The extract profit and loss account of Air Control Specialists Ltd is as follows (in millions):

Assume that in early 2009 it was discovered that the closing stock for 2006 was understated by £50 million and that the closing stock for 2007 was overstated by €20 million. The closing stock at 31 December 2008 was stated correctly.

Required 

1 Incorporate the above information and show corrected income statements for the three years.
2 Discuss whether each year’s net income as reported above and the related owners’ equity amounts at the end of the year are understated or overstated. For each incorrect figure, indicate the amount of the understatement or overstatement.
3 How much did these assumed corrections add to, or take away from Air Control Specialists Ltd’s total net profit over the three-year period? How did the corrections affect the trend of net profit?

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(Amounts in millions) Net sales revenue 2008 2007 2006 1,517 1,319 1,238 Cost of goods sold: Opening stock 269 259 234 Purchases 859 729 663 Cost of goods available 1,128 988 897 Closing stock (311) (269) (259) Cost of goods sold 817 719 638 Gross profit Total operating expenses Net profit 700 600 600 500 450 420 200 150 180