Economics, Accounting & Business: Post your doubts here!

[minie23]

Anyone got June 2013 papers for Eco ?
Please, its urgent

 

[shaahid]

Does interest on loan from a partner get recorded in the current account?

 

[sunny987]

Does interest on loan from a partner get recorded in the current account?

Yes it does.

 

[sunny987]

When does data need to be flexed in standard costing and when can we take the values given as it is?

 

[sunny987]

(The past papers section isn't working right now so can't post a link) November 2011, P42, Q2. Why aren't dividends paid shown in the income statement? Thanks!

When are dividends included in the income statement? You're just required to calculate profit after interest and tax-no dividends are supposed to be subtracted.
Yes, they are suntracted from retained earnings in the financial position but wont be subtracted in this question because it is a non-adjusting event i.e. event occuring after the balance sheet date thus no adjustment.

 

[WayneRooney10]

When are dividends included in the income statement? You're just required to calculate profit after interest and tax-no dividends are supposed to be subtracted.
Yes, they are suntracted from retained earnings in the financial position but wont be subtracted in this question because it is a non-adjusting event i.e. event occuring after the balance sheet date thus no adjustment.

Aren't we supposed to deduct dividends in the section after profit after interest? I was talking about the 'Interim dividend paid for year ended 30 June 2011: $125'

 

[WayneRooney10]

Can someone EXPLAIN IAS 23, 37 and 38? Especially IAS 38.

 

[shaahid]

Yes it does.

thank you

 

[vineeth jain]

WaleedUQ

the share premium can only be debited with the amount lowest in this rule:

1) Share premium received on original issue ( the premium received on the shares that are being redeemed at the time of issuance )
2) Existing Share premium balance sheet value + share premium received on new issue
3) Total cash received on new issue

This is a RULE. now if any value is the lowest in the above 3 rules, that is the amount we can charge to the share premium but if any1 is 0, as 0 is the lowest value, which means we cannot charge anything to the share premium account and we will have to use Profit and loss account. coming to example 4 that is the problem, we are not told that if these shares or ordinary shares were issued on premium ( it is wrong also as Capital Redemption Reserve is to be created of $85,000 not $100,000 ), so we will consider the first rule "Share premium received on original issue" as it is 0, 0 being the lowest value, we cannot debit share premium account and will use Profit and Loss account. even-though, new shares are being issued, we can see the option 2 and 3 too, but there values are bigger than 0, so we will not consider them.

For people who dont know how to create Capital Redemption Reserve:

here, the treatment is quiet easy. if new share are being issued with premium then just subtract the nominal (par value) of shares being redeemed with the total cash received from issuance of new shares. the difference is the capital redemption reserve balance.

eg: preference shares of $200,000 are being redeemed, with a premium of $20,000 and new issuance is being made to finance the redemption of $100,000 with $25,000 premium. here the amount we will charge in the capital redemption reserve is :

Nominal value of preference shares being redeemed - total cash received on new issue = Capital Redemption Reserve
$200,0000 - ( $100,000 + $25,000 ) = $75,000 Capital Redemption Reserve will be created

if the new issuance of shares are not being made, we will create the Capital Redemption Reserve same as the Par value of Redeemed shares

eg. Consider the example above but now think that we are not issuing any shares just redeeming preference shares of $200,000 so the capital redemption reserve created will be $200,000

what to do when there is a combination of both i.e. retained earnings and partly financed from issued shares. really confusing crr and share premium...
help will be appreciated..

 

[shaahid]

Can someone explain when proposed dividend be shown in appropriation and in current liabilities? and when not to show?

 

[nomanrafiq94]

Can anyone help me with June 2003 P4 Q3 part b
examiner has taken may purchases (660*3*4) as payment to suppliers
but according to the question it should be may purchases (880*3*4)?
Pls Help

 

[Wen Bin]

Hi everyone, I'm having some issues of REALISATION ACCOUNT. Do we have to record trade receivables and payables? In Oct/Nov 2011 42 no.1(a) the marking scheme shows that none of them are recorded but what I see from textbook they're needed

 

[Esme]

Aren't we supposed to deduct dividends in the section after profit after interest? I was talking about the 'Interim dividend paid for year ended 30 June 2011: $125'

Yes we are supposed to deduct those dividends from profit after interest

 

[Esme]

Can someone EXPLAIN IAS 23, 37 and 38? Especially IAS 38.

Umm....it is what it says in the book. It's quite clear. Which part did you not understand and I'll try to explain ?

 

[Esme]

Can someone explain when proposed dividend be shown in appropriation and in current liabilities? and when not to show?

Never...absolutely never. It used to be included before but not anymore. If you have the new edition of Accounting by Harold Randall, refer to page 161. It is stated clearly there above Example 4

 

[wajiman]

what to do when there is a combination of both i.e. retained earnings and partly financed from issued shares. really confusing crr and share premium...
help will be appreciated..

use the three rules mentioned on the partial financing of the shares and then you will get to know for the retained earnings. first rule is having a small error. let me correct it:
1) Share premium received on original issue ( the premium received on the shares at the time of issuance that are being redeemed now )

 

[Esme]

Hi everyone, I'm having some issues of REALISATION ACCOUNT. Do we have to record trade receivables and payables? In Oct/Nov 2011 42 no.1(a) the marking scheme shows that none of them are recorded but what I see from textbook they're needed

Yes you have to record them both and then also record the amounts received by trade receivables and the amounts paid to trade payables. I think the marking scheme just balanced them off and wrote the total.

 

[vineeth jain]

use the three rules mentioned on the partial financing of the shares and then you will get to know for the retained earnings. first rule is having a small error. let me correct it:
1) Share premium received on original issue ( the premium received on the shares at the time of issuance that are being redeemed now )

what will happen to crr???

 

[Esme]

what will happen to crr???

CRR = nominal value of redeemable shares - total value of new shares issued

 

[vineeth jain]

use the three rules mentioned on the partial financing of the shares and then you will get to know for the retained earnings. first rule is having a small error. let me correct it:
1) Share premium received on original issue ( the premium received on the shares at the time of issuance that are being redeemed now )

can u explain with an example???