- This topic has 3 replies, 3 voices, and was last updated 12 years ago by
.
- Posts
Hi,
I am from Vietnam and I have this concern regarding mid-year consolidation of SOCI.
Take June 2011 F7 intake as an example, Question 1 ACCA answer states that:
Revenue = (450,000 + (240,000 x 6/12) – 40,000 intra-group sales) = 530,000. ACCA answer treats similar items the same way as it argues that 40,000 intra-group sales are “post acquisition”.In my opinion, as revenues are accrued evenly except for the 40,000 intra-group sales (post-acquisition), the answer should have been:
Revenue = (450,000 + ((240,000 – 40,000) x 6/12 + 40,000) – 40,000 intra-group sales) = 510,000Hope that you can help clarify this issue.
Thanks and best
ThangHi
Yes, I can understand your point of view. However…. sales have accrued evenly, so half the year’s sales are post acquisition. And then we’re told that 40,000 is intra-group.
Your logic will fall apart if I were to say that, in the first 6 months, there was another 40,000 sales to the same customer. The revenue in the year has been achieved at the rate of 20,000 per month. It just so happens that one of our customers in the second half of the year is a group company.
This is not coming out too well!
Are you any clearer? If not, post again and I’ll try again!
- Topics: 0
- Replies: 1
- ☆
Is the same thing happening in example 1 ch 9 of F7 p55 of the notes? In this example the PUP of 20000 (note 2) was made after the acquisition of Dace. So surely the Net Assets of Dace at DOA should be 20000 more than the model answer? ie 10/12 of 24 not 10/12 of (24-20). I am finding it hard to convince myself of what I think is your argument above, that profits are accruing evenly for Dace over the year – the sum is such a large proportion of the retained profits of Dace!
Many thanks in advance. I am enjoying your lectures and finding them very helpful,
HezzThe rule about profits accruing evenly is fine – except when you are given information like the transfer of an asset at a profit. Unless Dace had been in the business of selling TNCA type assets ( which doesn’t make sense in this particular question ) then clearly the profit she makes is $4,000 “ordinary / trading” profits + the $20,000 “unusual / non-trading” profit on the TNCA transfer.
And we’re told specifically that that deal took place in the post-acquisition period
- You must be logged in to reply to this topic.