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