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Hello Sir, below are the question related to PYQ Mar/June 2018
Q31)”Although Swanson Co was correctly accounted for in the group financial statements for the year ended 31 December 20X7, a gain on disposal of Swanson Co of $9·44m is currently included in operating expenses. This reflects the gain which should have been shown in Perkins Co’s individual financial statements.”
I don’t understand the wording,is it should include in the Perkin Co ‘s individual financial statements for the gain on disposal of Swanson Co ? however, the answer added back the 9.44m to the operating expense. Why the answer included the profit on disposal in the consolidated financial statement but excluded from the individual statement?
Q32)(a)”The costs to date of $1·9m are included in the above trial balance.”
“To date, Haverford Co has received $1·4m from the customer and this is shown in the above trial balance.”Both are included in the trial balance, why the (a) Adjustments to Harverford Co’s profit for the year ended 31 December 20X7 is included the whole amount for contract revenue and contract cost of sales(5600 & 3600( rather than the net amount? (5600-1400=4200)(3600-1900=1700)
Thank you.
Hi,
Q31) On consolidation we can only include the group profit on disposal, and not the profit made on the disposal of the investment in the parent’s individual accounts. So the $9.44m has to be removed, and this is done by adding it back to the expenses given that when it was included it would have reduced the expenses.
Q32) You need to remove what they have included and then include the correct amounts.
Thanks
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