Question 2 starts from the paper marked 1 then continues on the paper marked 2
(30) 45 37 LULLLLLLLLLLLL QUESTION 2 (25 marks) The amounts misappropriated-paid but still reflected in receivables during ti (a) IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors lays periods are as shown on the table below: down criteria for the selection of accounting policies and prescribes Date - period ending Amount circumstances in which an entity may change an accounting policy. The 31 July 2016 N$14,000 standard also deals with accounting treatment of changes in accounting 31 July 2017 N$ 16,000 31 July 2018 N$20,000. policies, changes in accounting estimates and correction of prior period errors. REQUIREMENT: 2018 2017 N$'000 N$'000 Define accounting policy and outline in sufficient details the accounting treatment Revenue 300 275 required to record the following; Cost of Sales (225) (212) Gross Profit 75 63 i. A change in accounting policy, Expenses (26) (5 marks including definition of accounting policy) ii. A change in accounting estimate and (2 marks) Statements of Changes in Equity (Retained Earnings only) for year ended 31 July iii. The correction of an error. (3 marks) 2018 2017 N$'000 N$'000 The following are summaries of the draft financial statements of Katutura 258 236 Traders for financial year ended 31 July 2018 together with the comparative 45 37 Profit for the year (15) figures for 2017. During August 2018, prior to the signing off of the financial Dividends declared - Balance 31 July 258 287 statements, the auditors Messrs. Angula & Partners discovered that a fraud had been taking place in the company for the previous three years. The credit Statements of Financial Position as at 31 July 2018 2017 controller had been misappropriating monies paid to the company by its N$'000 N$'000 customers, the amounts instead appearing as receivables in the books. The 306 294 Non-current Assets 143 effect of the fraud was that amounts shown in the financial statements as Net Current Assets Ne 437 408 150 150 receivables need to be written off as they were in fact paid. There is no Equity Share Capital 287 258 prospect of recovering the money as the employee lost it gambling and is now ! Retained Earnings 437 408 bankrupt. The Employee has since been dismissed by katutura Traders. (b) (16) 102 REQUIRED Restate the above financial statements, including comparatives, incorporating the adjustments you deem necessary as a result of the fraud. Ignore the effect of (15 marks) taxation. Disclosure notes are not required. Marks allocated as follows: (30) 45 37 LULLLLLLLLLLLL QUESTION 2 (25 marks) The amounts misappropriated-paid but still reflected in receivables during ti (a) IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors lays periods are as shown on the table below: down criteria for the selection of accounting policies and prescribes Date - period ending Amount circumstances in which an entity may change an accounting policy. The 31 July 2016 N$14,000 standard also deals with accounting treatment of changes in accounting 31 July 2017 N$ 16,000 31 July 2018 N$20,000. policies, changes in accounting estimates and correction of prior period errors. REQUIREMENT: 2018 2017 N$'000 N$'000 Define accounting policy and outline in sufficient details the accounting treatment Revenue 300 275 required to record the following; Cost of Sales (225) (212) Gross Profit 75 63 i. A change in accounting policy, Expenses (26) (5 marks including definition of accounting policy) ii. A change in accounting estimate and (2 marks) Statements of Changes in Equity (Retained Earnings only) for year ended 31 July iii. The correction of an error. (3 marks) 2018 2017 N$'000 N$'000 The following are summaries of the draft financial statements of Katutura 258 236 Traders for financial year ended 31 July 2018 together with the comparative 45 37 Profit for the year (15) figures for 2017. During August 2018, prior to the signing off of the financial Dividends declared - Balance 31 July 258 287 statements, the auditors Messrs. Angula & Partners discovered that a fraud had been taking place in the company for the previous three years. The credit Statements of Financial Position as at 31 July 2018 2017 controller had been misappropriating monies paid to the company by its N$'000 N$'000 customers, the amounts instead appearing as receivables in the books. The 306 294 Non-current Assets 143 effect of the fraud was that amounts shown in the financial statements as Net Current Assets Ne 437 408 150 150 receivables need to be written off as they were in fact paid. There is no Equity Share Capital 287 258 prospect of recovering the money as the employee lost it gambling and is now ! Retained Earnings 437 408 bankrupt. The Employee has since been dismissed by katutura Traders. (b) (16) 102 REQUIRED Restate the above financial statements, including comparatives, incorporating the adjustments you deem necessary as a result of the fraud. Ignore the effect of (15 marks) taxation. Disclosure notes are not required. Marks allocated as follows
