ACCA accounting (SBR P3)

List 4 possible problems that may give rise to cash shortages and ways to overcome it

You are given the following information relating to a company's government grant transactions during the accounting period ended 31 December 20X5. (i) $4,000 to compensate relocation costs incurred in moving the business to a deprived region. (ii) $54,000 towards the purchase of an item of plant purchased on 1 January 20X5. The plant is depreciated over a useful life of nine years. (iii) The company recognises government grants as deferred income where permitted by the accounting standard. (iv) $5,000 of a grant previously fully credited in profit or loss became repayable during the year. BPP Tutor Toolkit copy 6 What is the effect on profit for the year and the deferred income balance of the above transactions? Profit for the year Deferred income  $5,000 CR $48,000  $10,000 CR $54,000  $10,000 CR $48,000  $58,000 CR $5,000

Huxton Co operates throughout Europe, providing in-flight catering to a number of European short-haul airlines. The financial statements for the year ended 31 March 20X0 are due to be authorised for issue on 1 July 20X0. The company maintains large cash reserves and a low level of gearing.

(a) Advise the directors of Huxton Co whether the financial statements for the year ended 31 March 20X0 should be adjusted for the events after the reporting date.

(b) (i) Discuss the accounting issues relating to the new commercial ovens and packing machines for the year ended 31 March 20X1 arising from the production site shut down.

(ii) Advise the directors of Huxton Co how the salary subsidy should be accounted for.

(c) Discuss the relevance of integrated reporting for the year ended 31 March 20X1 to Huxton Co’s shareholders.