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chapter 25 – Associate

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › chapter 25 – Associate

  • This topic has 3 replies, 2 voices, and was last updated 11 months ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 26, 2022 at 12:05 pm #649388
    ks13
    Participant
    • Topics: 12
    • Replies: 11
    • ☆

    Hi Sir,

    Are there any lectures to explain the example questions within the notes for Chapter 25 – Associates? I know the answers are in the back – just find it easier when explained on your videos.

    Thanks,

    February 27, 2022 at 10:16 am #649425
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6451
    • ☆☆☆☆☆

    Hi,

    I’ll look to get them recorded next month when I have the time available to do so.

    Thanks

    February 27, 2022 at 3:31 pm #649456
    ks13
    Participant
    • Topics: 12
    • Replies: 11
    • ☆

    Thank you for confirming – are you able to let me know if the answer for example 4 Chapter 25 is correct in the notes? I am getting PFY $266million.

    Example 4 – Group SPL incl. associate
    Helvellyn
    $m
    Scafell
    $m
    Revenue 1,645 1,280
    Cost of sales (1,205) (990)
    Gross profit 440 290
    Operating costs (190) (120)
    Profit before interest and tax 250 170
    Finance costs (55) (30)
    Profit before tax 195 140
    Taxation (35) (30)
    Profit for the year 160 110

    The following information is relevant in the preparation of the group financial statements:
    On 1 January 2020, Helvellyn acquired 80% of the equity shares of Scafell, a public limited company, for a
    cash consideration of $90 million. The fair value of the identifiable net assets acquired was $85 million and
    the fair value of the non-controlling interest was $25 million. The fair value of the net assets at acquisition
    was not materially different to their book value.
    On 1 June 2020 Helvellyn acquired 25% of the equity shares of Armboth and exerted significant influence
    through its representation on the board of directors. Armboth’s profits for the year were $200 million.
    It is the group policy to measure the non-controlling interest at acquisition at fair value.
    During the year, Helvellyn sold goods to Armboth for $40 million at a margin of 20%. At the reporting date
    Armboth still held half of the goods in inventory.
    Goodwill has been impairment tested at year-end and found there to be no impairment in Scafell but the
    investment in Armboth has fallen by $ 1 million.
    Assume that profits accrue evenly during the year.
    (a) Calculate the goodwill on acquisition of Scafell
    (b) Prepare a consolidated statement of profit or loss for the Helvelyn group for the year-ended 31 December 2020

    March 3, 2022 at 7:10 pm #649752
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6451
    • ☆☆☆☆☆

    Hi,

    I think that when the cost of sales has been deducted from the revenue figure there is a transposition error and the gross profit should be 730 and not 703.

    Does that fix the numbers for you?

    Thanks

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    Posts
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