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Hi,
In the question the fair value was $344 and the cost to sell was $5.
When calculating fair value less cost to sell the answer showed (344-(5*100%/60%))=335.7.Bear in mind the proportionate method is used in the question and we had to gross up goodwill to get the carrying amount.
But, I don’t understand why we are grossing up the fair value less cost to sell.
Can you explain?
I usually don’t like opentuition. I find the lectures boring and disconnected. However, my usual site for study did not offer F6 and I tried opentuition once again. However, i thoroughly liked that the lectures were not in a classroom setting and that they flowed. They did not name the lecturer , but Iiked the style for F6. Giving credit where credit is due.THANK YOU!!
Passed 54% with first attempt.
Remember that the profit u are supposed to start with is the figure as per accounts. This figure includes both non allowable and allowable deductions. Based on the notes given, u are supposed to determine which figures were correctly deducted( like gifts for employees) and which are not allowable(depreciation and thus has to be added bacK) or sometimes only part of an expense is allowable for deduction( like if they include one figure for donations and then tell u some were political and some were local).
ACCA tests if u can distinguish which one require adding back or deduction so they give notes on a variety of figures and u have to determine for yourself. They have stated that those items that need no adding back or deduction should be represented by a zero. A deduction for employees will be allowed…..thus u have don’t have to add anything or deduct anything….so u put a zero. For donation u separate the one figure given……for local charities carrying adverts,deduction will be allowed…..thus u have don’t have to add anything or deduct anything….so u put a zero and for the political part…..on a next line….u add back the amount not allowable for deduction.
Since interest on trading loan is allowable for deduction ….it was correctly dealt with when calculation profit …..thus no deduction or addition has to take place…..this is shown by a zero.
if u look at the marking scheme in the revision kit….u get a half mark for putting the zero…as this tells the examiner that u know the deduction was allowable and no adjustment has to be made.
Hope this helps!!!
Hi,
Regarding example 11-Ken.
In the answer Ken split letting relief and the 3 yrs for any reason PPR relief for period 1/4/1988-30/9/1993.
Why didn’t Ken claim full letting relief for period 1/4/1988-30/9/1993 and claim the 3 yrs for any reason PPR relief within the period 1/4/2003-31/03/2016?