[joyce704445]

Anyone know the ans?
Thanks =)

[joyce704445]

Yes.Thanks for ur kind reply.

Sorry, one more question from free lectures about depreciation of revalued asset.

from lectures note pg.31.

Purpurs has a year end of 31 December each year.

In his Statement of Financial Position as at 31 December 2002 he has buildings at a cost of
$3,600,000 and accumulated depreciation of $1,080,000.
His depreciation policy is to charge 2% straight line.
On 30 June 2003, the building is to be revalued at $3,072,000. There is no change in the remaining
estimated useful life of the building.
Show the relevant ledger accounts for the year to 31 December 2003.

My question:
When a non-current asset has been revalued, depreciation charge will be higher than it was before revaluation.
and the double entry of depreciation revalued $44,522 is debit to depreciation expenses and x mention credit to where.

but i can see as pass year question 2016.

On 1 April 2015, F Co revalued a property. As a result, the annual depreciation charge
increased by $20,000 as compared to depreciation based on historical cost. The company
wishes to make the allowed transfer of excess depreciation between the revaluation
surplus and retained earnings in accordance with IAS 16 Property, Plant and Equipment.
Immediately before the transfer was made, retained earnings and the revaluation surplus
were as follows:

Retained earnings $875,000
Revaluation surplus $200,000

What should be the balance on the retained earnings and revaluation surplus accounts
after the transfer?

The answer is Debit revaluation surplus ??
and credit retained earnings.

May i know what is the correct debit entry ?
Thanks ~~~

[joyce704445]

Sorry, one more question.

Fred opened a suspense account with a debit balance of $650. He discovered the following errors:

(1) Bank interest received of $43 has been debited to the interest payable account and credited to the cash account
(2) Cash sales of $710 have not been recorded in the sales account; the cash has been debited to cash at bank
(3) Discounts received of $118 have only been debited to the payables control account

What should the balance on the suspense account be after these errors have been corrected?

$58 Dr

$178 Dr

$1,242 Dr

$1478 Dr

Answer is :
Correct Answer
$1,478 Dr

Suspense account
Dr ($) Cr ($)
Opening balance 650
Discounts received 118
Sales 710 Closing balance 1,478
1,478 1,478

MY QUESTION:

(2)Cash sales not record in sales account, and sales is credit But why the suspense ac is put at debit ?

And (3) is also same, discount received 118, should be credit in purchase…

isn’t because after all the correction is done, (2) will be credit sales, debit suspense account ? and also (3) is same as (2). credit purchase, debit suspense.

[joyce704445]

Thanks for your kind explanation.
So i understand now is question 2 is no mention is subsidiary investment income and is diff of SOPL and SOFP.

How about if this is subsidiary investment income, do we need to disclose at SOPL ?
Thanks in advance.

[joyce704445]

None of the goodwill question i understand …. cry…. < i’m self study>

Q:
Able Co. bought 51,000 shares in Baker on 1.1.2011. Baker had 60,000 shares in issue on this date.

Able Co. paid $1.25 for every share in Baker and gave Baker’s shareholders 3 shares for every 2 shares acquired. The nominal value of Able’s shares is $1 per share and their fair value at the date of acquisition has $2.30.

What was the consideration Able has paid to control Baker?

A: Abel bought 51000 shares out of Baker 60000 shares = 85%

cost of aquisition = $239700
cash (51000 x $1.25) = $63750
share exchange = $17550 (51000/2×3 x $2.30)

My question is why the answer will be $239700?

Anyone can help me ? =(=(=(

[joyce704445]

Another again…=( wonder i can pass or not…

Parent Co.
Share Capital ($1) $100
Share Premium $100

Subsidiary Co.
Share Capital ($1) $100
Share Premium $100

P acquired 80% of S shares via a 3 for 2 share exchange. The share price of P at acquisition was $3. This has not been accounted for.

What is the figure of the share premium amount for the share exchange.

Answer is :
$100 at $1 = 100 shares x 80% = 80 shares

80 shares x2/3 = 120 shares at $3 = $360

$120 share capital
$240 share premium

My question is why Credit share capital $120, and credit share premium $240? =(

[joyce704445]

Sorry, another question. Anybody can help me?

Question:
P acquired 80% of S shares via a 2 for 1 share exchange. At the date of acquisition, the following balances were in the books of H and S:

Parent Co.
Share Capital ($1) $400
Share Premium $100

Subsidiary Co.
Share Capital (0.50c) $400
Share Premium $50

The share price of P was $2 at the date of acquisition. This has not been accounted for.

What is the cost of acquisition for the share exchange.

Answer :
$400 at 50c = 800 shares x 80% = 640 shares

640 shares x 2 = 1280 shares x $2 = $2560

My question is i don’t understand what is 2 for 1 share exchange (640 shares X 2) ?
Thanks in advance.

[joyce704445]

Thanks a lot=)

[joyce704445]

Thanks for your advice=)

[joyce704445]

I feel so sorry about it. Is first time for me to purchase this practice test. I had check that are really got answer with it. So guilty…. thanks a lot for your help…

But yes, i had read and study your free lectures, and i had one question regarding the free lectures, at page number 72. Chapter 12.

A company operates a process costing system using the FIFO method of valuation. No losses occur in the process , All materials are input at the commencement of the process. Conversation costs are incurred evenly thought the process.

the following data relate to last period:

Units Degree of completion
Opening WIP 2000 60%
Total number of units completed 14000
Closing work in progress 3,000 30%

cost arising :
Materials 51,000
Conversion 193170

1. What was the total number of units input during last period?

The answer you given is C – 15000

But i don’t understand how to get this answer?

[joyce704445]

7. A company uses absorption costing with a predetermined hourly fixed overhead absorption rate. The following situations arose last month:

(a)Actual hours worked were less than the budgeted hours used to set the predetermined absorption rate
(b)Actual overhead expenditure exceeded budgeted expenditure

Which of the following statements is correct?
1.Both situations would cause the overheads to be under absorbed
2.Both situations would cause the overheads to be over absorbed
3.Situation 1 would cause the overheads to be over absorbed and situation 2 would cause the overheads to be under absorbed
4.Situation 1 would cause the overheads to be under absorbed and situation 2 would cause the overheads to be over absorbed
*My answer : 3

8. Flexed budgets for the cost of cleaning in a hotel depend on the number of beds occupied. The following information is available for different levels of occupancy:

Proportion of beds occupied (%) Cleaning costs ($)
73 28,241
85 28,445

In June 76% of beds were occupied.

What should the cleaning costs be for June?
(a)$29,402
(b)$25,433
(c)$28,343
(d)$28,292

*My answer : 29402(28241/73 * 76) ( but 25433 also possible ? hw to choose which one to follow ? 70 or 83?)

9. A factory consists of two production cost centres (T and V) and one service cost centre (W). The total allocated and apportioned overhead for each centre is as follows:

T ($) 22,000
V ($) 54,000
W ($) 80,000

The service cost centre overhead is reapportioned to the production cost centres based on the number of employees. The number of employees in each cost centre is as follows:

T 50
V 30
W 20

After the reapportionment of service cost centre overhead what is the total overhead for production cost centre T?

* My answer : 72,000 ( 50/80 * 80,000 = 50,000 + 22,000)

10. Z Co has long-term loan liabilities of $324,000 and shareholders’ funds of $402,000.
What is Z Co’s capital gearing ratio?
(a)44.6%
(b)19.4%
(c)124.1%
(d)55.4%
My answer : Gearing ratio = Liabilities / shareholders fund = 324/402 = 80.60 ? BUt no answer, only have answer of 402/324 = 124% ?

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