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ACCA F7 June 2012 Question 1 Pyramid
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there’s one thing i’m confused by. In the W3, we deducted the deferred tax in the fair value adjustments and we also included it in the pre acq figure. Did we account for it twice?
4th attempt in March!! I hope this is it.
Hello Sir,
the answer to this question provided on ACCA page, does not cancel the interests on the loan notes of 275 and gives therefore different values of NCI – 8,480 and Retained Earnings – 36,380, kindly reply
Hello Sir,
the answer to this question provided on ACCA page, does not cancel the interests on the loan notes of 275 and gives therefore different values of NCI – 8,480 and Retained Earnings – 36,380, kindly reply
Cancellation of the intra-group loan interest is a presentation point only. So far as the subsidiary is concerned, it’s an expense and therefore the nci share should be calculated on the uncancelled profits
Have I given them their share of the profit as adjusted for the cancelled interest? I need to check it out before I go definite on this – I need to see the question again and I don’t have it to hand
Mike I’m also confused on this. Please reply-should the 275 be cancelled?
Hi, you Dr Asset and CR Retained Earnings by 800. Is that a typo? Is it suppose to be by 600?
Hi, In W5 A, could you please tell me where the 800 asset increase and ret earnings increase came from. thanks.
Hello,
the answer to this question provided on ACCA page, does not cancel the interests on the loan notes of 275 and gives therefore different values of NCI – 8,480 and Retained Earnings – 36,380, which approach is correct then…?
this lecture keeps crashing. why is this happening
Your internet connection might be too slow / or erratic
I have the same problem, can’t open today any of F9 or F7 revision lectures Seems to be a general problem?
Hi sir, I facing the problem of note no 2 I feeling confused the loan note why need to deduct $2500 in square’s loan note,can you explain to me? Thx
Because the 2500 is owed to the parent and therefore is not a liability of a group to the outside world.
Great explanation!
Glad you enjoyed it 🙂
What is the post retained earnings? N I cant play the video?
It looks like $7,675 for the subsidiary @ 26.16 on the video (and $2,000 for the associate)
Sir,
I think it would be a good idea if you did a few mini questions on reconciling current accounts… That area in F7 questions is a pain in the butt. I am now confident in all other workings and I would have balanced the question had it not been for the current accounts.
Kudos to you sir
God, I hate these current accounts, they seem to be a little work, but always confuses me.
Go back to basics and open up two T accounts.
The first, in the parent’s records is called “Current Account with Subsidiary”
The second, in the subsidiary’s records is called “Current Account with Parent”
Put in the balances given to you in the question. Account for the in-transit items, then cancel the (now) reconciled balances from Receivables and from Payables
When accounting for the in-transit items, write the adjustment on your QUESTION paper
Hope that helps
note 3 says sales were 1600 to square: why used 1500 in calculting your pup n the current account balances?
Sales from P to S were $16,000 and P had correctly recorded that. However, the goods were still in-transit and had not arrived at S, which means S’s accounts lagged behind by exactly the amount of this last unrecorded purchase which has to be $1,500 since then by adding it to S’s current balance of $14,500, they will have recorded the same amount i.e. $16,000.
But as the question mentions “S’s inventory was counted on 31 Mar 2012 and DOES NOT INCLUDE ANY GOODS purchased from Pyramid” anymore I would add, since they were all sold out. Thus, the PURP will be calculated only on the new goods that were received on the 4 Apr 2012, i.e. the $1,500 goods-in-transit.
Hope that answers your question.
I’m sorry this might be a stupid question but I really didn’t understand, from point no.3, why only $1500 was accounted for pup! There’s no mention of selling the rest $14500 goods that I might assume only $1500 left in inventory to be dealt with. So, if Square didn’t sell any of the $16000 goods purchased, why should we not calculate the pup on full amount but only on $1500?
And that you calculated the cost of investment, on g/w section, exploring share and share premium separately taking the 80% of Square’s share owned by P, why doesn’t the same method work with the examples in the course note? Example 1 of chapter 9 from the course note for an instance.
Please spend a few minutes and explain these two issues briefly when you’re free. Please
The question mentions “S’s inventory was counted on 31 Mar 2012 and DOES NOT INCLUDE ANY GOODS purchased from Pyramid” so the only goods that contain unrealised profits are the goods in transit as at the year end ie $1,500
OK?
Thank you so much for this. All your efforts are greatly appreciated.
Look at the question, note 3. You see how it says “Sales to Square 16,000” and “Purchases from Pyramid 14,500”?
Does that answer your question?
It’s even explained for you in the two lines after the table of figures: “On 26 March 2012, Pyramid sold and despatched goods to Square, which Square did not record until they were received on 2 April 2012”
Clear now?
Hi Mike/or any of you guys who might know what is going on!
i am trying to work through quest 1 from the june 12 past paper (Pyramid) and got tatally lost regarding note 3..the purchase of 1500 and hence the calculation of the pup. Can you explain where the 1500 come from.
any help will be really appreciated, thanks