CONSOLIDATION SECT-A — OpenTuition Forums

SStephen5y ago

1.Hillusion Co acquired 80% of Skeptik Co on 1 July 20X2. In the post-acquisition period Hillusion Co sold goods to Skeptik Co at a price of $12 million. These goods had cost Hillusion Co $9 million. During the year to 31 March 20X3 Skeptik Co had sold $10 million (at cost to Skeptik Co) of these goods for $15 million. How will this affect group cost of sales in the consolidated statement of profit or loss of Hillusion Co for the year ended 31 March 20X3? A Increase by $11.5 million B Increase by $9.6 million C Decrease by $11.5 million D Decrease by $9.6 million 2.How should the $200,000 worth upgrade of new components which decreases economic benefit be accounted for? A Added to the carrying amount of the machine B Charged to profit or loss C Capitalised as a separate asset D Debited to accumulated depreciation When asset increases the the economic benefit wouldnt we capitalize it so when it decreases the benefit wouldn't we charge as an expense ( the answer is A. could please you expalin both questions in detail?)

SStephen5y ago#1

IN ADDTION TO THIS I HAVE DOUBT IN A PARTICULAR ADJUSTMENT Kaplan 353 Question On 31 March 20X1 Highwood factored (sold) trade receivables with a book value of $10 million to Easyfinance. Highwood received an immediate payment of $8.7 million and will pay Easyfinance 2% per month on any uncollected balances. Any of the factored receivables outstanding after six months will be refunded to Easyfinance. Highwood has derecognised the receivables and charged $1.3 million to administrative expenses. If Highwood had not factored these receivables it would have made an allowance of $600,000 against them. How should we Account this adjustment in Sopl and Sofp?

P2-D2Tutor5y ago#2

Stephenamell wrote:1.Hillusion Co acquired 80% of Skeptik Co on 1 July 20X2. In the post-acquisition period Hillusion Co sold goods to Skeptik Co at a price of $12 million. These goods had cost Hillusion Co $9 million. During the year to 31 March 20X3 Skeptik Co had sold $10 million (at cost to Skeptik Co) of these goods for $15 million. How will this affect group cost of sales in the consolidated statement of profit or loss of Hillusion Co for the year ended 31 March 20X3? A Increase by $11.5 million B Increase by $9.6 million C Decrease by $11.5 million D Decrease by $9.6 million 2.How should the $200,000 worth upgrade of new components which decreases economic benefit be accounted for? A Added to the carrying amount of the machine B Charged to profit or loss C Capitalised as a separate asset D Debited to accumulated depreciation When asset increases the the economic benefit wouldnt we capitalize it so when it decreases the benefit wouldn’t we charge as an expense ( the answer is A. could please you expalin both questions in detail?)

Hi, 1) You need to adjust for the $12 million of intra-group sales and then for the PUP on the $5 million of goods that are still held. 2) It is a bit odd and I'd need to see the question in more depth to fully understand it. Thanks

P2-D2Tutor5y ago#3

Stephenamell wrote:IN ADDTION TO THIS I HAVE DOUBT IN A PARTICULAR ADJUSTMENT Kaplan 353 Question On 31 March 20X1 Highwood factored (sold) trade receivables with a book value of $10 million to Easyfinance. Highwood received an immediate payment of $8.7 million and will pay Easyfinance 2% per month on any uncollected balances. Any of the factored receivables outstanding after six months will be refunded to Easyfinance. Highwood has derecognised the receivables and charged $1.3 million to administrative expenses. If Highwood had not factored these receivables it would have made an allowance of $600,000 against them.

Hi, A bit confused. Is the adjustments given re the receivable what has been done, or is that the answer and you do not understand it, sorry. Thanks

SStephen5y ago#4

Stephenamell wrote:IN ADDTION TO THIS I HAVE DOUBT IN A PARTICULAR ADJUSTMENT Kaplan 353 Question On 31 March 20X1 Highwood factored (sold) trade receivables with a book value of $10 million to Easyfinance. Highwood received an immediate payment of $8.7 million and will pay Easyfinance 2% per month on any uncollected balances. Any of the factored receivables outstanding after six months will be refunded to Easyfinance. Highwood has derecognised the receivables and charged $1.3 million to administrative expenses. If Highwood had not factored these receivables it would have made an allowance of $600,000 against them.

sir, The HIGHWOOD question which i posted is a particular adjustment in a single entity question.I have shared ACCA's link for full question http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/f7uk_2011_jun_qu.pdf Thanks