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If you buy land: Dr IP / PPE Cr Cash (IP if held for investment potential)
No development = no double entry
No depreciation
Possible impairment if land values fall significantly : DR P&L CR PPE
1. Yes
2. YesCapitalisation would cease if there was an interruption.
No further knowledge really needed for exam purposes.
As previously stated, the extra 20 is not recognised.
No imbalance – no debit and no credit.
🙂
Please watch my debriefs of exams and of the spreadsheets for assistance.
https://opentuition.com/acca/sbr/acca-strategic-business-reporting-sbr-revision-kit-live/
1. Reverse initial loss of 20 but do not recognise the extra 20. Carry at lower of CA (at time of classification as HFS) and FVCTS.
2. Value in use not relevant if HFS, as we are selling not using.🙂
Hi. Pleased that you are enjoying the lectures.
At the moment we don’t have the resources to debrief any further exams.
Don’t forget to make use of the ACCA hub.
🙂
I would get straight on with the SBR. Just make sure that you spend more time on accounting standards than on consolidations.
🙂
We’d work it out manually – so each asset liability will have its own exchange difference – but not something the examiner would ask us to do.
In parent’s accounts:
Dr Investment in sub Cr Cash
being consideration for extra 20%
🙂
My answer:
1. Recognise at 10 at the purchase day – ‘cost’.
2. Recognise a tax liability at that date of 1. I think it might form part of the cost – you have to pay it if you buy the asset. (Dr IP Cr Tax liability)
3. Do not recognise the gain of 4 because our policy is to hold the asset at cost.The examiner at the time was looking for your discussion and knowledge rather than the specific answer.
The two 2s are in respect of separate adjustments, but I still don’t have enough information. I can see that the gain on the land would go to K’s P&L and therefore RE, but I’m not sure what the other adjustment was.
Where have you sourced Kutchen please? I know there are now several different versions.
Thanks
Steve
Apologies if lecture confused you. Stick to the rule below:
Financial assets should Initially be recognised at fair value plus transaction costs, unless classified as fair value through profit or loss , where transaction costs are immediately recognised through profit or loss.
Please use topic (e.g. transfer of assets) not numbers as thread header.
Please give sufficient detail so that I and other exam candidates don’t need to try and find the relevant question. No need to copy and paste. Just express your question in your own words.
🙂
Probably only where one company pays dividend or interest to the other. But not something to worry about for the exam. 🙂
Example of transaction that would be eliminated = inter-company dividend, removed from S’s divs paid and from P’s divs received.
🙂
