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Comments on the comparability of consolidated financial statements

This topic has 2 replies, 2 voices, and was last updated 7 months ago by alawi sayed.

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November 23, 2021 at 4:58 pm #641402
alawi sayed
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Hi Sir,

For Question 32 of a specimen exam in Kaplan kit (2020-21 )

It is asking to comment on comparability of the financial statements due to purchase of some subsidiary and for and for a tendering of new contract .

The model answer is going through a big story for analyzing what affected the comparability of the statements.

For the exam do we have to be expected to show this level of analysis and point out all the hidden aspects of the problem even though we may be not knowing how discover these items .

Please clarify Sir,

Thanks
November 27, 2021 at 7:44 am #641748
P2-D2
Keymaster
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Hi,

Yes, there is nothing hidden in the question. You are being told about there being an acquisition of a subsidiary, so we will be consolidating the results of the subsidiary this year when we wouldn’t have been last year. Plus, the new contract will incur costs this year as part of the tender hence reducing profitability but in the hope that the sales increase in future years.

Thanks
November 30, 2021 at 1:35 pm #642090
alawi sayed
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Thanks.
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