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Thanks for the clarification. It does make sense now to know you can only capitalise the interest once construction begins.
From this, it is fair to assume that only the investment income AFTER construction began is considered in the calculation of the amount to capitalise?
And yes it is rather strange they used 6 months. Probably a typo.
Here is the question in…er..question:
————————————————–B Co Statement of Profit or Loss and Other Comprehensive Income extracts for the year ended 31 December, 2009
$’000
Net profit for the year 421
Dividend (98)
Retained profit 323During the year the following important events took place:
(i) Properties were revalued by $105,000 increase.
(ii) $200,000 of $1 share capital was issued during the year at a 25c premium
(iii) A non-current asset with a carrying value of $130,000 was written down to $95,000. The impairment occurred as a result of general
price changes. The revaluation surplus account contains $25,000 relating to this asset.(iv) Opening equity was:
$
Issued capital 400,000
Share premium 50,000
Revaluation surplus 165,000
Retained earnings 310,000
————
925,000Show how the events for the year would be shown in the Statement of Changes in Equity.
The part of the answer from the book relevant to my query:
——————————————————————————–Statement of Profit or Loss and Other Comprehensive Income
Profit for the period 421
Other recognised income and expense
Surplus on property revaluation 105
Impairment loss (25)
80
———-
501Haha! You had me burst out laughing with your response Mike…curiosity dragged me into this post.
Thank you good sir
Just came here from F4 (passed…hamdula)…i tip my hat to you all for reaching P7…it is an incredible achievement…i can’t wait till i can sit the last exam… slowly but surely (…or one can hope)
To be frank i’m more comfortable with calculation papers. I’ve been advised to do F5, F6, and F8 as F8 is a relatively light syllabus, and then do F7 with P2 next year.
I’m also fairly comfortable with doing 3 papers.
I think the model answers over-explain and you wouldn’t be expected to write the same in an exam. As long as you get the points across that’s all that matters. The number of marks are a good indication of how many valid points you need to raise in your answer.
And as frustrating as it is, only repeatedly practicing past exam questions will you begin to understand how to answer questions efficiently. It’s a big step up from multiple choice questions as now you have to actually remember everything as opposed to just knowing it exists.
Good luck to all of us!
Glad to let you know i passed the F2 CBE today. All thanks to your lectures and notes 🙂
*palm on face*…i hope i don’t stupid-out like that in the exam…reading it again this morning makes complete sense.
Thank you for your reply…and patience 🙂
Just came across this question of OT’s mock exam:
A company calculates the following variances under a standard marginal costing system:
(i) The sales volume variance
(ii) The total fixed overhead variance
(iii) The total variable overhead varianceIf a company changed to a standard absorption costing system, which variances could change in value?
(i) and (ii) only
(i), (ii) and (iii)
(ii) only
(i) onlyThe correct answer is (i) and (ii) only….
Am i missing something here? Sorry to be a pain…
I just realised my confusion…when the notes said that the fixed overhead variances are calculated differently, they were referring to it’s reduced number of components only, rather than the variances themselves.
Sorry about that. And thank you for your reply.
Thank you for your reply. For future reference , would you recommend *not* relying solely on OT material for studying? I know that OT is about free and open knowledge so this would go against the idea of having to buy extra material…
And yes i have gone through that chapter, i accidentally typed that one in…