4a) Where the investor (the entity which acquired the shareholding in another entity) exercises some form of control over the investee, the investor is the parent of the investee, which is called its subsidiary. In terms of IFRS 3 Business combinations which is the correct option regarding control: (i) A parent may control an investee (subsidiary) regardless of the percentage interest held by the investor in that investee. (ii) An investor controls an investee when it has power over the investee (iii) An investor has power over an investee when it has existing rights that give it the current ability to direct the relevant activities of the investee. (iv) An investor has power over an investee when it has e exposure (or rights) to variable returns through its relationship with the investee (v)An investee may be controlled by more than one investor at any given time.
Select one: a. (i), (iii) & (iv)
b. (ii) & (iii)

c. (i), (ii), (iii) & (iv)

d. (i), (ii), (iii) & (v)

4b)

A Limited acquired 30% of the ordinary shares of B Limited. B Limited has 80% of the ordinary shares of C Limited. C Limited has 65% of the ordinary shares of D limited. A limited and D limited have joint control of E Limited and each has 50% in E Limited. What is the relationship between A Limited and B Limited?

Select one:

a. No relationship

b. Investor-joint venture

c. Parent-subsidiary

d. Investor-associate

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Wright Industries Limited traditionally follows a highly aggressive working capital policy with no long-term borrowings. Below are key details recently compiled: Items Sales (all on credit) Purchases (all on credit) Gross profit Average receivables Average inventory Average accounts payables Current annual credit sales Collection period Terms Required rate of return 24 000 000 2 months S (million) 24 The firm is also proposing to offer a 4/10, net /30 discount policy to reduce accounts receivables. Wrights anticipates 30% of its customers will take advantage of the discount. As a result of this discount policy, the collection period will be reduced to 1½ months. The company also provides the following data: net/30 12% 8 6 3 2 2 Determine: i. the firm's working capital cycle, that is, cash conversion cycle. ii. whether the firm should offer the new discount policy to customers. Wright Industries Limited traditionally follows a highly aggressive working capital policy with no long-term borrowings. Below are key details recently compiled: Items Sales (all on credit) Purchases (all on credit) Gross profit Average receivables Average inventory Average accounts payables Current annual credit sales Collection period Terms Required rate of return 24 000 000 2 months S (million) 24 The firm is also proposing to offer a 4/10, net /30 discount policy to reduce accounts receivables. Wrights anticipates 30% of its customers will take advantage of the discount. As a result of this discount policy, the collection period will be reduced to 1½ months. The company also provides the following data: net/30 12% 8 6 3 2 2 Determine: i. the firm's working capital cycle, that is, cash conversion cycle. ii. whether the firm should offer the new discount policy to customers.

Answer rating: 100% (QA)

4a The correct option is c An investor may control an invest ee through a number of ways including h... View the full answer