Question 1: FLOWERY 1) Just before the year end of the financial year, a customer requested Flowery delivery of 500,000 units of product until early the following year because customer did not have enough space to store the goods. The customer, however, indicated to Flowery that it could still issue the invoice as if the goods had been delivered at the date specified in the purchase order and he agreed to settle the amount within 90 days of the invoice date under the usual credit terms granted to him. Flowery invoiced the customer before the year ended 31 December 20x6. 2) Additionally Flowery operates a logistics division. Customers place their order with Flowery for airfreight or surface transportation services required. Flowery in turn places its order with the necessary carriers. Flowery can cancel its order with the carriers if its customers cancel their orders with Flowery. The company does not bear the risk of loss or other responsibility during the transportation process. Flowery can normally earn a margin of 10% on airfreight and 5% on surface transportation. Flowery's customers usually pay the gross amount to Flowery directly, while Flowery pays the gross amount to the carriers. Requirements: Determine how the above transactions (1) & (2) should be accounted for in the financial statements of Flowery. You should give specific explanations by referring to relevant IFRS. Question 1: FLOWERY 1) Just before the year end of the financial year, a customer requested Flowery delivery of 500,000 units of product until early the following year because customer did not have enough space to store the goods. The customer, however, indicated to Flowery that it could still issue the invoice as if the goods had been delivered at the date specified in the purchase order and he agreed to settle the amount within 90 days of the invoice date under the usual credit terms granted to him. Flowery invoiced the customer before the year ended 31 December 20x6. 2) Additionally Flowery operates a logistics division. Customers place their order with Flowery for airfreight or surface transportation services required. Flowery in turn places its order with the necessary carriers. Flowery can cancel its order with the carriers if its customers cancel their orders with Flowery. The company does not bear the risk of loss or other responsibility during the transportation process. Flowery can normally earn a margin of 10% on airfreight and 5% on surface transportation. Flowery's customers usually pay the gross amount to Flowery directly, while Flowery pays the gross amount to the carriers. Requirements: Determine how the above transactions (1) & (2) should be accounted for in the financial statements of Flowery. You should give specific explanations by referring to relevant IFRS
