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ACCA F7 December 2008 Question 1 Pedantic

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Comments

  1. boysbv says

    April 12, 2024 at 7:21 pm

    Hi Sir, I’m having a problem to understand what was done in current assets concerning cash in transit. I understood why we neet to add 200,000 as this refers to increase in cash (making as if the other company has already received the cash). We will also need to lower 600,000 to 400,000. But i don’t understand why you have subtracted 200,000 again as you already put 400k instead of 600k.

    Thanks for your time and consideration

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  2. afia01 says

    November 25, 2018 at 7:15 am

    Respected Sir,

    I have a question regarding Pedantic. Basically, in my Kaplan Exam kit there is a note(v):

    “Pedantic has a policy of accounting for any non-controlling interest at fair value. The fair value of non-controlling interest at the acquisition date was $5.9 million. Consolidated goodwill was impaired by $1 million at 30 September 2008. ”

    In the answer they have deducted the goodwill impairment of $1 million from the calculation of goodwill. We are not suppose to deduct year end goodwill from the calculation of goodwill, is not it?

    Thank you

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  3. Kor says

    November 25, 2014 at 7:25 am

    Did Sir,
    How did you calculate share issue of 16,000.

    Thank you!

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    • MikeLittle says

      November 25, 2014 at 11:03 am

      I think that you mean 1,600 not 16,000!

      60% * 4,000 acquired / 3 * 2 are the number of shares issued on the acquisition of Sophistic and that calculates out to 1,600

      Ok?

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  4. Swati says

    July 31, 2014 at 1:38 pm

    Dear Sir,

    F7 December 2008 Question 1 Pedantic:

    I am a bit confused with Working 4A for NCI (40%). Do we not deduct the 40% of pup from here? why?
    And when do we deduct it from NCI?

    Thanks..

    Log in to Reply
    • MikeLittle says

      August 1, 2014 at 8:47 am

      Without me looking up the question, let me ask first of all “Which company made the sale?”

      If the answer is Pedantic, then the adjustment is in Pedantic’s records / retained earnings so will have no affect on the entitlement of the nci

      If it wasn’t Pedantic that made the sale, please post again and I’ll check out the question

      OK?

      Log in to Reply
      • Swati says

        August 1, 2014 at 11:38 am

        Dear Sir,

        The question says: Sales from Sophistic to Pedantic in the post acquisition period were $8 million. Sophistic made a mark up on cost of 40% on these sales.Pedantic had sold $5路2 million (at cost to Pedantic) of these goods by 30 September 2008.

        So, when subsidiary is selling to parent, the we deduct the ‘pup’ from NCI for working 4A (nci 40%)? Is it?

        Swati.

      • MikeLittle says

        August 1, 2014 at 3:27 pm

        Yes – the unrealised profit is $800,000 and should be deducted from the Sophistic retained earnings “today” in your calculation to arrive at the Sophistic post-acquisition retained earnings. That’s the bottom figure in working W3 and it’s that figure that we use when calculating the nci share of post acquisition retained earnings in the subsidiary.

        So, you see, the nci is charged with their share of the pup as a result of deducting it from subsidiary retained earnings

        OK?

  5. olghi1986 says

    June 1, 2013 at 8:27 pm

    Thank you! Very useful!

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  6. ppatterson says

    May 29, 2013 at 11:10 pm

    Under the heading F V of N A @ DOA, not sure how the figure for – retained earnings b/fwd (3,500) was arrived at.

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    • MikeLittle says

      May 30, 2013 at 6:36 am

      I don’t have the question in front of me but is it not retained earnings at the end of the year – the retained earnings this year?

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      • merotchi says

        October 31, 2013 at 1:44 pm

        I am sorry Mike, but I am still not sure how the 3500 came about?

      • MikeLittle says

        October 31, 2013 at 1:51 pm

        Retained earnings from the question at the end of the year are 6,500. Profit for the year, from the question, is 3,000

        Therefore retained earnings brought forward must be 3,500 which when this year’s retained earnings are added on to that figure gives us 6,500.

        Therefore retained earnings brought forward must be that 3,500

      • merotchi says

        October 31, 2013 at 1:57 pm

        Just Figured it out with a bit of help! – RE 6500 – 3000 Profit x 6/12 because its for half the year only!
        Thank you Ever so much Mr Little!

      • MikeLittle says

        October 31, 2013 at 2:18 pm

        You’re welcome

      • drishti1234 says

        April 28, 2018 at 5:30 am

        But sir, in answers retained earnings at DOA is 5000.
        How?

      • MikeLittle says

        April 28, 2018 at 6:30 am

        Within the first 4 minutes of the recording … there’s your answer!

        OK?

  7. aine5 says

    May 27, 2013 at 11:00 am

    I still don’t understand where the figures are coming from 馃檨

    @alextrunghuynh, In a situation where Steve Scott tells you the value of the goodwill attributable to the nci, you still need to calculate the value of the nci INVESTMENT.

    The way to do this is to realise that the nci investment is equal to their proportional share of the S fair valued net assets at date of acquisition + the goodwill attributable to them

    So, for example, ( 30% x FV of SNA @ DOA ) plus the 1.5 million

    OK?

    Log in to Reply
    • MikeLittle says

      May 27, 2013 at 11:17 am

      Aine5

      What is it that you don’t understand?

      Log in to Reply
      • jodiann says

        August 3, 2014 at 3:20 am

        how did you get 5.9 for the nci in pedantic

      • MikeLittle says

        August 3, 2014 at 9:40 am

        The question tells us that the GOODWILL attributable to the nci is $1.5m but we need to know the value of the nci INVESTMENT

        The nci investment is equal to the combination of their share of the fair value of the subsidiary’s net assets at date of acquisition plus any goodwill attributable to the nci.

        The fair value of S net assets is represented by:

        Shares 4,000
        Retained earnings brought forward 3,500
        Retained earnings 6 months 1,500
        Fair value adjustment 2,000

        Total 11,000

        Nci share 40% x $11,000 4,400
        Attributable goodwill per the question 1,500

        Nci investment 5,900

        OK?

  8. aine5 says

    May 25, 2013 at 7:01 pm

    I cant figure out where the NCI of $15.5 is coming from??

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    • aine5 says

      May 25, 2013 at 7:04 pm

      Sorry its $5.9m

      Log in to Reply
    • MikeLittle says

      May 25, 2013 at 7:07 pm

      I recorded these answers using the Kaplan revision kit as the source of the question. Because Kaplan are not platinum providers, they are not allowed to reproduce the ACCA questions verbatim.

      It could be that this explains the apparent magic with which my figures have appeared.

      If by any chance this does not explain the anomaly, then post again

      Log in to Reply
      • MikeLittle says

        May 25, 2013 at 7:08 pm

        But 5.9 is explained in the posts just below this string

  9. sueellen says

    November 20, 2012 at 11:12 pm

    i was wondering the same thing Alex. I’m still confused by it and trying to work it out.

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    • unknown008 says

      December 3, 2012 at 12:39 pm

      @sueellen, The $5.9M is the FV of the NCI at acquisition mentioned in note 5 of the question.

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  10. alextrunghuynh says

    November 9, 2012 at 11:05 pm

    Where is the value of NCI $5.9M in the question? It only says goodwill attributable to NCI $1.5M.

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    • MikeLittle says

      November 9, 2012 at 11:55 pm

      @alextrunghuynh, In a situation where Steve Scott tells you the value of the goodwill attributable to the nci, you still need to calculate the value of the nci INVESTMENT.

      The way to do this is to realise that the nci investment is equal to their proportional share of the S fair valued net assets at date of acquisition + the goodwill attributable to them

      So, for example, ( 30% x FV of SNA @ DOA ) plus the 1.5 million

      OK?

      Log in to Reply
  11. lovemapu says

    November 3, 2012 at 10:30 pm

    thank you

    Log in to Reply

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