B2 Following are situation in the real world, read the situations carefully and give your judgement as an accounting student considering International accounting standards A) CASE 1: Mr. Mohammed is a fisherman, who ventures into the sea for his lively wood. He earns his income by selling fish in the local market. His average monthly income come to around OMR 5,400. During peak seasons of fishing Mr Mohammed earns around OMR15.000 a month. During the peak seasons (usually from December to March) after cash collections from the customers and after meeting immediate expenses, Mr Mohammed invested the remaining excess money of OMR 11,000 in short-term highly liquid investment in the month of January 2018. The objective of these investments is to meet short-term cash commitment. Mr Mohammed in the month of February 2017, wanted to upgrade his boat to improve his catch and efficiency. The cost of the new upgraded boat is OMR 28,500; it has advanced fish- catching technology where he can identify the location of bulk fish using radar technology. For this, he borrowed a loan from Bank Muscat worth OMR 30,000. Mr Mohammed also involved his son into the fishing business for this he has leased another boat under an operating lease agreement in exchange for a monthly payment of OMR 300 As an accounting student, give your judgement for the treatment of various cash flows stated in the above case, support your answer with proper justification considering, IAS7. B) CASE 2: Since 2005, Mr Abdul Rehman runs a car and minibus rental services in Barka. His company name is Barka Rentals company. He is having the following fleet of cars and buses in his company: Sports utility vehicle: 18, Sedan cars: 25, Small cars 20, and minibus: 20. the life of the vehicle is around 8-10 years. Mr Abdul Rehman rents cars to his customers usually small companies and individuals under an operating lease. For small companies, he renews its rental fleet for a period of 12 months. The ordinary activities of the company also include selling old cars (i.e. his old rental cars). Mr Abdul Rahman's companyin its financial statements recognize car rental income and income from the sale of old used cars as revenue of the company. Mr Abdul Rehman sold an old computer and printing machine that were used to store customer and vehicle data of the company for OMR 320, the book value of both the equipment was OMR250. In order to meet short term business needs, Mr Abdul Rehman made a fixed deposit of OMR 1,200 on a two-month maturity plan with 4% rate of interest in a bank. The conditions of the fixed deposit are that if he cancels the fixed deposit he shall lose insignificant percentage of interest. He pays all his employees using their salary account and bank transfers As an accounting student, give your judgement for the treatment of various cash flows stated in the above case, support your answer with proper justification considering, LAST
