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December 12, 2020 at 1:17 pm
I was a bit confused by the second quiz but now i think i got it clear. the profit made was over the four months(september to december) since P bought S. therefore the adjustment is 4/12*15000 in P’s SOPL and 80/100 * 15000 in P’s retained earnings as post acquisition retained earnings. hope this is true.
John Moffat says
December 12, 2020 at 4:06 pm
The 4/12 x 15,000 = $5,000 will appear in the consolidated SOPL (not in P’s own SOPL which will only show P’s own profit).
Although not asked for, 20% of the $5,000 (the post-acquisition profit) is attributable to the NCI and the rest of the total consolidated profit (i.e. P’s own profit plus 80% x $5,000) is attributable to the shareholders of P.
May 3, 2020 at 6:29 pm
In 2nd question p acquire 80% of S,s shares, but why it takes 100 at consolidation date?
January 28, 2020 at 6:49 pm
Question 3 – if all of inventory is sold, why is $6000 still removed from revenue? Isn’t it ignored as profit has been realised?
February 2, 2020 at 3:46 pm
I also got confused here, could you please explain this?
February 2, 2020 at 5:48 pm
It seems that maybe you did not watch the free lectures on this before attempting the test 🙂
$6,000 is removed from both the total sales and from the total purchases (and so the total profit is not affected, but the question only asked about the sales figure.).
We are required to do this, because the sales in P’s accounts will include 6,000 sold to S, but we must only show the total sales outside the group. Similarly the purchases in S’s accounts will include 6,000 bought from S, but we must only show the total purchases from outside the group.
February 2, 2020 at 5:53 pm
Because, if we don’t exclude it, those same goods will be included not only in S revenue (when they were sold to P) but also in P revenue when they were sold to the outside world
Now ask yourself this. How many times has the GROUP sold those goods to the outside world?
In consolidated financial statements we treat all the companies within the group together as though they were one big company and that or big company has sold those goods only once to the outside world
January 2, 2019 at 2:53 am
The items on the right (Donate, Search, etc) are not hidden as usual did
I have to scroll it left and right to read the whole questions
This problem also happens on FA Chapter 25 Questions
January 2, 2019 at 8:32 am
Thanks – it should be OK now
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