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question 278 of BPP KIT ( version 2019/2020)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › question 278 of BPP KIT ( version 2019/2020)

  • This topic has 1 reply, 2 voices, and was last updated 4 months ago by P2-D2.
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  • February 4, 2022 at 9:48 am #648096
    hm1995
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    question 278 is section B question of BPP KIT

    What is the amount of group gross profit for the year ended 31 December 20X4?

    in the answers it shows: $404,000
    which is Port Co $364,000 and Alfred Co ($240,000 × 2/12) = $404,000

    should we not do 75% of the (240000*2/12) which gives 30000, and then adding this to PORT COs 364000, giving a total of 394000?

    February 9, 2022 at 8:48 pm #648389
    P2-D2
    Keymaster
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    Hi,

    So it looks like there is a mid-year acquisition of the subsidiary, hence why we have pro-rated the subsidiary’s profit by the 2/12. Remember that we consolidate the subsidiary 100% on a line-by-line basis and we do not adjust for the ownership percentage.

    Thanks

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