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Parul Co Kaplan exam kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Parul Co Kaplan exam kit

  • This topic has 1 reply, 2 voices, and was last updated 3 months ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 29, 2023 at 10:01 am #685288
    sherlita
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Hello

    I had a question regarding a sum in Kaplan on interpretations. The parents consolidated results are provided and we are asked to remove the results of the new subsidiary and assess the parents performance

    The doubt is:
    “For several years, Saachi Co has provided a consultancy service to Parul Co, for which it
    invoices $400,000 per month. Parul Co includes this as an operating expense and pays Saachi
    as soon as it receives the invoice”

    The subsidiary was acquired 4 months ago therefore i assumed that you need to add $1600 back to the operating expenses of the parent once its removed. However in the answer they have also added it to the revenue of the parent. I did not understand the reasoning for this.

    Could you please help me? Thanks in advance

    June 8, 2023 at 12:11 pm #686501
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6699
    • ☆☆☆☆☆

    Hi,

    Sorry, I’m not 100% sure why they are adding the figure to the revenue balance. I’d have thought that the figure would need to be removed from revenue on consolidation as part of the other side of the journal entry of removing the intra-group trading.

    Thanks

  • Author
    Posts
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