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CONSOLIDATION SECT-A

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CONSOLIDATION SECT-A

1.Hillusion Co acquired 80% of Skeptik Co on 1 July 20X2. In the post-acquisition period Hillusion Co sold
goods to Skeptik Co at a price of $12 million. These goods had cost Hillusion Co $9 million. During the year
to 31 March 20X3 Skeptik Co had sold $10 million (at cost to Skeptik Co) of these goods for $15 million.
How will this affect group cost of sales in the consolidated statement of profit or loss of Hillusion Co for the
year ended 31 March 20X3?
A Increase by $11.5 million
B Increase by $9.6 million
C Decrease by $11.5 million
D Decrease by $9.6 million
2.How should the $200,000 worth upgrade of new components which decreases economic benefit be accounted for?
A Added to the carrying amount of the machine
B Charged to profit or loss
C Capitalised as a separate asset
D Debited to accumulated depreciation
When asset increases the the economic benefit wouldnt we capitalize it so when it decreases the benefit wouldn’t we charge as an expense

February 19th 2021 AN ACCA USER

Retagged February 19th 2021

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