Practice question /question 5

I assume that the entity’s business is seasonal and that the monthly revenue in the last 9 months of the year (or the period since acquisition – whichever explanation is appropriate) is on average twice the monthly average for the first 3 months (or the period since acquisition – whichever explanation is appropriate)

So, if we say that the average monthly revenue achieved in the first 3 months is “X”, then the average monthly revenue achieved in the last 9 months is “2X”

And 3 x X + 9 x 2X = 3X + 18X = 21X

So now we can find the value of X and thus the revenue / profits for the 3 month period and for the 9 month period

OK?

You’re welcome