QUESTION 3 (25 marks)

The information below represents the draft statement of comprehensive income of H Ltd for the

year ended 31 December 2020.

	2020 N$ 000	2019 N$ 000
Income	14 600	12 700
Cost of sales	7 200	6 100
Gross profit	7400	6 600
Operating expenses	(3 600)	(3 200)
Interest paid	(500)	(400)
Profit before tax	3 300	3 000
Taxation	(1 320)	(1200)
Profit and total comprehensive income for the year	1 980	1 800

ADDITIONAL INFORMATION:

	2020 N$ 000	2019 N$ 000
Dividends	500	400

Retained earnings: For year	1480	1 400
Opening balance	3 200	1 800
Closing balance	4 680	3200

The following balances appear in the draft statement of financial position on 31 December 2020:

	2020 N$ 000	2019 N$ 000
Deferred tax liability	1 620	1 300
Inventory	3 200	2 900

After completion of the draft statements, management decided to change the method for determining the cost price of inventory. It was decided to include, as from 1 January 2020, overheads in the cost of inventory. Details of inventory are as follows

31 December

	2020	2019	2018
Inventory at cost
New basis	3 840	3 480	3 000
Old basis	3 200	2 900	2 500
	640	580	500

REQUIRED:

b) Prepare the statement of comprehensive income and the statement of changes in equity and disclose the relevant note to the financial statements of H Ltd for the change for the year ended 31 December 2020 in accordance with International Financial Reporting Standards.