Evenbetter $($Pty$)$ Ltd $($Evenbetter$)$ is a leading personal care company specialising in

the retail of skin care, sun protection, make$-$up$,$ perfume, and hair care. The company

has a $30$ June year$-$end. The annual financial statements for the June $2023$ year$-$end

will be approved on $28$ July $2023.$ To finalise their $30$ June $2023$ year$-$end annual financial statements, the following transactions must be considered:

DIVIDENDS:

The board of directors of Evenbetter declared an ordinary dividend of R$240000$ on $7$

July $2023$ for the $2023$ financial year$-$end. Upon declaration of the dividend, the financial department recorded an accrual for the amount, as well as the related tax in annual

financial statements for the year ended $30$ June $2023.$

The following relates to the share capital as at $30$ June $2023$:

$20232022$

Authorised share capital $20000002000000$

Issued share capital $15000001500000$

Evenbetter does not have a fixed dividend policy.

LAWSUIT:

Evenbetter received a legal notice on $10$ July $2023$ of a pending R$1500000$ lawsuit

against the company. Evenbetter consumers have claimed that the company$$s new

eyeshadow palette is not intended to be used around the eye area. The new eyeshadow palette has caused consumers eye injuries such as eye irritation, rashes, discoloration, skin inflammation and pain. According to the lawyers of Evenbetter, the

possibility exists that that the lawsuit will succeed which may require Evenbetter to

settle the claims. The claim of R$1500000$ is material to Evenbetter. The lawyers have

communicated to Evenbetter that the matter will be deliberated and finalised in court

on $1$ August $2023.$

$3$ HFAC$232-1-$Jul$-$Dec$2023-$SuppSA$1-$TD$-$V$2-08122022$

REQUIRED:

$1\mathrm{.}1)$

$($i$)$ Discuss, in terms of IAS $10,$ whether Evenbetter $($Pty$)$ Ltd has correctly

accounted for the dividends declared in the $30$ June $2023$ annual

financial statements.

$(3$ marks$)$

$($ii$)$ Disclose the dividends declared in the notes to the financial statements

of Evenbetter $($Pty$)$ Ltd for the year ended $30$ June $2023$ in accordance

with IAS $1.$

$(2$ marks$)$

$1\mathrm{.}2)$

$($i$)$ Discuss, in terms of IAS $10,$ how Evenbetter $($Pty$)$ Ltd should account for

the pending lawsuit in its annual financial statements for the June $2023$

year$-$end.

$(5$ marks$)$

$($ii$)$ Disclose the pending lawsuit in the notes to the financial statements of

Evenbetter $($Pty$)$ Ltd for the year ended $30$ June $2023$ in accordance with

IAS $37.$