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could you answer question a, b , c, d and e You are starting up your own business as a corporation with share capital with

could you answer question a, b , c, d and e
You are starting up your own business as a corporation with share capital with 5 pepole. Each of you invests SAR 40,000 cash in your shares, with each share having a value of SAR100. Your agreement is that at the end of the year you will distribute earnings through a dividend of SAR 4 per share, if your cash balance is more than 50% of the initial balance invested
The operation you are starting up is an online store, and you are planning to sell household goods home design pieces. Since you are a new business, you are starting with the same kind of mug that is decorated to with the customer name in calligraphic style writing. Adding the name costs SAR 1 per mug (material), and you have hired a calligrapher full-time for this task. Their salary is SAR 5,000 a month. Importantly, the calligrapher has developed a special type of font that makes your mugs unique, and has spent about 1 month worth of work doing so.
You also have hired a website developer, SAR 10,000 a month, but all other tasks (distribution, sales management, administration and warehouse) are taken care of by you as the owner team. To store your mugs and run operations, you have rented a small space for SAR 10,000 a month, inclusive of utilities. However, you have purchased equipment for the calligraphy, warehouse and all other operations of SAR 60,000. All equipment is expected to be useful for 5 years, and be evenly used throughout this time period.
The mugs you purchase from a supplier abroad, cost per mug, including shipping, SAR 2. You charge SAR 12 per mug with a regular font and SAR 16 per mug with the special font.
In the first year of operations, these are monthly sales volume figures: Jan: 100
Feb: 80
Mar: 120
Apr: 150
May: 200
June: 200
Jul: 100
Aug: 100
Sept: 500 (incl 100 regular, plus 400 special order from a local school) Oct: 200
Nov: 200 Dec: 200
The business used the special font for the special order and charged SAR14 per mug, since this was a bulk order. According to this, a new customer requested a special order of 1000 mugs, paid upfront, to be delivered in January of the next year.
The business also pays rent upfront for a year from 1 July to 30 June
Finally, the business is currently thinking about purchasing land to build their premises on the land.
Follow the regular accounting cycle and set-up the accounting recording accordingly. Prepare financial statement plus basic notes for the financial year 1 Jan to 31 Dec, in line with IFRS, and advise on the following:
a) According to IFRS, how should they deal with the rent payment? Explain your choices in your own words.
b) According to IFRS, how should they deal with the specially developed calligraphy font?
c) The business wants advice on whether to follow historic cost or revaluation for the land it is thinking to buy and all other assets it deals with. According to IFRS, provide comprehensive advice on how they can apply the revaluation approach, if at all.
d) Based on year 1, what is the businesss sustainable growth rate?
e) The business thinks about acquiring another, related, business that will take over the sales function in a busy shopping zone (new Diriyah development in Riyadh). This is a
successfully running business whose owner wants to move on to a new venture. It has had stable profits over the previous three years, around SAR50k per year. On the basis of IFRS, advise how to approach the acquisition, if at all.

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