A batch of credit sales invoices with a total sales value of N$570 000 (including VAT at 14%) were not processed for the year ended 30 June 2017. However, the cost of sales associated with these invoices has been taken into account for the year ended 30 June 2017. As a result of this material error, the Inland Revenue Department agreed to re-open the 2017 assessment. The tax rate ruling for the year ended 30 June 2017 was 30% whilst the tax rate ruling for the year ended 30 June 2018 is 29%.

REQUIRED:
Discuss, with reasons, how you would account for and disclose the above situation in the financial statements of Vram Limited for the year ended 30 June 2018 in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. Your discussion must include calculations.

Answer rating: 100% (QA)

Credit sales of N570000 should have been accounted in the year end... View the full answer