Maverick Ltd is a Paper manufacturing company headquartered in India. The following items have been extracted from Maverick Ltd's financial statements for the year ended 30 June 2021. Net profit $3,000,000 Shareholders' equity Net cash flows from operating activities $20,000,000 $5,000,000 As a part of its business growth strategy plan, Maverick Ltd intends to expand its operations into Australia. The Chief Financial Officer (CFO) of Maverick Ltd has recently approached a local bank in Australia seeking a loan of $11,000,000. The company currently is in a strong financial position, and therefore, the CFO of Maverick Ltd is confident that the company would qualify for the loan. The Australian bank traditionally uses the below ratio to assess the Company's ability to generate future cash flows from operations. Net cash from operating activities to net profit ratio (i.e. Net cash flow from operating activities/net profit). The generally acceptable ratio for the bank is 1.60 or above. The Australian bank uses International Financial Reporting Standards (IFRS) as a basis for lending decisions. However, Maverick Ltd prepares the financial statements using Indian Generally Accepted Accounting Principles (GAAP). The CFO of Maverick Ltd has noted the following policy differences between the accounts which have been prepared based on Indian GAAP and what is required under IFRS in Australia. 1. The company used the LIFO method for inventory valuation. However, IFRS only permits the use of the FIFO method. The inventory valuations for the current and previous period are as follows under the two methods: FIFO LIFO Current Period $1,700,000 $1,960,000 Previous Period $1,500,000 $1,670,000 2. During the current financial year, the company has expensed $600,000 of new product development cost paid and recognised it in the Statement of Profit or Loss. However, the project is technically feasible and therefore qualify to be capitalised under IFRS. It needs to be recognised as an asset in the Balance Sheet (Statement of Financial Position). 3. Interest received of $550,000, and dividend received of $150,000 have been classified as cash flows from financing activities in the current year's cash flow statement. Traditionally, interest received and dividend received were classified as cash flows from operating activities, and the company does not have any significant reason for a policy change. 4. The directors of the company have recommended that a dividend of $550,000 be paid in respect of the 2020/2021 financial year. The dividend is required to be approved by the company's shareholders. As of the reporting date, the shareholders had not met to approve this dividend, but the directors have recorded $550,000 as a dividend to be paid anyway. 5. The CFO is conservative in its accounting values and decided to make a provision of $1,870,000 for any future major repairs that may be undertaken to its manufacturing plant. However, on 30 June 2021, there was no contractual obligation to incur any expenditure due to major repairs expected to be undertaken in future years. Hence, this provision for future repairs cannot be recognised in the financial statements in accordance with IFRS. Required: a) b) Prepare the necessary General Journal entries (Dr and Cr) to adjust the books of Maverick Ltd to reflect the requirements of IFRS as at 30 June 2021. Narrations are not required. (10 Marks) Would Maverick Ltd be granted the $11,000,000 loan from the Australian bank after making the adjustments to the financial statements? Show all calculations (Round off your answers to the nearest two decimals). (5 Marks)