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Hi Mike,
Do we need to know the required disclosures of different items? I don’t see any of such requirement stated in the study guide but I do see detailed disclosures of different items written in BPP study text and in opentuition notes.
Also,
In any single entity statement question where the revenue amount is wrongly recorded, for example:
A company acted as an agent for a customer where it would receive a 20% commission sales on the total revenue (which is 10m). The company had recorded $10m as revenue and $8m as cost of sales.I would deduct $10m from revenue and add $8m back to cost of sales first. Subsequently, would any of these options below be correct?
A)
Add $2m to revenueB)
Deduct $2m from cost of salesC)
Recognize $2m separately in profit or loss and name it “agent income”“Do we need to know the required disclosures of different items?”
I have always maintained that there is too much to stuff into your head concerning detailed disclosure requirements and that most of it comes down to a matter of common sense
Ask yourself “What would I, as an interested independent person, want to know about this figure / disclosure?”
And the answer is likely going to be substantially much of the disclosure requirements
“… and add $8m back to cost of sales first.”
I believe that you mean “… and deduct $8m from cost of sales first.”
Option C is the correct one – separate disclosure of an incidental source of income – probably call it “commission income”
OK thanks for the tip :), I was worried that the questions would ask for detailed disclosures about a specific item.
MOST (and that’s MOST with upper case lettering) unlikely – I can’t ever remember it happening in the past n years (where n is a number greater than the years that you have been alive)
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