consolidated financial statement

I assume that share capital etc are all in thousands (otherwise the question is nonsense). The shares were purchased 9 months through 2017. Therefore the pre-acquisition profits are 100 + (9/12 x 80) = 160 Therefore the net assets at the date of acquisition were 400 + 160 = 560. Since the goodwill was 30, the cost of the shares must have been 560 + 30 = 590

Dear sir, There is a question in the BPP revision kit where S purchased C and there is an adjustment where S sold goods which cost $80,000 to C, at an invoiced cost of $100,000.C had 50% of the goods still in inventory. How to deal with this adjustment? The answer in the book is a bit complicated to understand and can you make it easy for me? Thanks.

Dear sir, In the BPP revision kit, there is an exercise where Black have purchased Bury. There is an adjustment where it is said that: -During the year ended 31 oct 2015 Black sold goods which originally cost $12 million to Bury. Black invoiced Bury at cost plus 40%. Bury still has 30% of these good held in inventory at 31 oct 2015. The way you have done it in your free lectures is completely different. In the book, the answer for unrealised profit is $1,440,000 and I don't know how they have reached this answer. Can you help me please sir? -And by the way, is it important to know how to deal with dividend because in the BPP revision kit, there are some exercises where there is dividend in the PAL and SOFP.

BPP do not do it a 'completely different way' - that is ridiculous. You can do your working any way you want, but the exam is testing that you understand and not that you have simply tried to learn 'rules'. 30% of the goods are still in inventory and therefore the original cost of them must have been 30% x $12M = $3.6M They were invoiced at cost plus 40%, therefore Black will have charged 3.6M + 40%, and the unrealised profit will therefore be 40% x 3.6M = $1.44M Dividends on ordinary shares do not appear in the SOPL - only the SOCE. (They only appear in the SOFP if they have been approved before the year end, but not actually paid - in which case they are owing as a current liability)

Dear sir, There is a question in the BPP revision kit where S purchased C and there is an adjustment where S sold goods which cost $80,000 to C, at an invoiced cost of $100,000.C had 50% of the goods still in inventory. How to deal with this adjustment? The answer in the book is a bit complicated to understand and can you make it easy for me?

Therefore, we should add $3.6M with the Cost Of Sales and dedect from inventory?

Correct :-)

Dear sir, There is a question in the BPP revision kit where S purchased C and there is an adjustment where S sold goods which cost $80,000 to C, at an invoiced cost of $100,000.C had 50% of the goods still in inventory. How to deal with this adjustment? The answer in the book is a bit complicated to understand and can you make it easy for me? Thanks in advance.

Please tell me - have you actually watched my free lectures on this??? The 50% of the goods in inventory must have originally cost 40,000, but were invoiced for 50,000, and so there is an unrealised profit of 10,000. Therefore the consolidated inventory needs reducing by 10,000. Since S had recorded the sale, we need also to reduce S's retained earnings when we calculate the consolidated retained earning.

Dear sir, In the free lecture notes concerning consolidated profit and loss, example 3, the adjustment where it says that " During the year S sold goods to P $28,000( including mark-up of 40%) One quarter of the goods remained in P's inventory at the end of the year. - In the consolidated SFP, how we would deal with this adjustment in the sense that what to add and what to subtract. I know that for inventory $2000 should be subtracted but for receivables and payable, how to deal with them. Should we subtract $28,000 to both receivables and payable? Thanks.

I don't think that you can have watched my free lectures on this! (You should not use the notes on their own - it is in the lectures that I explain and expand on the notes) Why on earth do you want to change receivables and payables? You would only do that if P still owed money to S for the goods. If they have paid for them then there are no receivables and payables for them.

At 30 Nov 2007, the inventory of S includes goods purchased at a cost of $8000 from K at cost plus 25%. How do we know the $8000 is cost or selling price??

I think you said in your lecture that they won't give us questions on mid year acquisition, ? But there is a section on mid year acquisition in Kaplan.

On 1 June 2004, H acquired control of S. For the year ended 30 September 2005, H and S had cost of sales of $10 million and $6 million respectively. During the post-acquisition period, H had sales to S of $1.8 million. These sales had been made at a mark-up of 20% and at the year end, one third of the goods remained within S's inventory. What was the group COS figure for the year ended 30 September 2005? Is this solutions right? 10,000,000 + 6,000,000 - 1800000 + 100000 = 14,300,000

Pole acquired 80% of the issued equity shares of Rod for $43 million on 1 March 2008. Rod had retained earnings of $15 million at 1 July 2007 and made a profit after tax of $6 million for the year ended 30 June 2008. At the date of acquisition, Rod had issued share capital of $25 million and the fair value of the non-controlling interest was $10 million. On 1 April 2008 the fair value of freehold land and buildings owned by Rod was $1 million in excess of their carrying amount. Based upon the available information, what was goodwill on acquisition of Rod for inclusion in the Pole consolidated financial statements for the year ended 30 June 2008? Solutions: {43 + 10 - (25 + 15 + 4 + 1) = 8 } million It's written in Kaplan that " The net assets at acquisition can be calculated as the net assets at the start of the subsidiary's financial year plus the profits of up to the date of acquisition, together with any fair value adjustments at the date of acquisition." We got to know about the fair value of our assets after acquisition. At the time of acquisition there any need of an adjustment, so why did we subtract 1 million??

First question: $8,000 is the selling price from K and the cost to S (and includes therefore the mark-up of 25%)

Second question: Ask Kaplan why they have put it there! :-)

Third question: Yes - it is correct

Fourth question: The adjustment is only needed if the fair value was $1M higher at the date of acquisition. I can only assume that the date in the question is a typing error.

Oh God there are a lot of errors in Kaplan's kit. Anyways thanks a lot Sir :-)

You are welcome :-)

Dear sir, I do have watched your lectures concerning group accounts but still have some doubts 1."Greater than 50% of the preference shares held by an investor" Why this is not a parent and subsidiary relationship? 2."power to appoint or remove the majority of the directors or equivalent governing body" What does "equivalent governing body" mean?

1. Because preference shares do not have voting rights. It is the equity that have the voting rights. 2. Whoever are in charge of running the company and making the decisions.

Thanks sir

You are welcome.