*** ACCA F7 December 2017 Exam was.. Instant Poll and comments ***

@mehdi2015 said:
Anyway could help with this?
-And was the goodwill in mcq? 410,000 ..
Investment of parent 950- net assets acquisition 540(340 sharecapital +200retained earnings)

-In the ratios.. what was the big problem of roshan.co compared to the industrial average? The inventory days and payable days?

I got the same result too. I did not add the apportioned profit of the year ended as at 31.03.2019. Subsequently, the net asset value was the share capital (340) + retained earnings as at 30.09.2018 (200). However, I think that is not correct, because you should deduct the apportioned profit of the year ended as at 31.03.2019 from the retained earnings (200) to get the retained earnings at DOA.

I got the same figure. I remember that the profit given in the question (can’t recall now the exact amount) was the profit for the year ended as at 31 March 2019, while the acqs. occurred mid 2018. So logically, we can’t add any apportioned amount of the year profit 2019 to the retained earnings for the year ended as at 31 March 2018. Being so, and having no other given amount of retained earnings at DOA, except the retained earnings of the year end as at 31 March 2018 (and also remembering a lecture saying “if you are not given any amount of retained earning at DOA, you will use the retained earning amount for the year end), I got 410,000 for goodwill.
With regard to the big problems, there were two big ones, as you above-mentioned: inventory and payable s. The first one is related to purchases made from parent company at a higher value for 2015 compared to 2014 (COS way higher for 2015), closing inventory amounts and subsequently inventory days turnover. Why so much inventory for seasonal trading?! Maybe its inventory was obsolete or maybe it was overbuying from parent so the latter could manipulate its overall profits and show a better performance in the reported single FS (maybe I have gone too far with this assumption, by why would be a requirement for Rosham to purchase goods ONLY from parent??). Concerning the trade payable days, Rosham paid its suppliers way earlier compared to avg.sector (23 days i think) and one of its major suppliers is the parent company… In addition to that, there was a bank overdraft in 2015, meaning that Rosham had a lot of liquidity problem, given that its bank balance reversed from positive balance in 2014 to a negative one in 2015.
It seems I can’t remember the mcq question related to impairment 🙂

I based my answer on the ratios that i calculated as the question was asking problems comparing with industrial average..
So the poor ratios that i got from all those were inventory and payable days being lower performing compared to industrial average..
But i might be wrong..
Thanx fr yur opinion anyway bro

how did u calculate the AP ratio
Did u find the purchases ???