Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › Group FinancialStatements – Ejoy
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- May 10, 2010 at 4:33 am #43818
Hiall,
Who can please advise me the following question regarding the revision kit question of Ejoy (Examed June/2006):
1. when calculating of Profit for the year ended 31 May 20×6 from discontinued operation, the profit will be 15-2=13.
Q: why we need deduct the impairment loss of $2m for Tbay however the impairment loss of $26.3 for Zbay would not be deducted when calculating the profit for the year ended 31 May 20X6 for Zbay.
Hope somebody can help me. Thanks
May 10, 2010 at 6:28 pm #60163AnonymousInactive- Topics: 0
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Hi there,
Impairment losses are indeed (usually) expenses in the consolidated income statement.
In Ejoy both the 2 and 26.3 are being treated as expenses. Zbay is a ‘continuing’ part of the group so its cost of sales are added to Ejoys cost of sales. The 26.3 is an additional expense and is getting added to cost of sales in the usual way.
Tbay, however, is a discontinuing operation. It is therefore ‘one line accounted’…our share of its profit (30 x 6/12) = 15..BUT..the impairment loss here needs deducting because the 15 is a profit (additional expense of 2 reduces profit)
The 26.3 is added as you are starting with a cost figure (cost of sales) ..the additional cost gets added to cost of sales..
Does that make sense?
Regards
Clare Finch
Author of ‘A student’s guide to IFRS’
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