- August 30, 2017 at 5:20 am
Hello. My questios are:. 1). ((do we record the Goodwill entries in current account Or in capital account when a new partner join the partnership old partner old ratio new prtner new ratio))
And second question is 2). (( we studied that we record purchase of non current asset in journal day book but in Kaplan FA2 written that we record in journal or purchase day book how we can record a non current asset in purchase day book although we know that in purchase day book we record current assets))
3) ((what is the correct markup figure if the gross profit margin is 60%?? Sales totalled 600,000 cost of sale is 480,000?))
4) (( in MA2 I studied that if we use absorption costing we should add the POHs(production overhesds) in the cost of sale but here IAS2 says that we should not add the depreciation expense to the cost of sale why? We know that depreciation of production machinery which is use in production is production overhead then why we do not add this in cost of good sold and instead we add to the other expenses?
I hope that you will guide me as soon as possible.August 30, 2017 at 6:00 pm
1 It can be either, but usually the capital account.
2 It would be unusual nowadays to use the journal for the purchase of non-current assets. Remember, the purchases day book is not part of the doubleentry system. It simply captures/records invoices. It is possible to have several columns in the PDB eg, one for the purchases of goods for resale and a miscellaneous column where each entry can be used to post to the appropriate nominal account.
3 Your question is inconsistent. If gross margin is 60%, profit is 60% of sales and costs are 40% of sales. But your sales are 600,000 so your costs should be 40%x600000 = 240000.
4 I don’t think IAS2 does specify that: ‘The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads are those indirect
costs of production that remain relatively constant regardless of the volume of production, such as depreciation and maintenance of factory buildings, equipment and right-of-use assets used in the production process, and the cost of factory management and administration.’August 30, 2017 at 9:50 pm
Hm. I was also confuse in it. But in book its same like what I wrote they give cost 480,000. I think there is printing issue.
One question more.
(( We record the non current asset on their carrying value,. I mean cost less accumulated depreciation. This sentence is based on which accounting principle. Going concern or consistency , in exame kit they answered going concern can you tell me why it’s going concern and why not consistency))
(( book wrote that settlement discount is a memorandum column and not part of double entry, but I do not agree with this, can you tell me that am I right or not))
Thanks for replying open tuition.August 31, 2017 at 4:31 pm
It is the going concern principle because if the business were not a going,concern and was about to be closed down, the assets would have,to be values at their net sales value (often their scrap value).
Consistency means that the same accounting approach is taken year to year.
There are various ways of accounting for settlement discounts that are used by different organisations. There is no one correct way used to record amounts though all methods should end up with the same result.September 1, 2017 at 10:45 pm
Ok thank you so muchSeptember 2, 2017 at 3:13 pm
Hello. Sir kindly explain substance over form concept?
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