[steve799]

Hi Mike,

thanks for the 1st question, i think i got it.

for the second question, the extract of the question is :
“Electron buys and sells oil and currently has a number of oil trading contracts. The contracts to purchase oil are treated as NCA and amortised over the contracts duration. The contract always result in the delivery of the commodity”.

for me, it is an executory contract, isn’t it ? So no asset nor liab should be recognised until a certain point in time.
How can a contract to purchase let’s say a given amount of oil during 5 years, could be amortised ? Given no delivery has been done ?

Thanks for clarying,

Rudy

[steve799]

Hi Mike,

It s the first time i post something on this website. Not sure you are still available around 24h before the exam, but I will try.

First, thanks for your free time, that’s really uncommon nowadays a website site and people like this.

I have got two questions on P2 :

1) Step acquisition. I don’t really get why when calculating NCI, we remove the part of cost of investment in the sub sub-subsidiary attributable to the NCI. I have a feeling it makes sense, but a few words of explanations might help understand better. If it is specifically mentioned in one of your videos, let me know.

2) contracts to buy non financial assets : i guess you will agree that a contract to buy raw materials or other goods in 6 months (no other clauses) need not to be put on the balance sheet ? Until there is delivery entailing revenue recognition. Do you agree ?
Though, i saw in one of the BPP revision kit the following :
“Electron buys and sells oil and currently has a number of oil trading contracts. The contracts to purchase oil are treated as NCA and amortised over the contracts duration. The contract always result in the delivery of the commodity”. The answer agree with this amortisation. I would have expected that revenue is recogn each time oil is delivered, and not amortised. Can you shed light on this ?

Thanks a lot,

[Author]

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