2.1) Prepare the inventory general ledger account for the year ended 31 December 2022. Show all dates and calculations. Ignore VAT. (25 marks) 2.2) Prepare an extract from the Statement of Profit or Loss and Other Comprehensive Income of Sky Dining (Pty) Ltd for the financial year ending 31 December 2022 in accordance with International Financial Reporting Standards (IFRS), showing the below line items: Revenue Cost of sales Gross profit Show all your calculations. (10 marks) 2.3) During the year-end stock take, the management of Sky Dining (Pty) Ltd identified ready-made meals with a cost price of R75 000 which are contracted to be sold to a local airline. This local airline is now under liquidation. Management estimated that these meals had a net realisable less cost to sell value of R68 000 but decided not to write down the inventory. Management is of opinion that the auditors would not question this because the stock relates to only one contract, and the stock take is in December when everyone wants to go on holiday. Discuss the ethical dilemma faced by management, in terms of the International Financial Reporting Standards (IFRS), when there are signs of inventory impairment, but management decides not to write down the inventory balance. (5 marks)

Sky Dining (Pty) Ltd (Sky Dining) is a company that sells ready-made meals to operators within the airline industry. The entity has been in operation for over a decade and has a good reputation within the airline industry providing high-quality service and meals. The information below relates to the financial year ended 31 December 2022: Date Description Number of meals Amount 01 Jan 2022 Opening inventory 35001000 meals costing R105 per meal; 2500 meals costing R110 per meal (Refer to note 1 below) 28 Jan 2022 Cash purchases 1000 R120 per meal 02 Mar 2022 Credit sales 2300 R121 per meal 20 Apr 2022 Cash purchases 1500 R130 per meal 13 May 2022 Credit purchases 5500 R687 50020 Aug 2022 Cash sales 1450 R125 per meal 20 Nov 2022 Returns 100 The original cost of R120 per meal (see 28 Jan 2022) 13 Dec 2022 Cash sales 1500 R143 per meal Additional information: 1. Included in opening inventory are 1000 meals at R105 each, which was written down to the net realisable value of R95 per meal (net of selling costs) during the December 2021 year-end. During the current financial year, there has been a great demand for these items as passengers have started travelling again. Sky Dining is therefore able to sell each meal for R130 (selling costs are R5 per meal). At the current year-end, there were 200 meals still on hand. 2. The selling price of each ready-made meal is computed at cost plus 10%. The selling costs remained the same throughout the financial year at R5 per meal. 3. Sky Dining uses the perpetual inventory method and cost is determined using the First in First Out (FIFO) method. REQUIRED: 2.1) Prepare the inventory general ledger account for the year ended 31 December 2022. Show all dates and calculations. Ignore VAT. (25 marks) 2.2) Prepare an extract from the Statement of Profit or Loss and Other Comprehensive Income of Sky Dining (Pty) Ltd for the financial year ending 31 December 2022 in accordance with International Financial Reporting Standards (IFRS), showing the below line items: Revenue - Cost of sales Gross profit Show all your calculations. (10 marks) 2.3) During the year-end stock take, the management of Sky Dining (Pty) Ltd identified ready-made meals with a cost price of R75 000 which are contracted to be sold to a local airline. This local airline is now under liquidation. Management estimated that these meals had a net realisable less cost to sell value of R68 000 but decided not to write down the inventory. Management is of opinion that 'the auditors would not question this because the stock relates to only one contract, and the stock take is in December when everyone wants to go on holiday. Discuss the ethical dilemma faced by management, in terms of the International Financial Reporting Standards (IFRS), when there are signs of inventory impairment, but management decides not to write down the inventory balance. (5 marks) Competency Framework Reference D1.1 Financial reporting: in accordance with International Financial Reporting Standards (IFRS) a) Prepare, analyse and evaluate general purpose financial statements in accordance with IFRS for an entity, which could be a for-profit entity, an SME, a public sector entity or a not-for-profit entity. I Ethics, values, and attitudes d) Use an ethical reasoning process (based on ethics theories and professional values and attitudes and the code of professional conduct) to solve professional ethics dilemmas. b) Distinguish between ethical principles and rules of conduct, and apply the fundamental ethical principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour when rendering services Sky Dining (Pty) Ltd (Sky Dining) is a company that sells ready-made meals to operators within the airline industry. The entity has been in operation for over a decade and has a good reputation within the airline industry providing high-quality service and meals. The information below relates to the financial year ended 31 December 2022: Date Description Number of meals Amount 01 Jan 2022 Opening inventory 35001000 meals costing R105 per meal; 2500 meals costing R110 per meal (Refer to note 1 below) 28 Jan 2022 Cash purchases 1000 R120 per meal 02 Mar 2022 Credit sales 2300 R121 per meal 20 Apr 2022 Cash purchases 1500 R130 per meal 13 May 2022 Credit purchases 5500 R687 50020 Aug 2022 Cash sales 1450 R125 per meal 20 Nov 2022 Returns 100 The original cost of R120 per meal (see 28 Jan 2022) 13 Dec 2022 Cash sales 1500 R143 per meal Additional information: 1. Included in opening inventory are 1000 meals at R105 each, which was written down to the net realisable value of R95 per meal (net of selling costs) during the December 2021 year-end. During the current financial year, there has been a great demand for these items as passengers have started travelling again. Sky Dining is therefore able to sell each meal for R130 (selling costs are R5 per meal). At the current year-end, there were 200 meals still on hand. 2. The selling price of each ready-made meal is computed at cost plus 10%. The selling costs remained the same throughout the financial year at R5 per meal. 3. Sky Dining uses the perpetual inventory method and cost is determined using the First in First Out (FIFO) method. REQUIRED: 2.1) Prepare the inventory general ledger account for the year ended 31 December 2022. Show all dates and calculations. Ignore VAT. (25 marks) 2.2) Prepare an extract from the Statement of Profit or Loss and Other Comprehensive Income of Sky Dining (Pty) Ltd for the financial year ending 31 December 2022 in accordance with International Financial Reporting Standards (IFRS), showing the below line items: Revenue - Cost of sales Gross profit Show all your calculations. (10 marks) 2.3) During the year-end stock take, the management of Sky Dining (Pty) Ltd identified ready-made meals with a cost price of R75 000 which are contracted to be sold to a local airline. This local airline is now under liquidation. Management estimated that these meals had a net realisable less cost to sell value of R68 000 but decided not to write down the inventory. Management is of opinion that 'the auditors would not question this because the stock relates to only one contract, and the stock take is in December when everyone wants to go on holiday. Discuss the ethical dilemma faced by management, in terms of the International Financial Reporting Standards (IFRS), when there are signs of inventory impairment, but management decides not to write down the inventory balance. (5 marks) Competency Framework Reference D1.1 Financial reporting: in accordance with International Financial Reporting Standards (IFRS) a) Prepare, analyse and evaluate general purpose financial statements in accordance with IFRS for an entity, which could be a for-profit entity, an SME, a public sector entity or a not-for-profit entity. I Ethics, values, and attitudes d) Use an ethical reasoning process (based on ethics theories and professional values and attitudes and the code of professional conduct) to solve professional ethics dilemmas. b) Distinguish between ethical principles and rules of conduct, and apply the fundamental ethical principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour when rendering services