Please follow the tutorial instructions and answer questions step by step. For better understanding, please use the table to display the P&L statement and related questions.

Comprehension question 4.

Australia has adopted International Financial Reporting Standards since 2005. Does this mean all accounting standards issued in Australia are the same as the IFRS standards?

Exercise 1.6

An entity purchases a rental property for $5 000 000 as an investment. The building is fully rented and is in a good area. At the end of the current year, the entity hires an appraiser who reports that the fair value of the building is $7 500 000 plus or minus 15%. Depreciating the building over 40 years would reduce the carrying amount to $4 875 000.

1. What are the relevance and faithful representation accounting considerations in deciding how to measure the building in the entity's financial statements?
2. Does the Conceptual Framework lead to measuring the building at $7 500 000? Or at $4 875000? Or at some other amount?

Exercise 1.12

Explain how Beachside Ltd should account for the following items/situations, justifying your answer by reference to the Conceptual Framework's definitions and recognition criteria.

1. Receipt of artwork of sentimental value only.
2. Beachside Ltd receives 5 000 shares in Monty Ltd, trading at $6 each, as a gift from a grateful client.
3. The panoramic view of the coast from Beachside Ltd's caf windows, which you are convinced attracts customers to the caf.
4. The court has ordered Beachside Ltd to repair the environmental damage it caused to the local river system. You have no idea how much this repair work will cost.

Exercise 17.14

The general ledger trial balance of Medico Ltd, a medical manufacturing and research company, includes the following accounts at 30 June 2023.

	Dr	Cr
Sales revenue			$	2 600 000
Interest income				4 000
Gain on sale of plant				52 000
Rental income				4 000
Royalty income				20 000
Other revenue				2 000
Cost of sales	$	1 640 000
Interest on borrowings		66 000
Sundry borrowing costs		2 000
Research expense		102 000
Advertising expense		50 000
Sales staff salaries		194 000
Amortisation of patents		14 000
Freight out		64 000
Shipping supplies		32 000
Depreciation on sales equipment		10 000
Administrative salaries		144 000
Legal and professional fees		26 000
Office rent expense		60 000
Insurance expense		28 000
Depreciation of office equipment		32 000
Stationery and supplies		10 000
Miscellaneous expenses		4 000
Income tax expense		62 000

Additional information

• Land was revalued upward by $200 000 during the year ended 30 June 2023. The related tax was $60 000.
• Medico Ltd uses the single statement format for the statement of profit or loss and other comprehensive income.

Required:

a) Prepare the statement of profit or loss and other comprehensive income of Medico Ltd for the year ended 30 June 2023 in accordance with AASB 101/IAS 1, showing the analysis of expenses by function in the statement.

b) Provide any explanations necessary where figures have been added into a total that you display on the statement.

Answer rating: 100% (QA)

Comprehension Question 4 Answer No adopting International Financial Reporting Standards IFRS doesnt necessarily mean all accounting standards in Austr... View the full answer