR or CR to record the discount?
1. I have listed the years for which there is depreciation!
The question says there is a full years depreciation in the year of purchase, so I have no idea what the 1/12 is for!2. There should not have been a dr or a cr, but obviously there had been one (because they thought they were getting a discount) and so this needs reversing to correct the error.
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