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2012 June Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › 2012 June Question

  • This topic has 7 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 10, 2015 at 2:22 pm #281489
    teeboyz
    Member
    • Topics: 19
    • Replies: 52
    • ☆☆

    Hello Mike

    I noticed that Q1, consolidation question, the depreciation of PPE(from consolidation excess amount) 0.40 , the depreciation is not included/charged in Retained Earnings..Under what circumstances depreciation charges will be excluded from Retained Earnings

    Here is my current understanding: If the PPE was from the excess amount of the difference between net iden assets and share capital+ retained earnings, then the PPE’s depreciation is not charge in Retained Earning?

    November 10, 2015 at 5:12 pm #281563
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    Maybe this extract from the question will answer your question

    “The excess of the fair value of the net assets is due to an increase in the value of non-depreciable land.”

    OK?

    November 11, 2015 at 3:08 am #281624
    teeboyz
    Member
    • Topics: 19
    • Replies: 52
    • ☆☆

    Hmm the question got this line of words

    “The excess of the fair value of the net assets is due to an increase in the value of
    property, plant and equipment (PPE)”

    This what im trying to understand , why is this PPE’s depreciation not charged into Retained Earnings directly..Was it because ..It’s charge during the calculation of subsidiary Retained Earning? “[(19-15)-0.40]x60% = 2.16 ?

    November 11, 2015 at 3:52 am #281632
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    In working 3 in the answer, in the Zinc working, do I see an amount for extra depreciation? of:

    “Zinc:
    Post-acquisition reserves (19 – 15) 4·00
    Less increase in depreciation (W2) (0·40)
    ––––––
    3·60”

    Is this what you’re asking about?

    November 11, 2015 at 9:27 am #281675
    teeboyz
    Member
    • Topics: 19
    • Replies: 52
    • ☆☆

    Yep…If its deducted there, so there is no need to charge in Retained Earning anymore right?

    Is my concept correct?

    November 11, 2015 at 12:21 pm #281702
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    Yes – personally I would have shown this in my working W3 Consolidated Retained Earnings but it doesn’t matter how you get there – there’s more than one way to skin a cat

    November 11, 2015 at 1:22 pm #281718
    teeboyz
    Member
    • Topics: 19
    • Replies: 52
    • ☆☆

    Thank you Mr Mike

    November 11, 2015 at 5:38 pm #281768
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
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