a. What are the list of financial statements that should be reported by Islamic banks according to AAOIFI and according to IFRS? Is there any difference(s)? Explain!

b. Explain three possible accounting issues when IFRS framework is applied in Islamic financial institutions!

Muhammad Islamic Bank is doing a murabahah transaction with Ebrahim. The asset involved costs BD10,000. The mark up at Muhammad Islamic bank is 4% per year. The bank requiring Ebrahim to pay a 20% hamish jiddiyah. Ebrahim chose a period of financing of 5 years. Payment is made at a yearly basis.

1. Do the yearly journal entries in year 0 and year 1 to 5. DO NOT forget to provide all calculation processes!
2. Do the yearly extract of the Balance Sheet and Income Statement