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Hi Mr Mike, I have a question.
Note(iv)- Samson’s development project was completed on 30 September 20X4 at a cost of $50 million. $10 million of this had been amortised by 31 March 20X5. Development costs capitalised by Samson at the date of acquisition were $18 million. Highveldt’s directors are of the opinion that Samson’s development costs do not meet the criteria in IAS 38 ‘Intangible Assets’ for recognition as an asset.
Coming to development project, i approach it like that
-50…………….-40……………..-18—————–0—————-
10 million of depreciation will give -40 million, development is expenditure meaning negative thing till (18)ad (40)dr (22)post acquistion
I need your explanation also?
Note(ii)- Included in Highveldts investments is a loan of $60m made to Samson at the date of acquisition. interest is payable annually in arrears. Samson paid the interest due for the year on 31 March20X5,but Highveldt did not receive this until after the year end. Highveldt has not accounted for the accrued interest from Samson.
Question arising here why we deduct 6 interest cost from GRE only
debit cash-60
credit investment 60again question arising here will 60 recorded as cash in transit under current asset?
(highveltd) debit interest receivable-6
(samson) credit interest payable-6I’m not able to reply to either of these posts – I don’t understand things like
“debit interest receivable-6”
I’ve told you before that I cannot follow your posts when you insist on putting negative signs in front of debit figures
Does this entry “debit interest receivable-6” mean “Credit interest receivable 6”?
You need to think carefully about what you are writing because if I can’t understand it, nor will a marker be able to understand it
It’s equivalent to writing something like “Credit less -$100” and typing that in red
I have no interest in struggling to work out what your question is
Sorry 🙁
Note(ii)- Included in Highveldts investments is a loan of $60m made to Samson at the date of acquisition. interest is payable annually in arrears. Samson paid the interest due for the year on 31 March20X5,but Highveldt did not receive this until after the year end. Highveldt has not accounted for the accrued interest from Samson.
If samson pays yes it will be interest receivable(60*10%=6) and i will add it over GRe
Coming to make adjustments in SOFP what alterations should i do?Mr Mike i really work a lot sometimes i read the question i can not understand, now i look at the question i really say myself what i wrote there:):)
I should also add interest receivable over current assets that is all i think.
“If samson pays”
Samson HAS paid – the question tells you so
Highveldt hasn’t received the cash in-transit so go into the routine of recording in-transit items
In the receiving entity’s records, accelerate the in-transit matter (goods and cash are both treated the same way):
Dr Cash $6
Cr Interest Receivable $6 (this will increase H’s retained earnings figure in working W3)and those entries are in Highveldt’s consolidation adjustments and you must write these adjustments on the face of the question paper as well as in your answer booklet
Now we need to cancel the intra-group items so, as you are adding across to arrive at figures for the consolidated financial statements, the exercise becomes
Finance / investment income H + S – $6
Finance costs H + S – $6Investments H + S – $60
Long term liabilities H + S – $60
“I should also add interest receivable over current assets that is all i think.”
No, treat it as $6 cash – it IS cash, but it’s still in-transit
OK?
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