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https://www.gcaofficial.org/uploads/1/0/2/1/10219498/acca_f7_revision_mock_june_2013_answers.pdf
With regards to the question primrose:
May i know why the FV adjustment for software is -4 instead of +4 because its an upward revaluation right the carrying value became 54 from 50Q in the notes:
The software of the subsidary represent the amortised development cost. Completed at a capitalised cost of $60m and went on sale on 1/12/2010. Subsidary currently amortised the development cost over 10 years. However change to amortise over 6 years.This is a change of accounting estimates which should be done prospectively right?
if it were to be done prospectively then the carrying value should be from $50 to $54 (depreciation reduced. From (60/10 years to 60/6 years). Please enlighten where my logic is wrong.
@aarina said:
https://www.gcaofficial.org/uploads/1/0/2/1/10219498/acca_f7_revision_mock_june_2013_answers.pdfWith regards to the question primrose:
May i know why the FV adjustment for software is -4 instead of +4 because its an upward revaluation right the carrying value became 54 from 50Hi,
In the individual account the asset is depreciated over the 10 years so the carrying value would be 54 at acquisition. In the consolidated accounts the asset is depreciated over the 6 years so the carrying value is 50, and is therefore reduced in value on consolidation. This is therefore why there is a reduction in the value of the net assets at acquisition.
Thanks
@aarina said:
Q in the notes:
The software of the subsidary represent the amortised development cost. Completed at a capitalised cost of $60m and went on sale on 1/12/2010. Subsidary currently amortised the development cost over 10 years. However change to amortise over 6 years.This is a change of accounting estimates which should be done prospectively right?
Hi,
No, it is a consolidation adjustment under IFRS 3 and is revaluing S’s assets and liabilities to fair value using the group accounting policies, hence why we are using the 6 years.
Thanks
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