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BISCUITS AND CAKES(6/12)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › BISCUITS AND CAKES(6/12)

  • This topic has 7 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 22, 2016 at 9:21 pm #350781
    ameera98
    Member
    • Topics: 3
    • Replies: 34
    • ☆

    Hi Mr.John
    While calculating annualised ROI for B after adjustment, why dont we subtract 480,000 depreciation from the capital employed?
    Whereas in BPP section A question 239, depreciation has been deducted from the capital employed.

    Please advise.
    Thank you

    November 23, 2016 at 7:53 am #350893
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54681
    • ☆☆☆☆☆

    Biscuits and Cakes assumes we use the opening net assets (so before depreciation for the current period) on the basis that it is the opening net assets that generate this periods profits.

    Q239 however specifically says to use the average net assets.

    November 23, 2016 at 8:05 am #350900
    ameera98
    Member
    • Topics: 3
    • Replies: 34
    • ☆

    So if I use closing net assets for Biscuits and cakes, do i still score marks??
    Thank you

    November 23, 2016 at 8:13 am #350910
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54681
    • ☆☆☆☆☆

    You will certainly not lose many marks (provided that your workings are clear so the marker can follow them).

    The marks are for the workings and not for the final answer 🙂

    November 24, 2016 at 10:20 am #351150
    ameera98
    Member
    • Topics: 3
    • Replies: 34
    • ☆

    I have a confusion with question 1, section A of the June 2015 exam.
    They have not deducted the depreciation of 54000 from the capital employed of 2.7m while calculating the RI.
    I got the answer as 165780 and so i chose the closest answer 162000.
    But what if this was a calculation question?

    November 24, 2016 at 3:06 pm #351197
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54681
    • ☆☆☆☆☆

    In future you must start a new thread when it is a new topic or a new question.

    The question asks for the annual residual income, so we can’t subtract depreciation from the capital employed because it would mean every year the capital employed would get smaller and the residual income would therefor keep changing.

    November 24, 2016 at 9:39 pm #351283
    ameera98
    Member
    • Topics: 3
    • Replies: 34
    • ☆

    So in conclusion, for RI we should not deduct depreciation from Capital employed and for RoI , it depends if its net closing assets or opening assets.
    Am I right?
    Thanks for your response.

    November 25, 2016 at 7:23 am #351336
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54681
    • ☆☆☆☆☆

    Correct 🙂

  • Author
    Posts
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