- June 14, 2020 at 3:03 pm
Wallace a limited liability company acquired 60% of the voting share capital of Bruce on 1 February 20×8. The income and expenses of Bruce accrued evenly over the year.
Statements of profit and loss for the year ended 31 October 20×8.
$ 0000 $ 000
PBIT 16406 10300
Less: income tax expense 3700 2100
Profit for the year. 12706 8200
$ 000 $ 000
tangible 29860 14895
investment 9000 0
Current assets 12010 11697
ordinary shares 26000 5000
Retain earnings 14145 15210
current liabilities 10725 6382
(1) Wallace purchased it’s 60% of Bruce’s 10millions $0.50 nominal value ordinary shares on 1 February 20×8 for $1.5 per share. This was the market value of the shares on this date.
(2) On 1 February 20×8, the retained earnings of Bruce were $9060,000.
(3) the fair value of the NCI in Bruce was determined using by market value share price.
Wallace intends to sell goods to Bruce in the future and is uncertain as to how these transactions should be reflected within the consolidated financial statements. Wallace makes a mark-up of 25% on cost on all sales.
Please, explain how to find sales prices? how to calculate this part
Thanks in advanceJune 14, 2020 at 4:41 pm
Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations.
I assume you are referring to the price at which Wallace will sell goods to Bruce in the future. If so, then there is no affect at all on the current SOPL because they haven’t yet sold any.
In future years there will be an effect and I explain exactly what the effect will be in my free lectures on the consolidated SOPL. You cannot calculate the selling price because there is not enough information in the question and so I assume that for this part of the question requires a written answer (although obviously you cannot be required to give written answers in the exam).
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
You must be logged in to reply to this topic.