3) Waves Ltd is a manufacturing business preparing its annual financial statements for the year ended 31 December 2019. The following were noted in a meeting on 31 March 2020 with its consultants. The financial statements are expected to be authorized in the first week of April 2020. i) The consulting firm reviewed Waves Ltd' accounting policies and identified a change to the current accounting policy with respect to inventory to better reflect the actual economic substance of its business. The directors decide to change the valuation method used for raw material from the weighted-average cost method to the first-in-first-out (FIFO) method. The value of the inventories is as follows: Weighted Average FIFO 31-Dec-18 160,000 140,000 31-Dec-19 190,000 160,000 ii) Waves Ltd built a new factory building during 2019 at a cost of $20 million. At December 31, 2019, the net book value of the building was $19 million. Subsequent to year-end, on March 15, 2020, the building was destroyed by fire and the claim against the insurance company proved futile because the cause of the fire was negligence on the part of the caretaker of the building. iii) The company has a policy of a general provision for bad debts was for 5% of the trade debtors amount. In the last week of November 2019, a debtor, Frames Ltd, with debt of $2.5 million had suffered a heavy loss due to an earthquake; the loss was not covered by insurance. The CFO of Waves Ltd stated that the company should make a provision for 50% of amount receivable from Frames Ltd apart from the 5% general provision for bad debt on remaining debtors. In February 2020, Frames Ltd became bankrupt. The Chief Financial Officer has asked you to create a brief review stating the effects the above events would have on the financial statements providing reference to IFRS. Where possible you should show the calculations. (15 marks)