Identify an error and give ways to correct it:

1. On 15 December 20X5, Caesar sold to a customer wine for 100,000. plus 16% VAT 1 Caesar recognised the revenue from the transaction as follows: Dr Accounts Receivable / Cr Revenue 116,000 Dr VAT Expense / Cr VAT payable 16,000

2. In July 20X4, Caesar was sued for patent infringement. End of 20X4, Caesars lawyers advised that the risk of losing the case is remote. Consequently, Caesar did not provide for the case in its 20X4 financial statements. End of 20X5, Caesars lawyers advised that , in the light of the court proceedings so far, the probability of losing the case is 60% and the probable amount that Caesar will need to pay in case of losing is 1 mill. Caesars accounting department omitted, however, to account for this change in assessment in December 20X5. On 15 January 20X6, the court dismisses the case and the probability that the plaintiff will appeal the court decision is assessed to be remote.

3. On 1 October 20X1, Caesar bought a new bottling machine. The machines original cost was 1.6 mill. and this amount was entirely expensed upon purchase. The machine has a 10-year useful life and no residual value. In January 20X6, the machine is still in use and the original estimate of its useful life is still considered appropriate.