1. Mingle Ltd has the following products in inventory at the end of 2020:

Units Cost per unit GH

XYZ (completed) 1080 22

ABC (part complete) 560 26

Each product normally sells at GH34 per unit. Due to the difficult trading conditions, Mingle Ltd intends to offer a discount of 15% per unit and expects to incur GH4 per unit in selling costs.

GH10 per unit is expected to be incurred to complete each unit of ABC.

Required:

In accordance with IAS 2 Inventories, at what amount should inventory be stated in the financial statements of Mingle Ltd as at 31 December 2020? (3 marks)

2. According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity must select and apply its accounting policies consistently from one period to the next and among various items in the financial statements. However, an entity may change its accounting policies under certain conditions.

Required:

Identify the circumstances under which it may be appropriate to change accounting policy in accordance with the guidance given in IAS 8 Accounting Policies, Changes in

Accounting Estimates and Errors. (2 marks)

3. In accordance with IAS: 12 Income Taxes, deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.

Required: Explain temporary differences. (2 marks)

4. Yaqub Ltd is a listed manufacturing company which prepares its financial statements for the year ended 31 October, 2018 in accordance with IFRS. The financial statements are due to be authorized for issue on 15 January 2019.
   1. Yaqub Ltd holds an investment in the shares of a listed company, Malorie Ltd. During November 2018 there was a material fall in the value of Malorie Ltds shares. Analysts attribute the fall in value principally to a fraud dating back to December 2017 that was discovered by Malorie Ltd's management and announced publicly in November 2018.
   2. In December 2018, the directors of Yaqub Ltd publicly announced a plan to reduce the workforce by 10% as a result of worsening economic conditions.

Required:

Discuss the effects of each of the above items on the financial statements of Yaqub Ltd for the year ended 31 October 2018 in accordance with IAS 10 Events after the Reporting Period.

(4 marks)

5. After a wedding in 2018, ten people died, possibly as a result of food poisoning from products sold by Afrakoma Catering Services. Legal proceedings have commenced, seeking damages from Afrakoma Catering Services but it disputes liability. Up to the date of approval of the financial statements for the year to 31 December 2018, Afrakoma Catering Services lawyers advised that it is probable that it will not be found liable. However, when Afrakoma Catering Services prepares the financial statements for the year to 31 December 2019, its lawyers advice that, owing to developments in the case, it is probable that it will be found liable.

Required:

In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, what is the required accounting treatment?

i. At 31 December 2018? ii. At 31 December 2019?