Acca financial Accounting (FA) Study Text ac ca (FA)

State the accounting entries required to record the bonus issue made 

during the year.  

(2 marks)

 

Ledger Account: 

$ 

Debit

Credit

 (Total: 15 marks) 

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P Co and S Co

 

The statements of profit or loss of two entities, P Co and S Co, for the year 

ended 31 December 20X3 are presented below: 

P Co 

S Co 

 $000  $000 

Revenue

950

424

Cost of sales 

(400)

(152)

–––––

–––––

Gross profit 

550 

272 

Administrative expenses 

(200)

(120)

–––––

–––––

Operating profit 

350 

152 

Investment income 

60 

20 

Finance costs 

–

(8)

–––––

–––––

Profit before tax 

410 

164 

Income tax 

(100)

(32)

–––––

–––––

Profit after tax for the year 

310 

132 

––––– ––––– 

The following notes are relevant to the preparation of the consolidated 

financial statements: 

(i)

P Co acquired 80% of the ordinary shares in S Co on 1 October

20X3.

(ii)

During the post-acquisition period, S Co sold goods to P Co for

$50,000 making a gross profit margin of 20%. Forty per cent of these

goods remained in the inventory of P Co at the year end.

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PRACTICE QUESTIONS 

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KAPLAN PUBLISHING

 

Task 1 

Complete the following consolidated statement of profit or loss for 

the P Co group for the year ended 31 December 20X3 

(10 marks) 

$000

Revenue  

Cost of sales 

Item 1 

Add/Subtract* 

–––––

Gross profit 

N/A 

Administrative expenses 

Add/Subtract* 

–––––

Operating profit 

N/A 

Investment income 

Add/Subtract* 

Finance costs  

Add/Subtract* 

–––––

Profit before taxation 

N/A 

Income tax  

Add/Subtract* 

–––––

Profit after tax for the year 

N/A 

–––––

Profit after tax attributable to: 

Owners of P Co 

N/A 

Non-controlling interest 

Item 2 

–––––

N/A

–––––

Note:

 * = delete which does not apply

 

Item 1 

– Choose the correct calculation for cost of sales 

All figures are in $000 

Selected 

answer 

(i) 

($400 + (9/12 × $152) – $50 + $4 

(ii) 

($400 + (3/12 × $152) + $50 – $4 

(iii) 

($400 + (3/12 × $152) – $50 + $4 

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Item 2 

– Choose the correct calculation for the non-controlling interest 

share of the consolidated profit for the year 

Selected 

answer 

(i) 

(3/12 × 20% × $132) – ($50 × 20% × 40%)

 

(ii) 

(3/12 × 20% × $132) – ($50 × 20% × 40% × 20%)

 

(iii) 

(9/12 × 20% × $132) – ($50 × 20% × 40% × 20%)

 

Task 2 

P Co is considering the purchase of a shareholding in another entity and, if 

purchased, this investment would meet the definition of an associate.

 

 

Complete the following statement to explain what an interest in an 

associate is.  

(2 marks) 

An interest in an associate would normally be indicated by a owning a 

shareholding in that entity of up to 20%/between 20% and 50%*. An 

interest in an associate is normally characterised by being able to exercise 

control/ significant influence* over the strategic and operating decisions in 

that entity. 

* delete which does not apply

Task 3