• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Dec 2014 Retained Earning

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Dec 2014 Retained Earning

  • This topic has 5 replies, 2 voices, and was last updated 10 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • June 6, 2015 at 9:22 am #254382
    chericheung
    Member
    • Topics: 2
    • Replies: 11
    • ☆

    Hi Mike,
    Sorry I ask a question again.
    Here my question on Dec 2014 past paper, answer on Retain earning. There is an adjustment on “liability adjustment” under Joey’ retain earning of 3.5 which come from Margy’s recognised provision $5. The point I don’t understand is that:
    Accounting treatment of provision will be Cr provision Dr I/S
    But the answer Cr the provision to P/L, add $5 to Retain earning @YE
    What is it about?

    June 6, 2015 at 9:39 am #254413
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    From memory, I believe that this was an adjustment under the12 month reassessment rule where the figure at the year end, the contingency (?) was understated.

    The adjustment was put through as though it were a post-acquisition matter whereas it was a correction to a pre-acquisition situation.

    Instead, therefore, of charging the post-acquisition statement of profit or loss, the adjustment should be treated as though it had been correctly treated at acquisition date.

    So reverse the profit or loss entry

    Ok?

    June 6, 2015 at 3:29 pm #254520
    chericheung
    Member
    • Topics: 2
    • Replies: 11
    • ☆

    May need some time to digest. Why it need to be reversed? Even though it was treated as acquisition event, it’s nature is still a liability.

    June 6, 2015 at 10:50 pm #254628
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Yes, but it should be an adjustment in the goodwill / cost of acquisition calculation.

    The post-acquisition profits should not have been reduced for a pre-acquisition adjustment

    June 7, 2015 at 8:08 am #254675
    chericheung
    Member
    • Topics: 2
    • Replies: 11
    • ☆

    See. That makes sense. Thank you.

    June 7, 2015 at 9:46 am #254705
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • o1lim on Discounted Cash Flow Further Aspects, Replacement – ACCA Financial Management (FM)
  • julio99 on Impairments – Impairment (CGU) – ACCA Financial Reporting (FR)
  • effy.sithole@gmail.com on EPS – diluted EPS Example – ACCA Financial Reporting (FR)
  • Ken Garrett on The Finance Function in the Digital Age – CIMA E1
  • DeborahProspect on ACCA SBR Specimen Exam 2 Question 1

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in