For the following question the estimated PAT i got from newly acquired operations is
450 000 x 8/12 mths x 1.08= $324 000
But in the suggested answer the working shows
$450 000 x 12/8 × 1.08 = $729 000
I dont understand why.
Qn)The following summarised information is available in relation to Rebound, a publicly listed company.
Statement of profit or loss extracts year ended 31 march:
Continuing
Profit after tax
Existing operations 2000 000
Acquired operations 450 000
(On 1 august 2010)
Analysts expect profits from the market sector in which Rebound's existing operations are based to increase by 6% in the year to 31 march 2012 and by 8% in the sector of its newly acquired operations.
Calculate Rebound's estimated profit after tax for the year ending 31 march 2012 assuming the analysts expectations prove correct.
Ask the Tutor ACCA FR
Discontinued operations
If the newly acquired operations were only acquired 8 months before the year end, then to get an annualised figure we need to divide by 8 to get a monthly average and then annualise by multiplying by 12
That 450,000 achieved in the 8 months SINCE 1 August would, at the same monthly rate, equate to 675,000
675,000 x 1.08 = 729,000
Better?
Yes i got it. Thanks.
You're welcome
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