[meiyap]

If both of them are 11 months to year end, it would be fair comparison?

It is the inventory days, receivables and payables that are being grossed up to 12months-based on the book.

[meiyap]

Sorry, this is unrelated to the question above but I wasn’t sure if I should start a new topic since I have this pending.

I attempted a question[OAK] relating to an analytical review which is ratios related.
The P/L statement was 11months to Y/E.

Is it necessary to translate the figures to 12months? – based on BPP answers.

During my attempt, I used the figure from the question directly because my defence is that I would have to round all my figures upwards if I was performing a 12months P/L.

[meiyap]

I have picked up that the question relates to revenue recognition. It did not specify contract.

[meiyap]

Hi Mike,

The question was for 16 marks and split between matters to consider, risk of MM and procedures. I had several other points but I was most unsure about the above 4.

*They had given a forecasted PBT and Revenue in the question.

There was 2 issues discussed which was

1) revenue recognition
A development contract which was going to profit the company by £200,000 had extra additional cost of £350,000. Development is 1/3 completed and will take a further 15 months to finish. The contract pice is fixed and the additional cost must be covered by Bill

Procedures
– Inspect correspondence between architect to ensure that 350,000 includes all cost and cross reference with the quotations.

-Instead of assessing the reasonableness myself, can I bring in an independent expert to assess the reasonableness?

2) NCA Held for sale
Management decided to sell division. It operates separately from the rest of business, and generates 15% of total revenue. Interest have been expressed and sale to be negotiated in 2 months time.

Procedures
-Review BOD meeting to confirm that the approval to sell division ‘treasured homes’

[meiyap]

Yes! thank you very much ! 😀

[meiyap]

Thanks Mike.

Yes, that was my point as well. I assumed obligation has been met since Dasset is meeting the expenses of the residents.

But, I was told by a tutor that obligation only exist if/when director/company releases an announcement promising compensation.
As ,that would only give rise to a valid expectation.

Hence, i wanted a second opinion.

[meiyap]

Thank you ! 🙂

[meiyap]

is your point still relevant for the dec 2015 p3?

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