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In the suggested answers, For the FV of net assets working, how to get $2000 for retained earnings under at acquistion date.
At the year end retained earnings are $3,500.
That’s after adding on this year’s retained earnings of $2,000
So brought forward from last year must have been $1,500
The acquisition took place 3 months in to this year so 3/12 of this year’s profits were pre-acquisition = $500
Total pre-acquisition was therefore $1,500 + $500 = $2,000
OK?
For transaction (iv), to eliminate the interco balances. Shouldn’t we take
1200 – 400= 800
DR trade payables 800
CR trade receivables 800But in the suggested answer i realise they only minus 800 from trade payables. They didnt minus 800 from trade receivables. Why is this so ?
The answer deducts 1,200, 800 of which is cancelled against trade payables and the remaining 400 is deducted from Plastik’s overdraft
Let me ask you this ….. have you watched the lectures that cover accounting for in-transit items?
Why on Earth not?
The lectures are there to explain the course notes and the course notes are there to give you a solid basis for attempting the F7 exam!
There’s still time to watch the videos – I strongly recommend it
I just watched it. It really helps. Thank you so much.
As for the consolidated SOFP , for share premium it is given as
4800 ×$2 = 9600Where did the $2 come from ?
Is it P’s share price $3 – par $1 = $2
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