Question 1

Section A

Oceanic Shipping PLC acquired 75% of the ordinary share capital of Marine Logistics Ltd on 1 September 20X4. Marine Logistics Ltd's profit for the year ended 31 December 20X4 was $1,200,000, accruing evenly throughout the year. What amount of Marine Logistics Ltd's profit should be included in the consolidated statement of profit or loss for the year ended 31 December 20X4?

Accepted Answer

Determine the number of months the subsidiary was owned during the year (Sept to Dec = 4 months). Time apportion the full year profit: $1,200,000 * 4/12. Remember, consolidated P&L includes 100% of the subsidiary's post-acquisition line items.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Multiplying the time-apportioned profit by the ownership percentage (75%).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 6

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