- This topic has 3 replies, 2 voices, and was last updated 5 years ago by
.
- Posts
Hi Sir,
Hope you had a great weekend. Can you please help with Qs below? Thank in advance.BPP Kit (Sep18-Jun19 version) Section A&B Questions:
175. Why the answer is not Option C: “Changing Value of a Sub’s Inventory in line with Group Policy for Inventory valuation when preparing Consolidated FS”?
(I think Option C is also “Change in Accounting Policy”)From Question 171, we’ve learned from it that “A change in Valuation of Inventrory from weighted average to a FIFO basis is “Change of Policy”.
Is Q171 talking something different with Q175?
Would you be able to explain more about how to differentiate “Change in Accounting Policy” & “Change in Accounting Estimate”?186. Why we have to “Restate” the EPS for YE 31 Mar 2017? The question doesn’t mention any changes before 31Mar2017.
Besides, why the answer just use the EPS for YE 31 Mar 2017 we’ve got in Question to multiply 4000/5000 for Restated EPS?191. Why The Entry for chance in Invetory valueis Debit: Cost of Sales?
I think since the Inventory is reduced, the Cost of Sales needs to be Reduced (Credit Cost of Sales) as well?203. Why Option D: “Selling Asset under Sales & Leaseback Agreement” can Reduce Gearing?
I think Sales & Leaseback recognise Liability therefore should Increase Gearing?207. Why “(iv) Interest cover” is likely to be financial KPIs for a Public Sector?
Interest Cover is PBIT/ Interest so it involves profit, which shouldn’t be used for a Public Sector/Non-for profit?232. How to calculate the Margin of PuP?
I think it’s (15-10)/10 =50%257. Why do we have to “add Depreciation” 1800 to the Cashflow?
In Q254 & 255, we “Deduct Depcreciateion” to the cashflow. Why is it different? would you pls explain the details?274. Why Option C: Should be recognaised at $1m and not amoritsed is correct?
The question says there’s 5 years remaining while it has an indefinite life.
Why don’t we choose the “Shorter period”(between 5 years and indefinite life), which’s 5 years to amortise it?Why Option B:”Group Share of 75% should be recognised & not armortised” is wrong?
277. This question is not complete and doesn’t give options in Q. No answers accordingly at back. Would you please advise the Correct Answer?
When P sells to A:
The only I can match up is Credit: Investment in Associate. Is it correct?
What’s the Debit side? In Lecture you mention should debit RE in W5 & Cost of Sales(P/L). but there’s no such option here?Actually, would you be able to explain why for PUP in P<-sell->A scenario, we have to Debit 2 places? Where’s the other side of entry?
i.e. If A sells to P,
DR: Group RE/ Sare of Profit of Associate(P/L) => Debit 2 places but only CR 1 place?
CR: Group Inventoryie. If P sells to A,
DR: Group RE/ Cost of Sales (PL)
CR: Investment in Associate(I can understand in P<-sell->S scenario, PUP is DR: RE(of Seller), CR: Inventory)
279. Would you please explain in your way about how to calculate the Net Cash used in investing activities?
The answers at back just confusing.Thank you very much.
Reporting financial performance and EPS
175 – C is not a change in accounting policy and is just aligning the policies in the group accounts under IFRS 3. The subsidiary will still maintain the same policy in its individual accounts. In Q171, this is changing the actual measurement/valuation in the particular set of accounts.
186 – If we have a bonus issue then we need to restate the comparatives.
191 – If we are reducing inventory then we are credit inventory on the SFP and so debiting the value of closing inventory on the SPL within cost of sale.
Limitation of ratios and specialised, not-for-profit and public sector entities
203 – This is a bit ambiguous and would depend on the type of leaseback arrangement.
207 – A local council would be borrowing money and need to repay it back, so they need to ensure that they are not borrowing too much and this can be measured using interest cover. NFPs/public sector bodies still look at profit but it more of an income and expense type account as there are no sales as such.
Groups
232 – The margin is based upon the sales between the group members, so a profit of 3 was made on sales of 12, so a 25% margin (3 divided by 12).
257 – This is a very tricky one and what they are doing is looking at the movement in the lease obligation to find the cash payment made under the lease. The opening liability will have increased based upon the change to the right of use asset. The change in value of the right of use asset is the difference between the opening and closing position, but this will have been reduced by the depreciation charge for the year, hence it needs to be added back.
274 – It might have five years left but it is consistently renewed and therefore will have an indefinite life. B is wrong as we recognise 100% of S’s assets as we have control.
277 – Yes it is an odd answer. We would debit group inventory credit share of profit of associate.
279 – What is it exactly that you do not understand? Let me know and I can explain further.
Thanks
- You must be logged in to reply to this topic.