Kaitanos inventory includes three items for which the following details are available.

Supplier\'s Net realisable

list price value

$ $

Product X

Product Y

Product Z

The company receives a trade discount from its suppliers and it also takes advantage of a

discount for prompt payment.

Required

i Calculate the total value of products X Y and Z which should be shown in inventory in

the statement of financial position.

ii Explain the difference that changing from a weighted average to FIFO method of

inventory valuation is likely to have on an entity\'s profit or loss. marks

b IAS Agriculture prescribes the accounting treatment and disclosures related to

agricultural activities. An entity is encouraged, but not required, to provide a quantified

description of each group of biological assets, distinguishing between consumables and bearer

biological assets, or between mature and immature biological assets, as appropriate.

Required

i Distinguish between a biological asset and an item of agricultural produce.

ii Explain how agricultural produce is measured in the financial statements of an entity.

iii. Give five examples of biological assets and their relative agricultural produce.

iv Explain what is meant by consumable and bearer biological assets, giving one example

for each. marks

c On January Shumba Enterprises entered into a lease agreement to rent an asset for a

sixyear period, at which point it will be returned to the lessor and scrapped, with annual

payments of $ made in advance. The initial measurement of the lease liability amounts

to $ discounted at the implicit interest rate shown in the lease agreement of

Shumba Enterprises expects to sell goods produced by the asset during the first five years of

the lease term but has leased the asset for six years as this is the requirement of the lessor, and

in case this expectation changes. Shumba Enterprises has the right to determine the use of the

asset during the lease term and will obtain substantially all the economic benefit from its use.

Required

Explain how the above lease would be accounted for the year ending December

including producing relevant extracts from the statement of profit or loss and statement of

financial position. marks