Question THREE [10 marks] A] State the benchmark treatment for each of the following in as far as IAS 8 prescribes (just mention whether the required treatment is prospective or retrospective) F] Changes in accounting estimates. ii] Changes in accounting policy. Correction of material prior period error. [1 mark] [1 mark] [1 mark] B] Mikusu Manufacturing Limited is engaged in manufacturing of spare parts for motor car assemblers. The audited financial statements for the year ended December 31, 2017 disclosed that the profit and retained earnings were TZS 21,000,000 and TZS 89,000,000 respectively. The draft financial statements for the year 2018 show a profit of TZS 15,000,000. However, following adjustments are required to be made: The management of the company has decided to change the method for valuation of raw materials from FIFO to weighted average. The value of inventory under each method is as follows: December 31, 2016 December 31, 2017 December 31, 2018 FIFO TZS Weighted Average TZS 37,000,000 35,500,000 42,000,000 44,500,000 58,400,000 54,400,000 ii] In 2017, the company purchased a plant for TZS 100,000,000. Depreciation on plant was recorded at TZS 25,000,000 instead of TZS 10,000,000. This error was discovered after the publication of financial statements for the year ended December 31, 2017. The error is considered to be material. Required: Show the effect of the above on the retained earnings figures for the year 2017 and 2018 [7 marks]