Question 1

(a) MFRS102 Inventories requires inventories of raw materials and finished goods to be valued in financial statements at the lower of cost and of net realisable value. Required: Describe three methods of arriving at cost of inventory which are acceptable under MFRS 102 Inventories and explain how they are regarded as acceptable. [6 marks]

(b) Explain depreciation and revaluation in accordance to MFRS 116 Property, Plant and Equipment. [9 marks]

(c) Explain whether the physical assets and prepaid expenses qualify as financial instruments. [5 marks]

(d) Explain how to distinguish a financial liability from an equity instrument. [5 marks]

(e) Explain when to derecognise a financial asset. [5 marks]