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Hi again Sir
.I am sorry i am taking a lot of your time.I had a question on ASHanti of June 2010.What do you think would have been the BS.Will we show Associates in BS because we donot control or have significant influence on the sub subsidiary should we leave it out totally
How can you not have control of a sub-subsidiary? If it’s a subsid or a sub-subsid then, by definition you have control ( with exceptional exceptions! )
Sir i understood that part it was the answer i was looking for in my Complex Groups post.Actually the subsidiary had become an Associate of the Subsidiary in the year end.
Thanks
Hello Mike,
Could You please help with one issue in this task AsHanti.
I do not understand accounting in point 5 in the question:
Ashanti sold 5 million $ of goods to its customer who recently made announcement that it is reconstructuring its debts wuth its suppliers including Ashanti. It is probable that Ashanti will not recover the amounts outstanding. The goods were sold after announcement was made although the order was placed prior to the ammendment. Ashanti wishes to make additional provision of 8 mio $ against total receivable at the year end, of which 5 mio $ relates to this sale.
I understand that when sale is made the following entey is made: Dr AR CrRevenue and so the reversal entry is made: Dr Revenue Cr AR – to eliminate the sale – but why can’t I make a provision?
And also in SOCI there is one line called: “Impaired receivable” = 3 mio $ – is it diff between 8 and 5? but whyy?
Thank You inadvanceHi, I can’t remember the question in enough detail but, from memory, the 8 million should only have been 3 million because the sale took place after the announcement. The other 3 million is the balance of 8 – 5 ( as you have guessed ) and is creating a provision for doubtful debts. That’s assuming there was no provision for doubtful debts balance brought forward.
I hope that’s correct – from memory
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