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Well, I’m doing the English variant, CBE style.
And I’ve done a quick google, to be on the safe side.Thank you for the help! 🙂
I shall take care of that in the future.
And thank you for the answer. I understand it perfectly now.
@hazzy said:
Ok lets see
The profit made of 60,000 is for the whole year, so if we divide it per months it would be 5000 per month and since P acquired S on 31st of July so thats 7 months of profit thats pre-acquisiton which makes the profit account total 200.000 + (7*5000)=235000Since they acquire 60 percent of shares so
60 percent of 235000= 141000
So goodwill is
60,000 shares plus 141000 = 201,000 and subtract this from the consideration paid of 240,000 gives us 39000
Makes Sense?? hopefullyHey, can you explain why you took the 60 percent? …Coz from what I know, goodwill is calculated as Contribution Paid + Fair Value of NCI – Net Assets of Subs. at Acquisition…
Firstly, I assume the value of NCI has been omitted from the question, otherwise I don’t know how one could go about it. Anyway, if the answer is 39,000, I’ll assume that value of NCI was given as 134,000 (backward working).
Now: Acc. Profit (Retained Earnings) at acquisition will be, as shown by HazE: 235000
Add the Ordinary share capital to get total net assets at acquisition: 235000 + 100,000 = 335,000Answer:
Contribution – 240,000
ADD NCI —– 134,000 (Momena, check if NCI was given in the origianl q.?)
DEDUCT Net Assets at Acquisition – (335,000)
Goodwill —– 39,000I may be wrong, but I believe this is how we go about it
I thought abt it – Would you agree with this route?
1) Payments to be made on last day of every month from 31 Oct onwards.
2) So on 31 Oct, for the following year from 1 Nov 10 to 31 Oct 11, there must be 12 payments of 2000 each. (Current Liability)
3) Normally, CL would be 24000 on 31 Oct 10Since payment not made on 31 Oct 10 (Not related at all to the 12 payments to occur):
1) Accrued ie 2000 CL made at year-end
2) Add this to the normal (expected) payments to occur next year = 26000
3) Rest in NCL ie 34000PS: On another note, for Current liabilities, when we say WITHIN one year, do we include the last day of the year? Eg at 31 Dec X1, all loan payments to be made on last date of month, does it mean from 1 Jan X2 to 31 DEC X2, (including payment on last date), there will be 12 payments (CL)?
Thank you for your time.
Hmm alright. Hopefully this won’t be an issue.
Also: Is it right to say that redeemable preference shares form part of Long-term Loans (or Long-Term Loan Capital) but are excluded from shareholder’s equity?
Actually, I have seen the concerning lectures. (Which explain the examples)
And the answer eg for the expense does come out right, however, my issue regards a single question. This one:“A company has been notified that a receivable has been declared bankrupt. The company had previously provided for this doubtful debt. Which of the following is the correct double entry?
———— DR —————————– CR
A Bad debts account ———— The receivable
C Allowance for receivables —The receivable ”C seems to be, to me, logically the answer.
Unfortunately, the kit says that the answer is A.What would you choose?
Many thanks!
Also, if the question does not specify if the preference shares being paid are redeemable or irredeemable, is there some common assumption?
Once more, thank you!
Sorry but what do you mean by nature? For instance if absorption or marginal costing is used?
Oh so if the pattern of usage is unknown, we go with using the economic/useful life of the asset? (Considering straight-line method assumes even consumption of asset over the years.)
But for instance, the following question suggests that dividends DO appear on the income statement? (SOP&L)
The following information is available about a company’s dividends:
2005 Sept. – Final dividend for the year ended 30 June 2005 paid (declared August 2005) —- 100,000
2006 March – Interim dividend for the year ended 30 June 2006 paid — 40,000
Sept. – Final dividend for the year ended 30 June 2006 paid (declared August 2006) — 120,000
What figures, if any, should be disclosed in the company’s SOP&L for the year ended 30 June 2006 and its SOFP as at that date?
———SOP&L————————- SOFP for the period liability
A $160,000 deduction —————-$120,000
B $140,000 deduction —————- nil
C nil —————————————$120,000
D nil ————————————— nilThe answer is apparently B.
I disagree. Should it not be D? (Nil in SOP&L)Yes, I agree.
But the question asks for the statement which is *not* the purpose of the control account. The answer is C, so I wanted to know how, seeing as C is right (that is, is NOT the purpose), how B is wrong (that is, how can it be a purpose?). I also thought that the answer should be B ie the account doesn’t locate errors in the Trial Balance.
And I’d like to thank you overall for your immense help! It means a lot. 🙂
I went through the related lectures and they really helped! You have a soothing way of explaining.
Also, I get the allowance part now. Thank you.
However, about Ken… how do we know the receivables have been credited on receiving the money? Does this mean ‘cash received included in the rec. figure’ basically means the account has been credited with cash? Which is why we correct it as you said?
