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There’s a cash flow question called, ANDASH, which is from dec 06 attempt. I was wondering if anyone could help me with a little problem I’m facing
We normally take profit from SOCI that is before tax, however, we are recalculating profit before tax here adding profit from ASSOCIATE and deducting GOODWILL IMPAIRED. I would like to know, why is this procedure being followed to re-calculate the profit and what sentence specifically would tell us in exams that we have to ammend the profit. I hope I’m clear enough and someone could be of some help to me
thanks.
Sorry – I don’t have a P2 revision kit available to me until next week. I’ll try to post a reply to you then. Can I ask you to post your question on this page again on Sunday or Monday so that I shall be sure to see it? Thanks
sure, it’s not a big deal, I’ll surely re-post it but you can answer my question generally too, if you want. The main question is, how do we get to know from the cashfllow question that we have to recalculate the PROFIT AFTER TAX? in other words, we sometime have to amend it, so what specific word or sentence would tell us in the question that we have to amend the profit.
Now that’s a strange one! The start point for a cash-flow question is profit BEFORE tax. Anyway, I’ll get back to you about Andash in the near future
oh, sorry, my mistake. profit before tax. typing error. anywho, seeing the question, ANDASH will give you a better idea. They are re-calculating PBT, I don’t get the reason why?
I am not sure but I think it is because we are dealing with draft profit figure and we have to adjust it to get the right PBT figure for SOCF.
if it is so, how would we know that it is a draft profit figure? That’s the main confusion I’m facing. I mean, in exam, a person would directly look for PBT and start the question if he isn’t sure that we have to recalculate the correct profit.
From memory, the Income statement is headed “Draft Income Statement for the Group ….”
That’s how we know it’s draft!
Ihave seen that question…i might not be able to guide u well…But i am doing my best to giVe you MY Knowledge…
look khurrem…i did that question…actually what is happening…
they have given Profit before tax 400 …you can see here associate’s profit is not included….whereas, we have to include that share in post reserve…Moreover, you can see joma (Associate) sold inventory to parent AND it is dOne during the year…So in actual in the profit for the year of associate i.e (32-20)* share(25%) it has not been adjusted with the impact of Unrealised profit on stock sold…so you have to adjust that impact from associate’s profit [ as associate has sold the stock ] so net impact is just $ 1…Moreover, in broiler it clearly says impariment loss has not been recorded…impairment loss shall be recorded in Profit and Loss…calculate impairment loss upto the share of Parent and chrge dis to Profit n Loss…SO BASICALLY U HAVE TO ADJUST PROFIT AND LOSS BEFORE TAX and YOU HAVE TO SEE ADJUSTMENTS IN PAPER…Remember you are a professional student opting a Calibre exam…Think how the examiner can make Questions MORE DIFFICULT…
Make you REASONABLE ATTEMPT IN THE PAPER…take a look at the paper Solve at ur best then look for the asnwer,,,because IF YOU HAVE NOT DONE IT ON UR OWN ,,,Then u wldnt be able to do it in 3Hours aswell
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