a) IAS 8 Accoumting Policies, Changes in Accoumting Estimates and Errors contains guidance on the use of accounting policies and accounting estimates. Required: (i) Explain the basis on which the management of an entity must select its accounting policies and distinguish, with an example, between changes in accounting policies and changes in accounting estimates. 5 marks (ii) The directors of Trista are disappointed by the draft profit for the year ended 30 September 2020. The company's assistant accountant has suggested an area where she believes the reported profit may be improved: Most of Trista's competitors value their inventory using the average cost (AVCO) basis, whereas Trista uses the first in first out (FIFO) basis. The value of Trista's inventory at 30 September 2020 (on the FIFO basis) is K20 million, however on the AVCO basis it would be valued at K18 million. By adopting the same method (AVCO) as its competitors, the assistant accountant says the company would improve its profit for the year ended 30 September 2020 by K2 million. Trista's inventory at 30 September 2019 was reported as K15 million, however on the AVCO basis it would have been reported as K 13.4 million. Comment on the acceptability of the assistant accountant's suggestions and quantify how they would affect the financial statements if they were implemented under IFRS. Ignore taxation. 5 Marks