Q8- Houghton Ltd owns and operates a department store. During the year, the directors decided to offer refunds to dissatisfied customers, provided that these were claimed within three months of the date the goods were purchased. There are large notices explaining this policy on every floor of the store. Since the policy was introduced, refunds have been claimed on roughly 2% of all sales. Prepare brief notes for the directors of Houghton Ltd to answer the following questions: (a) When should a provision be recognised, according to IAS 37 Provisions, Contingent Liabilities and Contingent Assets? (b) How should the policy of refunding customers be treated in the financial statements for the year? (c) How should the policy of refunding customers be disclosed in the notes to the financial statements?

Q9- The tax charge of Roamer Ltd based upon its profits for the current year is 48,000. The company had under-estimated its tax liability for the previous year by 9,000. What will be the tax charge and tax liability recognised in the financial statements of Roamer Ltd at the end of the current accounting period?

Q10- You have strong views in support of a client who is being threatened with legal action by a supplier who is alleging late payment of invoices. You have offered to state publicly your views on the matter, in defence of your client. Identify the type of threat to objectivity described above.