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Question 252 BPP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Question 252 BPP

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • Author
    Posts
  • September 1, 2021 at 12:10 pm #633791
    ernnie02
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Basil acquired 60% of Parsley on 1 March 20X9. In September 20X9 Basil sold $46,000 worth of
    goods to Parsley. Basil applies a 30% mark-up to all its sales. 25% of these goods were still held in
    inventory by Parsley at the end of the year.

    An extract from the draft statements of profit or loss of Basil and Parsley at 31 December 20X9 is:

    Basil Parsley

    $ $

    Revenue 955,000 421,500

    Cost of sales (407,300) (214,600)

    Gross profit 547,700 206,900

    All revenue and costs arise evenly throughout the year.

    What will be shown as gross profit in the consolidated statement of profit or loss of Basil for the year ended
    31 December 20X9?

    A $717,463

    B $751 ,946

    C $716,667

    D $751,150 (2 marks)

    Hi, may I know why the unrealised profit does not require time apportionment?

    September 1, 2021 at 6:39 pm #633836
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    The unrealised profit is never time-apportioned. It is the profit that has been charged by the selling company on sales to the other company but has not been realised because the inventory has not been sold externally and so the group as a whole has not made the profit.

    However none of this is relevant for Paper PM (and question 252 in the Paper PM Revision Kit is not the question that you refer to).

    I think you must be meaning paper FA or Paper FR, and this is all explained in our free lectures for Paper FA and Paper FR.

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