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The subsidiary company of Group XY has purchased £150,00 worth of goods its parent company. However the goods purchased have yet to arrive at the subsidiary at the end of the financial year 20X4, meaning there is

a disagreement in the current account balances between the parent and subsidiary.

With Group XY looking to produce its CSOFP for the end of the financial year, which of the following statements are true in relation to accounting for this disagreement? Select ALL that apply.

Options:

The adjustments to resolve this disagreement, need to be accelerated, so they can be included in the consolidation of assets for the CSOFP for 20X4

£150,000 worth of inventory will be debited into the subsidiary's inventory account

As the goods have not reached the subsidiary by the end of the financial year 20X4, they will be included in the CSOFPfor the next financial year

£150,000 worth of inventory will be credited into the subsidiary's inventory account

£150,000 will be debited to the payables account of the parent company

£150,000 will be credited to the payables account of the subsidiary company

£150,000 will be credited into the receivables account of the parent company

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Question 2

Which TWO of the following would improve a company's short term cash flow position?

Options:

Postponing non essential capital expenditure

Increasing the working capital cycle by making payments to suppliers early

Taking advantage of bulk discounts offered on inventory purchases

Reducing levels of inventory by implementing a just in time system for purchasing

Paying a bonus to staff for exceptional performance

Question 3

The legislation in Country S provides for an indexation allowance in the calculation of capital tax. STU operates in Country S where the indexation factor for the period 1 January 20X1 to 31 December 20X6 is 20%

STU purchased a building for $64,000 on 1 January 20X1, incurring legal fees of $4,000. STU sold the building for $86,000 on 31 December 20X6 before selling fees of $3,500

What is the chargeable capital gam arising on STU's disposal of the building?

Options:

S11,600

$5,700

S900

$200

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