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