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December 2009 Question 1 Pandar

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › December 2009 Question 1 Pandar

  • This topic has 7 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 18, 2015 at 10:49 pm #283792
    jingdong
    Participant
    • Topics: 82
    • Replies: 103
    • ☆☆

    Dear Sir, would you please explain to me why does not the registration of a popular internet domain name make amortization?
    many thanks
    jingdongyu

    November 19, 2015 at 7:33 am #283844
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    Registration costs very little, so I believe.

    The fact that it becomes popular is as a result of the domain name holder’s efforts and such internally generated assets are not recognised. In the same way that internally generated goodwill is not recognised.

    It WILL be recognised when it’s sold! And when it’s bought. But until then, no.

    November 19, 2015 at 9:53 am #283881
    jingdong
    Participant
    • Topics: 82
    • Replies: 103
    • ☆☆

    Thanks a lot for your help, but in December 2011 Question 1 Paladin, the saracen’s customer relationship had been treated as intangible assets and did an amortization, i think it is generated by Saracen itself and it is also an internally generated assets, i am very confused please help me.
    many thanks
    jingdongyu

    November 19, 2015 at 10:10 am #283883
    jingdong
    Participant
    • Topics: 82
    • Replies: 103
    • ☆☆

    Dear Mike, In question Panda, when calculating NCI : (21000+2000)/2-2000=9500, i don’t understand why it needs to be deducted by 2000, i think this is an intragroup interest needed to be canceled, why it had been recorded in the profit and loss account of Salva?
    many thanks
    jingdongyu

    November 19, 2015 at 10:42 am #283892
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    Saracen’s customer relations internally generated asset was a fair value adjustment wasn’t it? Like goodwill, it’s not recognised until it’s bought (or sold)

    November 19, 2015 at 10:47 am #283896
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    In F7 questions, you’ll often see a note from the examiner “all incomes and expenses are deemed to accrue evenly unless otherwise indicated”

    In this case, the 2,000 loan interest that has been deducted in arriving at the year’s profits relates only to the post acquisition period (because the loan was only created as at date of acquisition)

    So add back the $2,000 to find the profit for the year BEFORE loan interest

    Divide by 2 to get $11,500 pre-acquisition profits and $11,500 post acquisition profits

    And now deduct the $2,000 to find that, of the $21,000 profit for the year, $11,500 was pre-acquisition and $9,500 was post acquisition

    Better?

    November 19, 2015 at 12:26 pm #283923
    jingdong
    Participant
    • Topics: 82
    • Replies: 103
    • ☆☆

    thank you for your explanation, $9,500 was post acquisition, but 2000 is intragroup interest, should be excluded, sorry i am still confused.
    many thanks

    November 19, 2015 at 3:15 pm #283961
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    Yes, $2,000 finance charges in the subsidiary will not be carried through into the consolidated statement of profit or loss and nor, incidentally, will the $2,000 investment income in the parent’s records

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