How much revenue should Handel Limited recognise in its statement of profit or loss and other comprehensive income for the year ended 31 December 2016 in relation to the sale of water filtration devices (i.e. excluding warranties)? 200,000 1,080,000 1,200,000 2,250,000 stasements to 31 Dexeneber exh year, is involved in the manufactare and diviributive of a varicty of natural featheare products. Several issues have still to be resolvad before the fisancial statements for the year couled 31 Decerser 2016 can be finalised. Iuse 1: Handel Limsited asquincl t200,000 of finished goods invenories on conkignment from Chopin Limibed buring. Docember 2016. While the goods nemain in Handel Limisol's inventory at 31 December 2016, they are not recoeded in the conpany's financial savements for the year ended 31 December 2016. The cootract entered into with Chopin Limited suacs that Handel Limited has the right to sell the inventories direct to the public or to transfer them at cost to another fetaller. Chopin Limined cannot foece Handel Limincd bo return the goods or transfer thern to another retailer. Requirsment Fxplain how this transaction should be tocondod in the fosancial stasensents of Ilandel Limited for the yoar ended 31 Docember 2016. 4 Marks Issue 2 : Handed Limited occasionally pechases gatlic, keepiang is it controlled conditions for periods of two years to enhance its autritional properties priof m asing it to manufacture a range of health supplements. In January 2016. Handel Limind purchased gartic at a cost of 684,000 , immediately contracting io sell it for 684,000 and buy it back eccastly two years later for Etot,640. Handel Limited has not made any accounting entries in respect of this arrangement in the conipany's financial stancments for the year conded 31 December 2016. Requircment Fxplais how thes trascaction should ke accounted for in the financial statements of Handel Limited for the years cndod 31 December 2016 and 2017, showing any relevant figures. 8 Marks Issue 3: Handel Iimited operales an internet site. During the year ended 31 December 2016 it cotnenenced selling products manufactured by another bedihcare eompany. Mahler limited, which does not compete directly with Handel Ifanted. Costomers using Handel Linited's internet site select which or Mahler L.imitod's prodects they wish to purchase and provide their credit card details and the adesess to which the goods should be delivened. Otce credit cand authorisation is received, Handel Limited passes the transaction details to Mahler Limited, who is thes nespeasible for the detivery of the goods to the custonser and for any disputed credit charges, product meturns of warranty claiess, Handel timinct charges Mahler Limited a fee of 10 so of its products sold. During the year ended 31 December 2016 Handel Limined sold goods to Requirement Explain how Handel Limitod shoold reflect this amangement with Mahler Limitod in its financial statements for the year endod 31 Docomber 2016. 4 Marks Issue 4: During the year ended 31 Decenaher 2016 Handel Limind commenced selling a water filtration device for 6240 which inclades an exiended warranty that covers all repairs foe a period of four ycars. A eompetitor sells the same device without a warranty for 1225 and a local insurance broker sells a warranty similas as Handel Limited's for 625. During the year ended 31 Deceanber 2016, Handel Limined sold 5,000 How much revenue should Handel Limited recognise in its statement of profit or loss and other comprehensive income for the year ended 31 December 2016 in relation to the sale of warranties (i.e. excluding water filtration devices)? 1.200,000 240,000 30,000 120,000
