Single entity FS adjustments

Question 1

How do you treat goods omitted from Y/E inventory count?

Answer 1

Increase inventory

Question 2

SOCE format

Answer 2

Column: SC, SP, Reval, RE, Total
Rows: BF
- PY adjustment (reduce RE)
-Total Comprehensive Income (inc reval/RE)
-Issue of SC (inc SC, SP)
-Dividends (reduce RE)
-Transfer to RE (reduce reval, increase RE)

Question 3

What is other comprehensive income? How is total comprehensive income calculated

Answer 3

Theoretical gains/losses not realised

Will include revalued PPE only

PFTY - Reval of PPE= TCI

Question 4

How should revenue be recognised when goods are sold under a sale or return agreement with expected returns?

Answer 4

Work out sales figure and then expected returns. Remove this from revenue and increase CL under refund liability

e.g. expected sale 27000 wit 10% returns

reduce rev by 2700 etc

Question 5

With R&D costs, what is not included? What 4 steps are considered?

Answer 5

First check when PIRATE is met (recognition criteria)

Remove any expenditure before, staff costs and promotions/advert costs

Add depreciation of PPE used to get IA total

Amortise this total over life to get final figure (goes in SFP)

Question 6

How do you treat patents?

Answer 6

BF amount less disposal= Remaining IA

Less a. amortisation

less amortisation for year (full year for remaining and TA disposal till sold)

Add back a. amort on disposal

Total= CA

Question 7

How do you treat exchange differences?

Answer 7

if there is a gain you remove from cost matrix (other opex) and remove from TP in SFP