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F7 Chapter 11 Questions

VIVA

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    • Thanks for pointing that out – it seems that it’s the only place where the wrong answer is shown … if you had selected a wrong choice, the correct solution is explained on the answer page indicating where you had gone wrong

      OK?

    • Because (if you had listened to the recorded lectures and / or read the course notes) the way that I deal with pups that arise from transaction involving an associate is to deduct the full pup from the associate’s retained earnings and then bring into the consolidation only the group’s share of those reduced associate earnings thereby eliminating only the group’s share of the pup

      The effective double entry is to reduce consolidated retained earnings and reduce also the investment in the associate

      But all that is made perfectly clear in the course notes and in the lectures!

      OK?

  5. Hi Sir,I don’t see the difference between question and the rest of the questions as the question is asking what will be the value of the investment in the consolidated statement. Why the question 1 is 0 and others we compute the number as shown in the video ?

    In question 5, why not remove the PUP from the profit after tax and take our share of the rest and add it to the initial investment ? as the good are still in his invetory fully.

    Thanks.
    Daniel.

    • Question 1 – the investment is the ONLY investment of Filiatra – so there are no subsidiaries and therefore no consolidation

      Question 5 – 4/12 of the associate’s profit (time apportionment) = $28,000

      Deduct from that the FULL pup of $4,000 leaving $24,000 adjusted post-acquisition retained profits

      Taking 35% of that $24,000 gives us our share of this year’s associate, time apportioned, adjusted, profit after tax and that figure is $8,400

      Does that explain it for you?

  6. Dear sir, in Q5 I think in the consolidated level, the pup should be eliminated with the parent inventory, but not the investment is it right?

    • Not the way I do it! By reducing the associate’s retained earnings by the full amount of the pup before taking our share into consolidated retained earnings, we automatically eliminate out 35% share of the pup because we only consolidate our share of the associate’s retained earnings

      Dr Reduce our Share of Associate’s retained earnings Cr Investment in Associate

  7. Edmundo – two points!

    1) Why not put your question on a separate post rather than tack it on to the thread relating to a completely different question?

    And

    2) Why not put your question onto the Ask ACCA Tutor forum?

    In future, that would be the preferred route because I rarely look at “recent posts”

    In fact, for the benefit of all, please repost your question on Ask ACCA Tutor for F7 and I’ll get back to you today!

    • The question asks you for the figure in the consolidated financial statements

      The investment in Kyparissia is the only investment held by Filiatra ……… so no consolidation because there are no subsidiaries

  9. I also could not get the answer in nr 5

    I had:
    Shares 50,000 x 1,5 = 75,000
    Payment 377,914/1,08^3 = 300,000
    Post acq ret ears: I deducted the PUP from the PBT 105,000 – 20%x20,000 = 101,000
    Then I calculated the implicit tax rate (105-84)/105 = 20%
    Next I calculated the PAT: 101,000 x (1-20%) = 80,800

    Then time apportined: 80,800/12x4x35%= 9,427

    Total: 384,426

  10. Good Day Mr Mike,

    In Question nr 4 my answer is 1,031,127 which does not show in the options.
    A follows

    Shares: 300,000 x 2,5 = 750,000
    Payment: 330,000 / 1,1^2 = 272,727
    Post Acq ret Ears: 84,000/12 x 4 x 30% = 8,400
    Total: 1,031,127

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