- This topic has 4 replies, 2 voices, and was last updated 4 years ago by
.
- Posts
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?)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?
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<br>to 31 March 20X3 Skeptik Co had sold $10 million (at cost to Skeptik Co) of these goods for $15 million.<br>How will this affect group cost of sales in the consolidated statement of profit or loss of Hillusion Co for the<br>year ended 31 March 20X3?<br>A Increase by $11.5 million<br>B Increase by $9.6 million<br>C Decrease by $11.5 million<br>D Decrease by $9.6 million<br>2.How should the $200,000 worth upgrade of new components which decreases economic benefit be accounted for?<br>A Added to the carrying amount of the machine<br>B Charged to profit or loss<br>C Capitalised as a separate asset<br>D Debited to accumulated depreciation<br>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
Stephenamell wrote:IN ADDTION TO THIS I HAVE DOUBT IN A PARTICULAR ADJUSTMENT
Kaplan 353 Question<br>On 31 March 20X1 Highwood factored (sold) trade receivables with a book value of<br>$10 million to Easyfinance. Highwood received an immediate payment of $8.7 million<br>and will pay Easyfinance 2% per month on any uncollected balances. Any of the<br>factored receivables outstanding after six months will be refunded to Easyfinance.<br>Highwood has derecognised the receivables and charged $1.3 million to<br>administrative expenses. If Highwood had not factored these receivables it would<br>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
Stephenamell wrote:IN ADDTION TO THIS I HAVE DOUBT IN A PARTICULAR ADJUSTMENT
Kaplan 353 Question<br>On 31 March 20X1 Highwood factored (sold) trade receivables with a book value of<br>$10 million to Easyfinance. Highwood received an immediate payment of $8.7 million<br>and will pay Easyfinance 2% per month on any uncollected balances. Any of the<br>factored receivables outstanding after six months will be refunded to Easyfinance.<br>Highwood has derecognised the receivables and charged $1.3 million to<br>administrative expenses. If Highwood had not factored these receivables it would<br>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
- You must be logged in to reply to this topic.