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1. in question 35.16, could you please explain why the answer adds the depreciation to the carrying amount, shouldn’t depreciation be deducted?
2. Are interim and final ordinary dividend on ordinary shares the only dividends that are recognised in the financial statements?
3. In question 34.14, why is inventory adjustment deducted from the purchases? If opening inventory is higher than the closing inventory shouldn’t it be added?
4. Is gain/loss of revaluation not calculated in retained earnings?
1. Depreciation is deducted. Here they are calculating the missing figure – maybe you will find it easier to do a t-account and find the missing figure that way.
2. The dividends recognised are those actually paid during the year (which is probably last years final and this years interim)
3. If closing inventories are lower then they must have used some of the inventory to make the sales and therefore they needed to purchase less.
4. No. Revaluation gains must be kept as a separate reserve because they are not distributable.
Thank you very much for the clarification.
Yet I am still quite unsure about 3.If opening inventory is higher than the closing inventory, wouldn’t it increase the cost of sales?
Also by ‘recognised in financial statements’ for dividend, does it mean that it will be shown in statement of change in capitals?
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