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Dear sie,
I think depreciation for the paren should be equal to 750, rathern than 1100. Its 7500 at cost , 10 years life. So 7500/10=750. You can check: 3000/7500*10 is 4. This means that four years passed, 6 years remaining. 7500-3000/6 is 750 again. Check: 4 years passd, 750 each year, 750*4=3000 accumulated depreciation and the patent is four years old.
I believe that we need to impair the patent down to recoverable amount
What do you think?
Aaaaa, yeah, what i did is that i included 750 depreciation in COGS and showed 350 loss as other expense in p/l
Is this treatment acceptable? If not, will i lose marks for such a separation?
No – there will be 2 marks – 1 for the depreciation, 1 for the impairment.
the question DOES say that depreciation and amortisation should be charged to cost of sales …. but says nothing about impairments
You should be fine
What is your assessment of Q3 section D?
I indicated the dilution comes from convertible loan notes; interest saved on conversion will still be lower than the number of new shares, so thats why dilution; ceo is overreacting as diluted eps is just a signal of the effects of dilution and the decrease in eps in this case is not related to bad performance of the company
What if one of my buddies correctly calculated 350 loss in his workings, but forgot to include it in the pl statement? Will he lose significant number of marks?
I didn’t look at section D question 3
No you won’t lose many (if any) so long as your workings clearly show that it’s an impairment
Mr Little, thanks for your response. If by any chance you find a time to look at it and comment on my post, I will be much obliged.
It’s unlikely – I shall be away from home this coming week and the official answers will be out shortly after – you will probably be just as well waiting for them to appear
Mr Little, in the subsidiary retained earnings calculation, is it ok to just substract pre acquisition retained earnings of 7100 from closing retained earnings equal to 5600? The answer will be -1200 as well.
I have neither the question nor the answer in front of me and won’t have until tomorrow at the earliest
However, if you can arrive at 1,200 and it seems logical, then you can get there whichever way you want
“All roads lead to Rome” or
“There’s more than one way to skin a cat”
If you arrive at the correct answer it doesn’t matter if you use a crystal ball and consultations with the ancient Muses of Greece
Just don’t make a mistake such that the marker cannot see where you’ve done wrong!
Sir, in case you have some minutes tomorrow when you can access the question, kindly ask you to review the validity of my approach and briefly look at Q3 section D to reflect on validity of comment related to that question above. Thank you very much.
hi Mike,
about revaluation surplus
land 2000 (16000-14000) building 7200(52200-45000)
total 9200
and you but it in SOFP 8800, how?
also why there is not a transfer from revaluation surplus to RE as per question?Hani, I think you’ve possibly forgotten depreciation on the building
Am I correct?
hi Mike
how is that?
– cost of building 50000 less Accumulated depreciation 5000 = 45000
– then revaluation takes place (beginning of the year 1 April 2015) =52200-45000=7200
– at the end of the year 31 Mar 2016 we should deduct depreciation 52200/18 yearis that true?
Hi, yes that’s ok
The revaluation was by $9,200 but of that amount $7,200 related to thee building
The excess depreciation on $7,200 is $400 so the reason why ($2,000 + $7,200) is shown as $8,800 is because I have taken out that $400 excess depreciation from Revaluation Reserve and transferred it to Retained Earnings
Better?
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