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Question 297 Paradigm co BPP KIT ( version 2019-2020)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Question 297 Paradigm co BPP KIT ( version 2019-2020)

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by P2-D2.
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  • Author
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  • April 13, 2022 at 10:34 am #653236
    hm1995
    Participant
    • Topics: 61
    • Replies: 15
    • ☆☆

    Hello

    In the question it says that paradigm issued a loan note to shareholders which forms part of consideration, however in the answers this loan is accounted for under non current liability. Why is this so? If the loan has been paid to the group should it not have been accounted for under receivable?

    Second. For the calculation of retained earnings post acquisition how are getting $10m? While it had retained loss previously of (4000) plus the loss of (2000) until the date of acquisition making it a total of (6000).
    Adding the loss of 6000 to the year end profit of 8000 gives 14000(earned post acquisition) which is what should be distributed.

    April 13, 2022 at 12:30 pm #653242
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7172
    • ☆☆☆☆☆

    Hi,

    When the loan has been issued then they would have DR Investment and CR Non-current liabilities.

    I still think that there is a mistake in the figure used for the reporting date retained earnings of the subsidiary. What you suggest above I believe to be correct.

    Thanks

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