• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

in notes, chapter 9 , group accounts example 1 p57

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › in notes, chapter 9 , group accounts example 1 p57

  • This topic has 6 replies, 2 voices, and was last updated 10 years ago by MikeLittle.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • May 27, 2014 at 4:34 am #171100
    pagermm
    Member
    • Topics: 13
    • Replies: 13
    • ☆

    Dear Mike,

    in your notes f7 , p57

    1. at the date of acquisition, some of Danute’s inventory had a fair value $ 12,000 in excess of it carrying value. All of this inventory had been sold before the year end.

    in calculate retained earning

    step 1 in Per Q, why no need to adjust this figure?——-don’t understand. cause in some other example, it also need to adjust.

    in pre acq we used this figure.(64+10+12), this one I understand.

    May 27, 2014 at 7:59 pm #171257
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    That’s exactly the point of doing working W3 my way – there’s no need to make any adjustment when writing the top line! It’s straight from the question. I can’t remember how I treated the fair value adjustment in the printed solution – there are two ways in which it can be done.

    When allocating the 60,000 profit for the year to the pre- and post-acquisition periods, we could make the fair value adjustment in that working. The adjustment is to add 12,000 to the pre-acquisition profits and deduct 12,000 from the post acquisition profits.

    The alternative (the way I think I have done it in the example solutions) is to make the fair value adjustment in working W3 as normal as part of the pre-acquisition profits (of course, it will also appear in working W2, the Goodwill calculation)

    From your post, it seems that I have answered in the printed solutions in the second way. Why no adjustment? Why should there be? All that undervalued inventory has now been sold so the profit on the sale is already reflected in the “per q” profits

    is that ok or are you still at sea?

    May 28, 2014 at 5:34 am #171337
    pagermm
    Member
    • Topics: 13
    • Replies: 13
    • ☆

    From the question , the acquisition date is 31 Mar 2011. The statements of financial position is given on 31 Oct 2011.

    but in 1. it says, all of this inventory has been sold before the year end. What date is year end?

    Can we consider all sold out before 31 Oct 2011 or year end 31 Dec 2011?

    (2) if all inventory has not been sold out , then what do you?
    in your way of doing in all the examples,

    Need to adjust the per Q by deduct $16000?

    May 28, 2014 at 7:07 am #171347
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    “What date is year end?”

    The financial year end! 31 October. Be prepared – it the exam, the year ends of the various companies throughout the exam are almost certainly NOT going to be 31 December

    “Can we consider all sold out before 31 Oct 2011 or year end 31 Dec 2011?”

    “Year end” in the context of accounting is the accounting year end and not the calendar year end

    “(2) if all inventory has not been sold out , then what do you?
    in your way of doing in all the examples,”

    In working W3, the “top half” the first two lines would be “per q” followed by “fair value adjustment” The fair value adjustment would be for the value of the $12,000 inventory still not sold – say $3,000. In the “bottom half” there would appear “- pre-acquisition retained earnings” and “- fair value adjustment”.

    That fair value adjustment in the bottom half would be the $12,000 undervalued inventory as at date of acquisition

    “Need to adjust the per Q by deduct $16000?”

    What’s the $16,000? Never adjust the “per q” line – always pick the figure up from the question without any adjustment. Show the adjustments as separate items following the “per q” opening line

    OK?

    May 28, 2014 at 7:16 am #171351
    pagermm
    Member
    • Topics: 13
    • Replies: 13
    • ☆

    thank you so much

    May 28, 2014 at 7:29 am #171354
    pagermm
    Member
    • Topics: 13
    • Replies: 13
    • ☆

    Dear Mike,

    I found your way to do this , is the easiest to understand. There are other way to do it, but seems difficult to understand.

    I only wonder, if I do exactly this way, will get partial mark from examiner, if I didn’t get final figure right ( like say , forget some adjust)?

    May 28, 2014 at 10:30 am #171381
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    No, you should be fine doing it “my way” The markers should be able to see what you have done and must be used to seeing it done in the way that I teach and the way the course notes go.

    No worries

  • Author
    Posts
Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • nabeelafatima on Using Information Systems – ACCA Performance Management (PM)
  • John Moffat on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • Fangzi on The cost of capital (part 1) – ACCA (AFM) lectures
  • Coffeeice6 on What is Assurance? – ACCA Audit and Assurance (AA)
  • khalid.zaheer on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in