P4-45A. (Learning Objectives 2, 5: Understanding annual reports and financial statements reporting requirements) Manuel Young, the new accountant of Raffles Place Ltd., was preparing the company’s financial statements ending 20X6. During the year, the company:

■ Changed the useful life estimates of some assets from 3 to 5 years.

■ Had to account for its investment differently due to the publication of a new IFRS.

■ Changed its accounting policy on revenue recognition.

■ Discovered an error in the 20X5 financial statement.

Manuel is somewhat unsure of what to do next. He has emailed you, his former accounting professor, for advice.

Requirement Write a reply to Manuel and offer your guidance on the appropriate treatment of the items.

Group B