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Revenue 3 215 000 2 750 000 Cost of sales (1 260 000) 1955 000 (1 325 000) 1425 000 Gross Profit expenses (1 270 000) (940 000) 485 000 Profit for the period 685 000 Other comprehensive income Total comprehensive income 685 000 495 000 Retained earnings at the beginning of 2019 amount to N$945 000 (2018 NS460 000) Ignore tax implications Required: 1.1 Calculate the profit for the years 2019 and 2018 based on the new valuation applied to inventories 2Marks 1.2 1.3 Disclose the note applicable to the reporting period 31 December 2019 relating to the change in accounting policy on 8Marks inventories in order to comply with IFRS Present the statement of changes in equity for the reporting period ended 31 December 2019 5Marks List and discuss the procedure followed when a company is selecting an accounting policy 10 Marks 25 Marks 1.4 Total Question 1 Not yet wered Marked out of 25 Flag question Clansa is the auditor of Smart Ltd and she is currently finalizing the 2019 financial statements. Due to the changes in IFRSthe company now needs to include fixed overheads in the determination of inventories as required by IAS 2 Inventories. Previously fixed overheads were excluded in inventory valuations. The accountant presented you with the following figures relating to the new and old methods of inventory valuation 2019 2018 2017 NS NS NS Closing inventories, including fixed overheads 520 000 330 000 410 000 Closing inventories excluding fixed overheads 470 000 320 000 380 000 The preliminary Statement of Profit or Loss and other comprehensive income for the period ended 31 December 2019 (before any of the above-mentioned facts were taken into account) is as follows: 2018 2019 NS NS Revenue 2 750 000 Cost of sales 3 215 000 (1 260 000) 1955 000 (1 270 000) Gross Profit (1 325 000) 1425 000 (940 000) expenses Profit for the period Other comprehensive income 685 000 485 000 Total comprehensive income 685 000 485 000 Retained earnings at the beginning of 2019 amount to N5945 000 (2018 NS460 000) Tonere tax implications NII