a) Y Ltd. purchases a machine for $60,000. At the end of the current year, Y Ltd. appraises the fair value of the machine $70,000 plus or minus 5%. Explain what aspects need to be taken into consideration in measurement of the machine in the financial statement with regards to relevance and faithful representation.

(6 Marks)

b) Analyse the conditions for using accounting based earnings rather than market information for fixing mangers bonus.

(4 marks)