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(ii) The directors of Trista are disappointed by the draft profit for the year ended 30 September 2020. The company's assistant accountant has suggested an

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(ii) The directors of Trista are disappointed by the draft profit for the year ended 30 September 2020. The company's assistant accountant has suggested an area where she believes the reported profit may be improwed: Most of Trista's competitors value their inventory using the average cost (AVCO) basis, whereas Trista ues the first in first out (FIFO) basis. The value of Trista's inventory at 30 September 2020 (on the FIFO busis) is K20 million, however on the AVCO basis it would be valued at K18 million. By adopting the swe method (AVCO) as its competitors, the assistant accountant says the company would improve its profit for the year ended 30 September 2020 by K2 million. Trista's inventory at 30 September 2019 was reported as K15 million, however on the AVCO basis it would have been reported as K13.4 million. Comment on the acceptability of the assistant accountant's suggestions and quantify how they would uffect the financial statements if they were implemented under IFRS. Ignore taxation. 5 Marks

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