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Question 4 A friend of yours own shares in a company and has received its...

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Accounting

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Question 4 A friend of yours own shares in a company and has received its most recent general purpose nancial report. However, the friend is confused about some items in the report and raised the following questions which you are to respond to. (a) (13) Why are there are two columns of gures, one headed 'economic entity\" (or 'consolidated' or 'group') and one headed 'chief entity' (or 'parent' or 'holding' company)? (4 marks) Some of the assets are shown at \"cost less accumulated depreciation'. What does this mean? (4 marks) What is the meaning ofthe item called \"retained profits' in the statement of financial position? (2 marks) Suggestion: (a) (b) Consolidated entity - consists of all entities in the group Parent entity - controls subsidiary entities Control definition Accumulated depreciation sum of all depreciation charges Depreciation allocating to expense the cost of an asset over its useful life. The using up of economic benets. The increase in equity resulting from profitable operations that has not been distributed to owners

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