Question 1

Analyze the authentic accounting scenarios 2.1 and 2.2 given below. Exercise your professional judgment and apply specific regulations of the appropriate accounting standard(s) to solving the recognition, measurement, and financial reporting questions. Refer to the of the appropriate IFRS/IAS. Provide all the necessary calculations.

1.1.

The company XYZ bought property for OMR 600,000 on 1 January 2017. The land element of the purchase was OMR 100,000. The expected life of the building was 30 years and its residual value nil. On 31 December 2019, the property was revalued to OMR 700,000, of which the land element was OMR 124,000 and the building OMR 576,000. On 31 December 2020, the property was sold for OMR 680,000.

REQUIRED:

What would be reported in the Statement of Comprehensive Income (Statement of Profit and Loss) for the year ended 31 December 2020 the gain or loss on disposal?

1.2.

The Sohar Development Company has incurred the following costs in relation to a unit of inventory (in OMR):

Raw materials cost 15.00

Import duties 4.00

Direct Labor 5.00

Subcontracted labour costs 8.00

VAT tax 2.00

Storage costs. 0.50

Production overheads (per unit). 0.25

With the first batch of items produced, it was found out that the quality of the materials was unsatisfactory. Abnormal wastage costs of OMR 1.00 per unit have also been incurred by Sohar Development Company.

REQUIRED:

At what cost should Sohar Development Company disclose this inventory in its financial statements?