comply with the requirements of International Financial Reporting Standards. BabyCare Ltd manufactures and sells various types of baby products across South Africa. The profit before tax in the draft annual financial statements of BabyCare Ltd for the years ended $28$ February $2023$ and $29$ February $2024,$ amounted to R$3300000$ and R$2950000$ respectively, before taking into account all the information below:$1.$ During the preparation of the draft annual financial statements for the year ended $29$February$2024,$ it was discovered that the inexperienced accountant incorrectly expensed import duties on three of its motor vehicles which were imported from Germany. The import duties incurred on the three vehicles imported from Germany were expensed instead of being capitalized in the accounting records of BabyCare Ltd for the year ended $28$ February $2023.$ Import duties of R$70000$ on each motor vehicle were expensed and recorded in the accounting records of BabyCare Ltd on $1$ December $2022.$Depreciation and tax allowances on motor vehicles are both provided at $25\%$ per annum $($pro$-$rata$)$ on the straight$-$line method. This incorrect allocation of the import duties is considered material and has not yet been corrected in the accounting records of BayCare Ltd for the year ended $29$ February $2024.$The SA Revenue Service indicated that they will re$-$open the previous years tax assessment. The SA Revenue Service will also regard these import duty costs to be of a capital nature$\mathrm{.}2.$ The directors decided at a board meeting that the current inventory valuation method does not give a reliable presentation of the effect of inflation on the companys profits. The directors subsequently decided to change the accounting policy concerning the valuation of inventory from the weighted average method to the first$-$in$,$ first$-$out method. Unfortunately, the inventory valuations according to the first$-$in$,$ first$-$out method for the $2022$ year could not be determined, due to a virus in the computer inventory costing program.The following deferred tax schedule with the respective inventory values was provided to you by the financial accountant which you may assume to be correct:Carrying Tax amount baseRR$29$ February $202465046656046628$ February $2023465000279000$The value of inventories on the weighted average method for the financial year ended $28$ February $2022$ amounted to R$364434$The SA Revenue Service indicated that they will not reopen the previous years tax assessments as a result of this change in the method of inventory valuation and that they will not accept the new inventory valuation method for tax purposes.FAC$3701/101/1/20241$ASSIGNMENT $02($First Semester$)($continued$)3.$ After a review of the computer hardware owned by BabyCare Ltd$,$ the directors decided to change the depreciation method for its computer hardware to $15\%$ per annum according to the straight$-$line method. Previously the computer hardware was depreciated at $20\%$ per annum according to the reducing balance method. The change in the depreciation method has not yet been recorded in the accounting records of BabyCare Ltd$.$ The following information was obtained from the computer hardware schedule.Date of purchaseCost of computer hardware Tax allowance$4.$ Assume all amounts are material$\mathrm{.}1/01/2022$R $7800006$ years straight line $($pro$-$rata$)5.$ The SA normal tax rate has remained unchanged at $27\%$ for the past $3$ years$\mathrm{.}6.$ The company provides for deferred tax on all temporary differences using the statement of financial position approach. There is certainty beyond any reasonable doubt, that the company will have sufficient taxable profit in future against which any unused tax losses can be utilised.MULTIPLE CHOICE QUESTIONS:These questions can be answered online. Log onto myUnisa, choose the FAC$3701$ module tab and access the assignment tool. Click on the submit action next to assignment $02.$ Remember each question has only one correct answer.QUESTION $1$The tax consequence of the correction of the incorrectly expensed import duties on the annual financial statements of BabyCare Ltd for the year ended $28$ February $2023,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors, is as follows:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$QUESTION $2$The incorrect allocation of the import duties will have the following effect on profit before tax in the statement of profit or loss and other comprehensive income of BabyCare Ltd for the financial year ended $29$ February $2024,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$QUESTION $3$Using the values in the deferred tax schedule provided for in information $2$ the change in the inventory valuation method from the weighted average method to the first$-$in$,$ first$-$out method will have the following effect on the cost of sales in the statement of profit or loss and other comprehensive income of BabyCare Ltd for the year ended $29$ February $2024,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$FAC$3701/101/1/20242$ASSIGNMENT $02($First Semester$)($continued$)$QUESTION $4$Using the values in the deferred tax schedule provided for in information $2,$ the value of inventory on the weighted average method on $28$ February $2023,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors and IAS $12,$ Income taxes, amount to:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$QUESTION $5$Using the values in the deferred tax schedule provided for in information $2$ the deferred tax balance at $28$ February $2023,$ only in respect of inventory according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors and IAS $12,$ Income taxes, amounts to:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$QUESTION $6$The change in the inventory valuation method from the weighted average method to the first$-$ in$,$ first$-$out method will have the following effect on the balance of retained earnings in the statement of changes in equity of BabyCare Ltd on $1$ March $2022,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$QUESTION $7$BabyCare Ltd must disclose the following information relating to the voluntary change in the inventory valuation method from the weighted average method to the first$-$in$,$ first$-$out method in the annual financial statements for the year ended $29$ February $2024,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors:a$)$ a description of the transitional provisionsb$)$ the amount of the adjustment relating to prior periods before those presented.c$)$ the nature of the change in accounting policy.d$)$ that the change in accounting policy is made in accordance with the IFRSs transitionalprovisionse$)$ the title of the International Financial Reporting Standard $($IFRS$)$ that is applied.f$)$ the reasons why applying the new accounting policy provides reliable and more relevantinformation.g$)$ for the current period and each prior period presented, the amount of the adjustment foreach financial statement line item affected.The correct answer is:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$ QUESTION $8$The accumulated depreciation in respect of the computer hardware that will be reflected in the accounting records of BabyCare Ltd after the change in method of depreciation at $29$ February $2024$ is as follows according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors, amount to:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$FAC$3701/101/1/20243$ASSIGNMENT $02($First Semester$)($continued$)$ QUESTION $9$The tax base of computer hardware of BabyCare Ltd for the years ended $28$ February $2023$ and $29$ February $2024$ respectively, according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors and IAS $12,$ Income taxes, amount to:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$QUESTION $10$The following information regarding the change in the depreciation method of computer hardware should be disclosed in the notes to the annual financial statements of BabyCare Ltd for the year ended $28$ February $2024,$ according to the requirements of IAS $8,$ Accounting policies, changes in accounting estimates and errors:a$.$ Identify the change in depreciation method as a change in estimate.b$.$ Identify the change in depreciation method as an error accounted for prospectively.c$.$ Nature of the change.d$.$ Amount of the change in depreciation method in the current year.e$.$ Effect of the change in depreciation method in future periods.f$.$ At least two comparative periods in the statement of financial position.The correct answer is:$[$Refer online to Assessment $2$ for the different multiple$-$choice question options$]$UNISAFAC$3701\_2024\_$TL$\_101\_1\_$B$\_$PDFFAC$3701/101/1/20$