[lfede09]

Emfa wrote:Passed with 64% and super happy. Thought I was going to be on the margin either side so very surprised with that result seeing as Section B was an absolute nightmare. Thanks to OpenTuition for your excellent lectures and support.

Agree! Section B was definitely a nightmare! I got overwhelmed!

[lfede09]

Sir,
Thank you very much for your clarification!

However I have faced a question related to this topic and I have made a mistake! Here the scenario:
The HR director told you that Sampson Co’s lawyers believe that the finance director’s claim is likely
to be successful, but estimate that $150,000 is the maximum amount of compensation which would be paid.
However, management does not intend to make any adjustments or disclosures in the financial statements.

Which of the following audit opinions will be issued if the unfair dismissal case is NOT adjusted for or
disclosed within the financial statements?

– A qualified audit opinion as the financial statements are materially misstated

– A qualified audit opinion as the auditor is unable to obtain sufficient appropriate evidence

– An unmodified opinion with an emphasis of matter paragraph

– An unmodified audit opinion

Well I thought that the issue is not material so un unmodified opinion is expressed, however
the management does not recognised the provision in the financial statements so I thought that it is a important matter but not require significant audit attention and my final answer was:

An unmodified opinion with an emphasis of matter paragraph. meanwhile the correct one
is just “unmodified opinion”

Could you explain me what is wrong with my argumentation?
Always Thanks!
Fede

[lfede09]

Thank you!
Just to be sure to get it.
Revaluation gain $ 500,000 go through the OCI and impact the deferred tax of 500,000×30%= $150,000
Then we have a revaluation loss of 400,000-500,000= $ 100,000
The revaluation loss go through the profit or loss so the decrease (30,000$) impact only the tax expense not the deferred tax, is it right? While the revaluation gain impact the deferred tax.

But, if we have a revaluation gain, we can reverse the revaluation loss and then the excess of loss go through the profit or loss(it is not the case), cannot we?
So should it impact also the deferred tax? (as difference between 150,000 deferred tax(credit) and 30,000(debit)?

It is a tricky question! hahah
I found it in practice platform in MYACCA.

[lfede09]

NCI at acq= 30% * 275,000 = 82,500

NCI=
82,500
Retained earnings= 200,000-125,000= 75,000*30%= 22,500

Less Impairment= 50,000*30%= (15,000)

TOTAL= 82,500+ 22,500 – (15,000) = 90,000.

You’r right!
Good Luck!

[lfede09]

Consideration 300,000
NCI ( 30%* 275,000) 82,500

Less sub’s NET ASSET at acq. date (275,000)

107,500
Less Impairment (50,000)

GOODWILL 57,500

NCI:
82,500
22,500(30%*75,000)

(15000) (30%*50,000) Impairment

90,000 Total

You’r right!
Bye

[Author]

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