Forum Replies Created
- Posts
Thanks for your answer sir,
I have purchased updated revision kit and I am starting my studies from today, hoping for my best effort and your support.I would like thank you and all Opentution team as I passed all my all other fundamental level paper last year, I never felt like l do self study.
Thanking you.
I asked same question in different post, the last post was mistakenly posted so you do not need to answer the last question.
Thanks
Thanks for your answer Sir, I will practice consolidation questions and also cash flow problems.
Another question was in mind that when we charge finance cost in case of Convertible Loans at market interest rate, the difference (between finance cost charged and interest paid) should be deducted from equity component in Financial Statement and not in retained earnings, Am I right or not, if not please explain the phenomenon.
Thanks in advance.
Thanks for your answer, now I am sure that bank confirmation request is send by auditor, which includes authority letter signed by client.
Again, I would ask ‘what will be accounting treatment in last year of loan/debt to eliminate equity component.’
Thanks in Advance.
Thanks For your answer sir,
I had another question in mind, it is that In case convertible loan we charge finance cost on debt portion/component using market interest rate, should we deduct the difference between finance cost and Actual interest paid from equity component or from retained earnings?
Thanks in Advance.
I am so sorry, but thanks Mike, as 4 out of 5 Wagons are working, so the reduction in the value of the business will be reflected by reducing goodwill.
Thus the option B is correct.
I will double check my answer before posting next. Thanks for rectifying my Mistake.
If you want mike to answer this question ask this to Ask the tutor forum for F7.
Answer by Anna is correct.
Revenue to be recognized in year ending is 31 Dec 2014:
$100 million * 0.8890 (PV of $1 for 3 years on 4%) = $ 88.9 million
Interest to be recognized for year:
i) Ending Dec 2015 $88.9 * 0.04 = 3.556 million (A/cs Receivables $92.456 m)
ii) Ending Dec 2016 $92.456 * .04 = 3.698 million (A/cs Receivables $96.154 m)
iii) Ending Dec 2017 $96.154 * .04 = 3.846 million (A/cs Receivables $ 100 m)
Goodwill @acquisition 50000-(10000 + (5*6000)) = 10,000/- (fig. in $)
#1 Impairment in Assets:
Operating Lease= $ 500.
Net Book Value of operating license at the year end $9500/- ($10000-$500).#2 Impairment in overall value of the business $ 25000
Charged first to any asset most damaged Asset:
i) Operating licence (Impairment is $ 500 see #1) ($ 500)
ii) Wagons (Crashed and caused to reduction in value of business) ($24500)
Total Nil#3 Value of:
i) Operating Licence (See #1) $9500
ii) Wagons ( $30000 – $24500) $5500
iii) Goodwill $10000I think third option is correct. Because, the assets damaged the value of business should be impaired To reflect true and fair view of the value of assets, in the Financial Statements.
I hope it will help. If this answer is not correct please tell me. I am a student like you.
Addition reading: Read BPP ACCA F7 study text, Chapter 5, section 4 (Accounting treatment of a impairment loss).
Thank you
Hi Furqan,
Answer specific to question is:i) If IFRS/Accounting rules says that recognize income now but the tax rules say that recognize income next year, the consequence would be that company will be taxed next year for current year income.
As per the matching concept, expenses are recognized in the same accounting period as the related revenues are recognized. Tax is an expense, thus tax expense for current period should be recognized in current accounting period by debiting current expense A/c and crediting Deferred tax A/c (Liability). And in the next year tax liability will be increased by debiting deferred tax A/c(Liability) and crediting tax liability(Current Liability) A/c. (Tax is usually paid in next year.)ii) If tax rules says that recognize income now and accounting rules says recognize it next year, the consequence would be company will be taxed in current period for income of future period.
As per matching rule, current year tax is provided using deferred tax account, by debiting Deferred tax A/c(Asset) and crediting Tax liability A/c(Current Liability). This deferred tax (Dr. balance, called Asset) will be use to provide tax expense in next period, by debiting Tax expense A/c (Expense) and crediting Deferred tax A/c (Asset).
I hope this answer will help, sorry for any error, I am student like you.
Addition Readings:
Deffered Tax Article
Webpage: https://www.accaglobal.com/in/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/deferred-tax.html
PDF:www.accaglobal.com/content/dam/acca/global/PDF…/sa-aug09-bake-clendon.pdfHello Brother,
Make sure you attempt new specimen exam paper. here is link:
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f7/specimen/F7-specimen-s16.pdfSo,
If on P the parent acquired 60% subsidiary S on 1 Jan 2015 and at the same date P transferred $8m Non Current Asset to S for $10m and the NCA has useful life of 5 years.At the year end:
*PUP for Parent P would be $2m and That should deducted from:
i) Parent Profit &
ii) NCA in Group Financial Statement*And Extra Depreciation of $2m/5 = $0.4m should be added back to:
i) Subsidiary Profit
ii) NCA in Group Financial Statement.(Is this treatment is correct. Please give a feedback)
O.K.,
First, I will go through it (Course Notes) and if I feel it is necessary, than I will ask you for it. By the way, Thank you for your quick response.Have a good day.
Sir,
What about this syllabus update “Explain and illustrate the effect of the disposal of a parent’s investment in a subsidiary in the parent’s individual financial statements and/or those of the group (restricted to disposals of the parent’s entire investment in the
subsidiary.)”
