[simran98]

Sorry, sir I am still bit confused.

I previously had come across a contingent consideration question where they had taken the FV of the consideration in the goodwill as there was no probability given.

So how will we calculate FV in such case?

[simran98]

Sir, in the answer given they have mentioned that a gain of 9m is recognised on disposal of the south American development costs

I didnt understand why we are disposing the development costs

[simran98]

So if there was no probable profit percentage given, the FV would have been 16?

[simran98]

Sorry, meant BPP.

Also, didnt understand why we are adding the movement amt to CoS.

[simran98]

The above example is to check the revenue balance

Bascially, agreeing revenue from cashbook to till receipts to test for completeness

[simran98]

I had come across an example in which it said “Cashbook should be agreed to till receipts to determine completeness”.

So in this case should we not test till receipts to cashbook for completeness?

This is what is confusing me

[simran98]

As per my understanding, for completeness, we shall start with related documents and check if the entries have been made in the ledgers, but that does not seem to be the case everytime

Really getting confused with this

[simran98]

Got it, sir

Thanks so much!

[simran98]

You have ascertained that Cherry purchases its raw materials from a wide range of approved suppliers. When production supervisors require raw materials, they complete a requisition form and this is submitted to the purchase ordering department. Requisition forms do not require authorisation and no reference is made to the current inventory levels of the materials being requested.

Cherry has an internal audit department which has provided you with details of the internal controls around the non-current assets cycle. One such control is that upon receipt of a new asset, each asset is assigned a unique serial number and this is recorded on the asset and in the non-current assets register.

In relation to the control relating to the receipt of a new asset, which of the following describe the MOST RELIABLE audit procedures which enable the auditor to assess whether this control is operating effectively?

1) Select a sample of capital additions on site, agree that a serial number is recorded on the asset and confirm it is included in the non-current assets register

2) Select a sample of assets recorded on the non-current assets register, confirm that it includes a serial number for each asset and agree the number to the physical asset

3) Inspect the non-current asset register and verify that there are no duplicated serial numbers

4) Observe the receipt of assets to confirm that serial numbers are assigned and recorded

1 and 3

2 and 3

1 and 4

2 and 4

The answer is 1 and 3.
I do not understand how to decide which assertion to look at? If we look at existence, the 2nd option is right and if we look at completeness, 1st is right.

Getting confused at this part

[simran98]

Yes, understood!

Thank you!

[simran98]

So, if along with receivables, say if payments also were misstated, would we then classify that material and pervasive?

[simran98]

Hi Kim

I went through the link, I still am not clear on pervasive nature of things

[simran98]

.

[simran98]

Did you get an ABC question in Section A?
We had to calculate total cost right?
How did you do it?

@agboolakenny84

[simran98]

Sir, I understood my mistake.
Sorry, for the trouble.

Thank you!

[simran98]

Sir, I got two different answers.

When I did it in Tabular form, I got the answer as 177.339 A
and when I did it this way (below) I got it as 45A.

920kg of Input Produced 810kg
920Kg of input should have produced 828kg

Yeild= 18×2.5 = 45A.

Please tell me where have I gone wrong.

[simran98]

But sir, in Kaplan there is a question (below)

At the end of 20X1, an investment centre has net assets of $1m and annual operating profits of $190,000. However, the bookkeeper forgot to account for the following:
A machine with a net book value of $40,000 was sold at the start of the year for $50,000 and replaced with a machine costing $250,000. Both the purchase and sale are cash transactions. No depreciation is charged in the year of purchase or disposal. The investment centre calculates return on investment (ROI) based on closing net assets.

Assuming no other changes to profit or net assets, what is the return on investment (ROI) for the year?

Here we are subtracting the new machine cost of 250k from net assets, why is that so?

Thank you in advance!

[simran98]

Sir, my doubt was wont we assume that the said variable cost has already been adjusted in the figures given to us
Why are we adjusting 20,000 units again?

[simran98]

Thank you Sir!

[simran98]

Hello Sir,

In Bath Co, I did not understand how they got the internal units to Div A as 20,000 and also why is Division B only charging $65? It is because thats the maximum division A will be paying?

If so, why are we not buying 80,000 units externally? Charging 65 instead of 75 to division B will let division B lose 10 dollars

I am sorry sir I am just a bit confused in this question

Thank you in advance!

[simran98]

Hello Sir

The same question, they have mentioned that operational costs are to stay at their current level of 80 per member per annum.

I do not understand why we are subtracted 80 from the subscription fee of 720

[simran98]

Thank you so much Sir!

I finally understood this concept!

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