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- March 7, 2016 at 11:29 am #304005
Dear Tutor,
Please help me check 2 questions in Revision kit F3 – BPP (2016), I think they maybe gave the wrong answer for 2 questions.
1/ Question 26.25/ p126 Revision kit F3 – BPP (2016)
X Co acquired 80% of the equity share capital in Y Co on 31 July 20X6. Extracts from the 2 companies’ statement of profit or loss for the year ended 30 September 20X6 were as follows:
Revenue (X Co) = 3.4 million Cost of sales (X Co) = 1.5 million
Revenue (Y Co) = 2.4 million Cost of sales (Y Co) = 1.8 millionDuring the year ended 30 September 20X6, Y Co sold goods for $5,000 each month to X Co, at a mark up of 25%. At the end of the year X Co had 50% of these goods left in inventory.
What is the group profit for the year ended 30 September 20X6?
A. 1.901 million
B. 2.001 million
C. 2.004 million
D. 1.904 millionBPP’s answer:
“unrealised profit = $1,000 for 2 months: August, September
Total revenue = (3,400 + 400 – 10) = 3,790
Total cost of sales = (1500 + 300 – (10+1)) = 1,789Group profit = 3,790 – 1,789 = 2,001 => B is his answer”
My answer:
“unrealised profit = $1,000 for 2 months: August, September
Total revenue = (3,400 + 400 – 10) = 3,790
Total cost of sales = (1500 + 300 – (10)+1) = 1,791Group profit = 1,999 => No corrected answer in this question”
2/ Question 26.27/ p126 Revision kit F3 – BPP (2016)
P owns 80% of the equity share capital of S. The profit after tax of S for the year ended 31 December 20X6 was $60 million. During 20X6, P sold goods to S for $4 million at cost plus 20%. At the year end 50% of these goods were left in the inventory of S.What is the NCI share of the after-tax profit of S for the year ended 31 December 20X6?
A. $11.36 million
B. $11.6 million
C. $11.68 million
D. $ 12 millionBPP’s answer: C
My answer: D
NCI share of the after-tax profit of S = 60 * 20% = 12 millionCould you help me to clarify 2 questions!
Thank you so much.March 7, 2016 at 12:12 pm #304015Your answers are correct for both questions.
It seems like BPP have made mistakes, which is very poor of them.March 7, 2016 at 12:35 pm #304022Thank you so much.
In addition, I also found his mistake in previous chapter (15 mark question – 25.2 BPP Revision kit F3 2016) when they required me to calculate “the net profit percentage ratio”.
As far as I know, the formula to calculate this ratio is
“Net profit percentage ratio = Net profit/ Sales”And the word “net profit” in this formula is “profit for the year”. However, BPP has used “profit before tax” instead of “profit for the year” to substitute “Net profit”.
So would you please clarify this inconsistency for me, thank you again 😡
March 7, 2016 at 3:18 pm #304056In the context of ratio analysis, net profit really means net operating profit (which is the profit before tax an interest).
The reason is that it is used to measure how well the company is being managed, and although changes in the tax rate will effect the very final profit, changes due to the tax rate changing are not due to the company being actually managed any better or worse.
March 7, 2016 at 5:20 pm #304109Thank you so much, you are my lifesavee ?
March 7, 2016 at 5:27 pm #304120You are welcome (just don’t have problems swimming in the sea – I am not so good at life-saving then 🙂 🙂 )
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