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Adder Group

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Adder Group

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by Kim Smith.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • June 6, 2020 at 2:19 am #572944
    toushiga
    Participant
    • Topics: 424
    • Replies: 172
    • ☆☆☆☆

    Ms,For PYQ June 2015 Q2(a)(ii) “audit evidence in the audit working paper”

    1.For the 6th point,why need to assess the plan when the Baldrick Co eventually need to consolidate with Parent Co no matters whether its operation have been integrated with those rest of the Group?

    Thank you.

    June 8, 2020 at 7:45 am #573187
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8309
    • ☆☆☆☆☆

    The “matter” is whether a 52% holding should have been accounted for as a subsidiary rather than an associate – evidence therefore includes ideas that support control rather than significant influence.
    Per the scenario – management’s justification for what appears to be an incorrect treatment is “Baldrick Co’s operations have not yet been integrated with those of the rest of the
    group” – therefore that should be examined as audit evidence.

    August 12, 2020 at 7:18 am #580196
    toushiga
    Participant
    • Topics: 424
    • Replies: 172
    • ☆☆☆☆

    Does it therefore should consolidate on the acquisition date in this case 1 Jan 2015 for Baldrick Co rather than wait or review the future plan for integrating the Co into the Group which is incorrect?

    August 12, 2020 at 10:18 am #580243
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8309
    • ☆☆☆☆☆

    Yes – control was obtained on acquisition date through 52% holding.

    August 13, 2020 at 4:25 am #580328
    toushiga
    Participant
    • Topics: 424
    • Replies: 172
    • ☆☆☆☆

    So if the management justification is incorrect ,why still need to review of forecast and budgets to assess the plans for integrating Baldrick Co into the Group which is the 6th point of evidence,should it be collecting evidence regards to consolidation?

    Thank you.

    August 13, 2020 at 7:02 am #580334
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8309
    • ☆☆☆☆☆

    It’s not relevant to accounting treatment but relevant to understanding the entity.

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