ACF $621$ ASSIGNMENTQUESTION $1$a$)$ Jordan, the managing director of Kings Limited has a number of specific queries in relation toInventory and has asked you for advice in relation to IAs $2.$ As part of its overall inventory,Kings limited has three items of inventories whose costs and net realizable values are as follows:ITEM COST $($E$)$ NRV $($E$)172802564839296$TOTALS $220224$Required:Calculate the closing value of each item of inventory and hence the total value of closinginventory for these $($a$)$ items for Kings limited at the year$-$end.$($b$)$ In the context of IAS $2-$ Inventories:$($i$)$ Outline the items that comprise inventory $(5$mark$).($ii$)$ Explain how inventories are measured $(2$ mark$).($iii$)$ Provide four examples of costs which are specifically excluded from the costs ofinventories and instead are recognised as expenses in the period in which they areincurred $(4$ mark$).($iv$)$ Briefly discuss three situations in which Net Realisable Value is likely to be less thancost $(5$ marks$).[$Total $20$ marks$]$QUESTION $2($a$)$ The International Accounting Standards Board $($IASB$)$ follows a process for the setting ofInternational Financial Reporting Standards. Outline the main stages of this process. $(10$ marks$)($b$)$ Identify and discuss the main qualitative characteristics of accounting information. $(10$marks$)($c$)$ The following trial balance was extracted from the books of Shanetta Ltd as at $31$December $2023$:Debit CreditE m E mRetained profit $-12,000$Ordinary shares E $2,500$ each $-75,000$Share premium account $-10,00010\%$ Debentures $2024-200,000$Buildings $300,000-$Land $50,000-$Plant and machinery $25,000-$Vehicles $70,000-$Provision for depreciation: $--$Buildings $-90,000$Plant and machinery $-10,000$Vehicles $-30,375$Discounts $2,0002,500$Returns $3,5004,000$Inventory $22,000-$Purchases$/$revenue $225,000427,625$Rents and rates $25,000-$Carriage $7,000-$Postage and stationery $4,000-$Debenture interest paid $10,000-$Wages and salaries $70,000-$Bad debts $3,250-$VAT $2,000-$Electricity $3,000-$Trade receivables$/$trade payables $74,00042,750$Provision for doubtful debts $-3,000$Bank $5,500-$Interim ordinary dividends paid $6,000-907,250907,250$The following additional information is available:$1.$ Inventory on hand $31$ December $2023$ was valued at E $22,000,000.$ This includesthe following items, which were valued at cost price.$($i$)$ On $1$st January $2023,$ Sligo Ltd purchased a machine, for the factory, at a costof E $2,000,000.$ This has been recorded as a purchase of goods for resale in the books.$($ii$)$ An item of inventory which was damaged during the year. This item of inventory hada cost price of E $1,000,000$ and a net realisable value of E $600,000\mathrm{.}2.$ Included in revenue is an amount of E $25,000,000$ for goods sent on approval to acustomer. The mark up on these goods was $25\%\mathrm{.}3.$ Carriage in the trial balance comprises carriage inwards of E $3,000,000,$ with theremainder being carriage outwards$\mathrm{.}4.$ A customer has been declared bankrupt owing E$1,500,000.$ This is to be written off$\mathrm{.}5.$ The provision from doubtful debts should be $5\%$ of trade receivables$\mathrm{.}6.$ Included in the revenue figure is an amount of E $4,000,000,$ which was the sales proceedsfrom the disposal of a motor vehicle during the year. The vehicle was purchased for E$10,000$ during $2021\mathrm{.}7.$ Depreciation is provided on non$-$current assets asfollows: Buildings: $2\%$ on costPlant & machinery: $20\%$ on costVehicles: $25\%$ on written down valueA full years depreciation is charged in the year of purchase and none in the year of sale$\mathrm{.}8.$ On $20$ December $2023,$ the Directors of Sligo Ltd proposed a final dividend of $500$ francsper share. This was approved for payment at a subsequent meeting of the Board of Directorson $30$ December. The ordinary dividend figure of E $6,000,000,$ in the trial balance, relatesto an interim dividend that was declared and paid during $2023\mathrm{.}9.$ The debenture interest outstanding should be provided for$\mathrm{.}10.$ When preparing the accounts at $31$ December $2023,$ closing inventory was overvaluedby E $5,000,000.$ This has not been corrected in the accounts$\mathrm{.}11.$ At the $31$ December $2023$ the company had the following accruals andprepayments: AccrualsElectricity E$500,000$ Rates E$1,000,000$PrepaymentsRent E $5,000,000$Required:Prepare, for internal use, a Statement of Comprehensive Income for the year ending $31$December $2023$ and a Statement of Financial Position as at that date. $(30$ marks$)[$Total: $50$ Marks$]$QUESTION $3$IAS $16$ Property Plant and Equipment sets out the accounting requirements for initial recognitionand measurement, subsequent measurement and derecognition of items of property, plant andequipment. IAS $16$ expands on and applies the definition of an asset in the Conceptual Framework,as well as the recognition criteria set out in that document.The following is the extracts from the Trial balance of Justice Company Ltd as at $31$stDecember, $2023$DR CRE EMotor vehicles $($at cost$)870,000$Accumulated depreciation $1/1/2023-$Motor vehicles $270,000$Equipment $500,000$Accumulated depreciation $1/1/2023-$ Equipment $150,000$Property $($Land E $100,000)550,000$Accumulated depreciation $1/1/2023-$ building $135,000$Ordinary share capital $($issued at E$2\mathrm{.}00)600,000$Capital surplus $(1/1/2023)120,000$Income surplus $(1/1/2023)480,000$Net profit after tax $($for the year $2023)350,000$The following additional information is relevant:a$)$ The property was revalued to E $700,000$ which the new value for land is E$140,000.$ The originallife of the building was $50$ years and has not changed. The revaluation was done at the end of theyear.b$)$ Additional equipment costing E$150,000$ and motor vehicle costing E$450,000$ were acquiredduring the year.c$)$ Motor vehicles which cost the firm E $250,000$ on $1$st October $2020$ was sold for E$170,000.$d$)$ The company charges depreciation at the rate of $20\%$ on cost on the motor vehicles andequipment is depreciated at $25\%$ on reducing balance. Full year depreciation is charged in the yearof purchased and nil in the year of disposal.e$)$The company made a bonus issue of $1$ share for every $3$ shares held at E $2\mathrm{.}00$ on $1$st June $2023$and a right issue of $1$ share for every $5$ shares held as at $31$st December, $2023$ for E $3\mathrm{.}50$ per share.f$)$ Treasure shares of $40,000$ shares were issued for E $4\mathrm{.}00$ per shares and a dividend of E$110,000$was paid for the year.In accordance with IAS $16$ Property Plant and Equipment, you are required to:i$)$ Prepare the Non$-$Current Assets Schedule $(15$ Marks$)$ii$)$ Prepare a Statement of Changes in Equity $(15$ Marks$)[$Total: $30$ Marks$]$