The balance sheets of Parkway plc for 20X7 and 20X8 are given below, together with the profit and loss account for the year ended 30 June 20X8.

1 The freehold land and buildings were purchased on 1 July 20X0. The company policy is to depreciate buildings over 50 years and to provide no depreciation on land.
2 Depreciation on plant and machinery and motor vehicles is provided at the rate of 20% per annum on a straight-line basis.
3 Depreciation on buildings and plant and equipment has been included in administration expenses, while that on motor vehicles is included in distribution expenses.
4 The directors of Parkway plc have provided you with the following information relating to price rises:

Required:

(a) Making and stating any assumptions that are necessary, and giving reasons for those assumptions, calculate the monetary working capital adjustment for Parkway plc.

(b) Critically evaluate the usefulness of the monetary working capital adjustment.

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Balance Sheet 20X8 20X7 000 000 000 000 000 000 Non-current assets Cost Depn NBV Cost Depn NBV Freehold land Buildings Plant and machinery 30,000 Vehicles 40,000 60,000 40,000 8,000 32,000 16,000 14,000 20,000 20,000 - 60,000 60,000 60,000 40,000 7,200 32,800 30,000 10,000 40,000 12,000 28,000 20,000 170,000 44,000 126,000 170,000 29,200 140,800 Current assets Inventory 80,000 70,000 Trade receivables 60,000 40,000 Short-term investments 50,000 Cash at bank and in hand 5,000 5,000 195,000 115,000