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Sorry but a question came in my mind. You said this regarding textbook “I would suggest that you lock the study text in a dark room and give the key to a stranger that you will never see again”. So either syllabus has changed or to read lengthy text for this subject is waste of time?
So, the statement “Existence is an assertion about account balances at the period end” is true?
So, If management asks auditor not to perform circularization, what should he do then?
Means confirmation procedure is an irrelevant audit procedure to be applied on any item of Income statement?
I think the error is material but it’s not pervasive. PBT is 2.3m and error is 0.5 so now PBT will be 1.8m. Still company is earning profits and profits are not converted to loss so the matter is not pervasive. The audit opinion would therefore be Qualified opinion.
Will you please summarize steps for calculation of group R.E and NCI that what should be included and what shouldn’t? When practicing, I always get wrong answer for these because of adjustments like mentioned in above questions.
*SORRY FOR WRITING AS SOON AS POSSIBLE”
In Consolidated statement of Profit or loss, total revaluation gain is 2100 (1500 of parent as given in question and 600 for subsidiary revaluation surplus at year end.
Following is part of question
“At the date of acquisition, the fair values of Subtrak’s assets and liabilities were equal to their carrying amounts with the exception of Subtrak’s property which had a fair value of $4 million above its carrying amount. For consolidation purposes, this led to an increase in depreciation charges (in cost of sales) of $100,000 in the post-acquisition period to 30 September 20X4. Subtrak has not incorporated the fair value property increase into its entity financial statements.The policy of the Plastik group is to revalue all properties to fair value at each year end. On 30 September 20X4, the increase in Plastik’s property has already been recorded, however, a further increase of $600,000 in the value of Subtrak’s property since its value at acquisition and 30 September 20X4 has not been recorded.”
But as per workings of solution for finding group retained earning and NCI, this 600000 is not added in calculation of subsidiary retained earnings. If this 600000 is added to subsidiary R.E, so this would change group retained earnings?