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Hi Mike, (1) Concerning the treatment of cash in transit in the 2014 f7 DEC.exam.
Question 3,am a bit confused as my usual practice is to add it to the bank balance in the current account as opposed to what was done in the solution.
So I want to know if there’s a new rule that justifies their posting.
2) the NCI balance in the stm.of financial position of 4500+300,am I right to calculate it this way:
At date of acquisition. 4500
Share of impairment (20%*500)= (100)
Share of post acquisition profit (20%*1400)= 280
Share of post acquisition reserve (20%*600)= 120
Kindly assist.1) Please remind me, in what way has the cash in transit been treated in the solution
2) That’s fine – again, in what way has it been calculated in the solution
The cash in transit is deducted from the bank balance in the current liability section
When they have deducted it from current liabilities …… is a cash current liability not the same as an overdraft? And when they have deducted it from this current liability overdraft, has that not had the effect of reducing the liability?
And is that not the same as adding it to a current asset (if the bank account had not been overdrawn but had been an asset, it would have increased that asset and an increase in an asset requires the same kind of entry (ie a debit) as the entry required to decrease a liability)
Are you still with me? And does that now sort out your problem?
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