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QUESTION 15 a. The Conceptual Framework for Financial Reporting identifies faithful representation as a fundamental qualitative characteristic of useful financial information. 16/17 Required: Distinguish between
QUESTION 15 a. The Conceptual Framework for Financial Reporting identifies faithful representation as a fundamental qualitative characteristic of useful financial information. 16/17 Required: Distinguish between fundamental and enhancing qualitative characteristics. b. Sawla Ltd (Sawla) prepares financial statements under International Financial Reporting Standards (IFRSs). On 1 June 2020, Sawla acquired a manufacturing software at the cost of GH1.5 million. The software is estimated to have a useful economic life of 5 years with no residual value. To develop staff capacity to a higher level, a training program was organised for production staff on the use of the software at a cost of GH250,000 during the year. Management is convinced the staff training will generate more revenue for the entity through future economic benefits. Sawla intends to adopt the revaluation model under IAS 38 Intangible Assets and to revalue the software at the end of each year. Accordingly, the software was valued by a software engineer at GH1.7 million on 31 December 2020. Sawla accepted this value and decided to incorporate the valuation in the financial statements. Required: In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020
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