Which of the following items would appear on the consolidated statement of financial position at the end of the first financial year of the business combination? (i) Goodwill (ii) Equipment (iii) Loan from parent to subsidiary (iv) Investment in subsidiary

Select one: a. (iii) and (iv) only

b. (i), (ii) and (iv) only

c. (i) and (ii) only

d. (i), (ii), (iii) and (iv)

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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 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: Determine: 24 000 000 2 months $ (million) 24 net/30 12% 8 6 3 2 2 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 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: Determine: 24 000 000 2 months $ (million) 24 net/30 12% 8 6 3 2 2 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)

d i ii iii and iv Explanation The equity method is used to account for investments in subsidiaries a... View the full answer