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ACCA F7 June 2011 Question 1 Prodigal

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ACCA F7 past exams lectures Download ACCA F7聽Q&A


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Comments

  1. vili says

    November 14, 2016 at 3:24 pm

    Hi, I have a question, When calculating the RE why aren’t we using W3 like we normally do ?

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    • MikeLittle says

      November 14, 2016 at 5:39 pm

      There’s no picture coming up on my screen but I can’t believe that I’ve calculated retained earnings in any way different than my normal way.

      In fact, I’m not even sure that I know a different way!

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  2. ssingh says

    June 2, 2016 at 4:14 am

    Good day sir,

    Can you please explain why we did time apportion the gain of the land $1000 on a prorata basis of six months to arrive at the ” NCI share for total comprehensive income.

    Also the Prodigal and Penketh question have similar requirement concerning land but same skill set.

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    • MikeLittle says

      June 2, 2016 at 7:30 am

      Where have we time apportioned the $1,000 revaluation gain on the land?

      I don’t see it in the answer – please give me the working number where you see that time apportionment

      And, if you want to be 100% certain that I see your response to this, you would be better posting of the ask the tutor forum!

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  3. Vineeth says

    June 1, 2016 at 2:03 pm

    Hi Mike,
    This question was asked previously but I didn’t find your answer for the same.

    Why do we not include the subsidiary’s other equity reserve in the equity section and only the parent entity? “Share capital- Always only ever the Holding co” Does this rule apply here as well?

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    • MikeLittle says

      June 1, 2016 at 3:43 pm

      No. The rule for “other equity reserves” is the same as the rule for retained earnings ….. H’s own + H’s share of …..

      Am I not correct that Sentinel’s other equity reserve of $2,200 was entirely pre-acquisition?

      The only change to other equity reserves was a $700 decrease for Prodigal and a $400 decrease for Sentinel

      So consolidated other equity reserve should be Prodigal’s own of $3,200 brought forward less $700 this year’s decrease and less also half of Sentinel’s $400 decrease

      Does that equal $2,300?

      OK?

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      • Vineeth says

        June 2, 2016 at 12:49 am

        Got it . Thank you

  4. DreamerSK says

    May 28, 2016 at 9:01 am

    I have a question that was asked above but not answered.

    In (ii) Prodigal had included the profit as a reduction in depreciation. We need to increase COS by 800 000 but Prodigal have already reduced it by 1 000 000(due to the profit on transfer being included as a reduction to depreciation)

    Why aren’t we increasing COS by 1 800 000 to adjust for Prodigal’s reduction in depreciation?

    Additionally, Why are we reducing the retained earning of the seller by 800 000? Why isn’t the seller’s retained earning increasing after selling it for a profit?

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    • MikeLittle says

      May 28, 2016 at 9:27 am

      Put questions like this on the Ask ACCA Tutor forum – not as a comment on a lecture

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  5. Swati says

    August 3, 2014 at 7:30 pm

    Dear Sir,

    Referring to F7 June 2011 Question 1 Prodigal:

    Why is NCI also given the share from ‘Gain on Land Revaln’ and ‘Loss on FV of Equity Fin asst Invstmnt’? If they are items of OCI , why is NCI interested in this? I somewhere read that “NCI has no interest in the OCI’?

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    • MikeLittle says

      August 3, 2014 at 8:47 pm

      They want their share of the subsidiary’s activities and financial position. If OCI represents an increase on the value of the subsidiary’s assets, why should they not get their share?

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      • Swati says

        August 4, 2014 at 8:46 am

        okay.. So, NCI will take their share from OCI as well, provided its earned by Subsidiary. Right?

      • MikeLittle says

        August 4, 2014 at 5:32 pm

        Agreed

  6. Swati says

    August 3, 2014 at 8:34 am

    Dear Sir,

    Ques: F7 June 2011 Question 1 Prodigal.
    While calculating the FV of TNA of Subsid on doa, when we calculate the Profits for 6 months (time-apportioned) then we are looking at the Income statement ‘profit for the yr’ (i.e. 66000).

    My doubt is: why are we not taking 66,600 (basically including OCI) and doing 6/12 of 66,600? Do we never take this when we are calculating the fv of TNA at doa of S?

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    • MikeLittle says

      August 3, 2014 at 9:55 am

      The question specifically says that the revaluation of land takes place at the end of the year and, additionally, states that the land value increased subsequent to acquisition

      The question says “During the post acquisition period Sentinel鈥檚 land had increased in value over its value at the date of acquisition by $1 million”

      With reference to the Other Equity Reserve, there is no information within the question concerning the date of the fall in value of the financial asset investment.

      However, as stated on frequent occasions within the recording, you are specifically told NOT to calculate goodwill but that I was going to “for your benefit”

      Had you been asked to calculate the goodwill, we would have needed to know the value of the other equity reserve / financial asset investment as at date of acquisition

      OK?

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      • Swati says

        August 3, 2014 at 10:46 am

        Yes sir,
        Thanks.

      • MikeLittle says

        August 3, 2014 at 11:04 am

        You’re welcome

  7. ayeodele says

    May 17, 2014 at 8:35 pm

    why the nci not getting a share of the reserve(retain/other

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  8. ayeodele says

    May 17, 2014 at 8:08 pm

    when profit is given for the year and part belong to pre acq period do the adjust for all abnormal cost such as pup etc

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  9. SOUD SAEED says

    April 9, 2014 at 7:02 pm

    Hi Sir,
    We are told in the question that the profit obtained as a result of the transfer of the asset from Prodigal to Senitel has been deducted in the depreciation cost, i was thinking that maybe we should deduct the profit 1st from the cost of sales then we deduct the 800,000 and the 2nd thing Sir i didn’t understand is why we add the 800,000 rather than subtracting in the cost of sale, e.g

    Cost Of Sales(260,000+55,000-1000-800).

    I really appreciate for your help.

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  10. radooqu says

    March 22, 2014 at 12:53 pm

    Why no adjustment for profit on transfer of plant less depreciation (1000-200) of $800 in the NCI calculation? What am I missing..?

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    • MikeLittle says

      March 22, 2014 at 6:08 pm

      Was the plant transferred from the parent to the subsidiary? In which case, the pup adjustment is in the parent company.

      Without the question in front of me (and no notes readily available) I guess that the above could answer your question.

      If not, post again

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  11. nesherina says

    October 8, 2013 at 7:09 pm

    where did the 3 dollars for the share premium came from. (80000 shares *$3)

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    • MikeLittle says

      October 8, 2013 at 9:56 pm

      Without the question in front of me, I guess that 80,000 shares were issued in a takeover share-for-share exchange but the share issue has not been recorded. Am I correct?

      And I presume that the market value of the parent company’s shares as at date of acquisition was $4. Still correct?

      And the nominal / face value of the company’s shares is $1?

      OK so far?

      Ok, when parent issues 80,000 shares with a value of $4 each, but those shares have a face value of only $1, the remaining $3 worth attributable to those shares is classed as share premium and must be credited to the share premium account

      Does that answer it? If not, post again – but this time, give me the question name 馃檪 I really do not want to listen to myself any more times than I really have to!

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  12. ADEOLA says

    June 1, 2013 at 10:03 pm

    lecture not showing.., it’s saying server not found

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  13. Mdots says

    April 26, 2013 at 1:29 am

    I have a few questions:

    -For the equity section, why are we not adding up subsidiary figures (given in the Q from SOFP extract) like “Other equity reserves= 3.2+ 7+ (.2 x 75%) {we did not include the subsidiary 2.2} but we did include the loss on fair value of equity 200 x 75%.
    -Also in NCI W4B Share in profit of Subs: Why aren’t we adding the Fair value adjustment of $1m and deducting Depreciation of 200?
    -For R.E calculation why are we not deducting PUP in that calc?
    – Shouldn’t we deduct the PUP from COS, eliminating the profit element?

    I’m a bit confused on the logic. Thanks for helping in advance.

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    • gagbo says

      August 3, 2014 at 6:57 pm

      With reference to group accounting, only the parent’s share capital must be accounted for / i.e. included. Never ever the Subsidiary’s!!

      The pre acq element of subsidiary’s profit and the FV adjustment are applied in calculating the Goodwill, if applicable.

      The intention is not to eliminate the profit element but to adjust it via the unsold stock element. Depending on who made the transfer / sales, the adjustment is made in the seller’s book – parent or subsidiary.

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      • MikeLittle says

        August 3, 2014 at 9:15 pm

        Hi, not sure what Gagbo is saying here

        Mdots, I’m probably too late to answer your question for the exam (you should have posted on Ask theTutor!)

        Gagbo, if you have a question, do please post it on Ask the Tutor

  14. gaabita says

    June 10, 2012 at 7:45 am

    thanks for answering

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  15. gaabita says

    June 9, 2012 at 5:49 pm

    I don’t understand why revenue computation is 450 + 240 * 6/12 – 40 instead of 450 + (240-40)*6/12. Is it correct to apportion the inter group transaction that we know for sure that took place after the shares exchange?

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    • MikeLittle says

      June 9, 2012 at 7:22 pm

      @gaabita, not always. Sometimes Steve says that the subsidiary has dealt with its new parent throughout the year. In that situation, we should eliminate only the post acquisition revenue and cost of sales, and adjust only for the pup on any sales still in stock which had been transferred post acquisition

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  16. miked2107 says

    June 8, 2012 at 5:42 am

    Lecture keeps stopping!!!!!!!!!!!!

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