QUESTION 4 (25 MARKS)

(a)The assets shown in the individual financial statements of a group company may include assets acquired from another company in the group. If such assets have been transferred between the two companies at a price in excess of original cost, then their valuation includes an element of unrealised profit and this must be eliminated when the consolidated statement of financial position is prepared.

Required:

Explain THREE (3) situations commonly arises when inventories are transferred between group members at prices whuich exceed original cost.

(9 marks)

(b) Distinguish FOUR (4) between current tax and deferred tax.

(8 marks)

(c) Distinguish FOUR (4) between permanent difference and temporary difference.

(8 marks)

QUESTION 4 (25 MARKS) (a) The assets shown in the individual financial statements of a group company may include assets acquired from another company in the group. If such assets have been transferred between the two companies at a price in excess of original cost, then their valuation includes an element of unrealised profit and this must be eliminated when the consolidated statement of financial position is prepared. Required: Explain THREE (3) situations commonly arises when inventories are transferred between group members at prices whuich exceed original cost. (9 marks) (b) Distinguish FOUR (4) between current tax and deferred tax. (8 marks) (c) Distinguish FOUR (4) between permanent difference and temporary difference. (8 marks)