[fairlygladys]

Debt : equity = 30% (0.3 : 1)
Meaning to say the total is 1.3
Then get the % of debt and equity portion and find out how much expected return of the debt and equity. The tax effect merely for debt portion because the tax on interest
when come to WACC =(1/1.3×15.7%)+[(0.3/1.3×6.5%) x (1-25%)] = 13.2%

[fairlygladys]

Performance measurement is the tools we use to measuring the performance such that
– Financial KPI on profit based and value based, ie. ROI, RI, EVA, NPV, MIRR
– Non Financial KPI
– Variance analysis, balance scorecard, building block, pyramid, VFM
It’s some can quantify, compare, benchmark, measure

Performance management is the model that something we use to manage such that
– Prism, VBM, Six-sigma

[fairlygladys]

Says, A tax rate is 25% while B tax rate is 20%. Higher profit made by A will paying a higher tax to the local authority while B has a better tax advantage. At consolidate level, company is making a higher tax pay and given a lower net profit. This happen for global organisation where A and B at different country/state taxable profit at different tax rate.

The maximum TP accepted by B is not impacted by its internal cost. For division B, they still at a lower purchase cost to buy from A. However, there may perhaps intervention from HQ to have A lower the transfer price to B.

If B internal cost at $20, end up A earn $25 while B earn $20. As above, A tax rate is higher than B by 5%, meaning to say that when consolidated at corporate, will be paying higher tax which suppose maximum B profit will pay lower tax as compared to A.
Tax payable
A = $25 x 25% = $ 6.25
B = $20 x 20% = $ 4.00
Company tax payable = $10.25

Says HQ placing TP policy only 10% at total cost.
A sells to B = $148.50
Profit = $13.50
Tax payable = $ 3.375

B sells to customer = $200
Profit = $31.50 ($200 – $168.50)
Tax payable = $6.30

Company tax payable = $9.675

[fairlygladys]

It exists when selling internally within the organisation of different division/business unit across boundaries. It impacted to the global tax effect for a global organisation as well as the performance of the BU manager or division manager. Generally maximum TP is the willing purchase price to be accepted by the buying party and the minimum TP is the willing selling price to be agreed by the selling party. Says division A sells to division B. Material cost $100, variable cost $ 30, fixed cost $ 5. A sells to external customer $160. B can purchase from external supplier is $165. B sells to customer $200.

If A sells to B $130 at cost, A earn nothing lots fixed cost $5 but B earn $70. It’s unfair to A and A will not be considered in selling to B as A can sell $160 with a profit of $25 after deducted the fixed cost.

If A sells to B $160 at market price, A earn a profit of $25 while B earn $40. This seems to be fair to both A & B. A still get the same pay as selling to external customer while B is getting a lower purchase price from external supplier by $5 lower.

The profit earn for a company as whole still no impact as earning $65 ($200 – $135) it just the profit sharing in between A & B of the organisation.

The minimum TP = A’s selling price, ie. $160 market price
The maximum TP = B’s purchase price, ie. $165 market price

I suppose this is something about transfer pricing. Please correct me if I’m wrong.

[fairlygladys]

What gets measured gets done. I think it was supposed about KPI. General speaking what was in measuring indicators will ultimately drive the intended result. How we can ensure the intended result is in line with the organisation, the best way is to link it through the reward system. It somehow showing the appreciation reward in return to the contribution that motivating the employees. Eg. We want to increase our market share in industry by 5%, as the indicator, once achieved a fixed bonus $100,000 will be given out. The division manager will getting his best effort to increase the sales through perhaps market penetration strategy, to expand the market share in the industry by 5%.
In short, what we want, make it as a performance indicator for measurement, by then linked it with rewards will drive the result eventually.

[fairlygladys]

Rolling budget is where you use the latest actual to reflect the coming forecast which deemed more reliable than the fixed, flexible and incremental. However, I think beyond budgeting will having the same characteristics as rolling budget but more suitable for rapid change environment which drive to continuous improvement, for decentralization organisation.

[fairlygladys]

Q1a & c, make some overlap when elaborate further on SWOT
Q1b I describe each of the element of contextual factor, may application some how slightly away
Q2a I use 5C for pricing strategy
Q2b a bit waffle
Q3a I describe problems then only say how to overcome
Q3b I give advantage of software package without applying

Praying hard for a pass mark
Fingers cross

[fairlygladys]

Fingers cross

[fairlygladys]

Dr. P&l
Cr. RE
Give rise to ending RE nil impact,

[fairlygladys]

Cr Investment in associate

When we do consol, associate we do equity method
Cost of investment
+ % of profit
+ adjustment

We only present single line item

[fairlygladys]

paid should credit cash..correspondent debit p&l, depends scenarios

[fairlygladys]

share price for listed company should same as market value as it quoted in the market, for non-listed company is a bit hard to obtain the market value as in unquoted market.
which Q are you referring?

[fairlygladys]

Sir, we split only if the Q require to show translation of exchange difference, then we use post-acquisition x average rate and balancing to exchange gain/loss.
do we need to translate the full balance sheet? it’s a bit time consuming and both given the same answer. can we just do direct from net assets?

thanks.

[fairlygladys]

1. Change in accounting policy result different measurement, recognition and presentation therefore we do a retrospective adjustment. if unrealistic to go back to day 1 since it already operated for 20 years, therefore we do a comparative adjustment to retained earning and restate the financial statement. so that user can compare like to like
2. Change in accounting estimates particularly we already prepare the financial statement based on the best estimate, e.g. provision provided based on the best estimate we know as at financial reporting date, if the condition out from these date we do disclosure if material. if actual figure different from amount we have provide in provision, only do prospective adjustment. therefore we make the different into current year profit or loss.
3. Error of prior period result the previous year not presented faithfully, a retrospective adjustment need to be provided and restate the financial statement.

[fairlygladys]

1. Change in accounting policy result different measurement, recognition and presentation therefore we do a retrospective adjustment. if unrealistic to go back to day 1 since it already operated for 20 years, therefore we do a comparative adjustment to retained earning and restate the financial statement.
2. Change in accounting estimates particularly we already prepare the financial statement based on the best estimate, e.g. provision provided based on the best estimate we know as at financial reporting date, if the condition out from these date we do disclosure if material. if actual figure different from amount we have provide in provision, only do prospective adjustment. therefore we make the different into current year profit or loss.
3. Error of prior period result the previous year not presented faithfully, a retrospective adjustment need to be provided and restate the financial statement.

[fairlygladys]

for real estate, I think IAS 11 more appropriate by recognition based on percentage of completion. there are few methods for measurement and most use by industrial is using on cost to date/total cost to measure the % of completion. the sales should recognize gradually throughout the project terms until acceptance testing done and handover to customer.
for me, it sounds like
1. receive money is deposit irrelevant to sales progress as no cost is incurred
2. obtain loan from bank to funding the project more like finance arrangement
3. company helps customer to obtain loan? the company may incurred some administrative expense for transport allowance to the staff, you may attribute it to the project cost if you can identify for which projects
can I have the Q that you mention above?

[fairlygladys]

Hello kangmo, I thought from your example DTL will be 237,5 (CV – TB = TD x TR = DTL, if CV is Asset to the company) as the future allowable tax only 50 so the difference of 950 give rise to a liability to the company?

Dr. Tax expense 237,5
Cr. Deferred Tax Liability 237,5

[fairlygladys]

hi, exchange rate difference will be charged to profit or loss due to translation, if it is not 100% owned, then we shall share the gain or loss according to group share and NCI portion

[fairlygladys]

Hi,
1. Partial goodwill method, means NCI do not have goodwill apportionment. Q will said is proportionate. When do impairment need to calculate notional goodwill
2. Full goodwill method, NCI got goodwill portion. Q will give FV of NCI. Easier for impairment as comparing like to like

[fairlygladys]

usually the market leaders, when its selling price per unit is lower than other competitors in the markets, then we can say that they are having great economic of scale. it can be use in cost based strategy and also the pricing strategy. this is what is can think off, particularly it can be use widely

[fairlygladys]

hi, exploiting the resources by using the lowest cost to generating the greater outputs. it usually link to learning curves, starting is high cost and low output, as it goes by low cost generate high output.

[fairlygladys]

Thanks dear, you’re very helpful. Very clear and precise, I understand finally

[fairlygladys]

Can I know why are we not using 364 for heeny?
Is it the 2 set of recoverable amount at different time, Dec 12 at year end so we use 595 while Dec 11 right after acquisition so we use1079?

[fairlygladys]

Hi,
Extract as below
Dec11
Goodwill” 60
FV adj: 10
Recoverable: 1099
Total equity: 1079
Total equity + liability: 1601
Impairment:60+10+1079-1099=50

Dec12
Goodwill: 23
FV adj: 36
Recoverable : 604
Total equity: 364
Total equity + liability: 595
Impairment:23+595+36-604=50

Appreciate your reply

[fairlygladys]

thanks for sharing…. Sec A is the killing part, think the marks I got mostly from Sec B

[Author]

Posts