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Hello, I’m looking at the past paper questions with the requirements being sofp, soci and soce. I’m noticing that adjustments for depreciation, disposal loss, amortisation , R&D expense, are added or taken away from the cost of sales figure. However, I thought that some of these adjustments would have been done after the gross profit. Can you plz tell me why?
and is there no clue in the question? The F7 examiner will typically say “All depreciation is to be charged to cost of sales” but he has once said that “Depreciation should be allocated as 60% cost of sales, 20% to administrative expenses and 20% to distribution costs”
If a question does NOT push you one way or another, take a view. But it’s likely that you will be steered to the correct place
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