QUESTION 3 Section 1 Whitebirk has met the definition of a SME in its jurisdiction and wishes to comply with the IFRS for SMEs. The entity wishes to seek advice on how it will deal with the following accounting issues in its financial statements for the year ended 30 November 2021. The entity already prepares its financial statements under full IFRS. (i) Whitebirk purchased 90% of Close, an SME, on 1 December 2020 The purchase consideration was $5.7 million and the value of Close's identifiable assets was $6 million. The value of the non-controlling interest at 1 December 2020 was measured at $0.7 million. Whitebirk has used the full goodwill method to account for business combinations and the life of goodwill cannot be estimated with any accuracy. Whitebirk wishes to know how to account for goodwill under the IFRS for SMEs. (ii) Whitebirk has incurred $1 million of research expenditure to develop a new product in the year to 30 November 2021. Additionally, it incurred $500,000 of development expenditure to bring another product to a stage where it is ready to be marketed and sold. (iii) Whitebirk purchased some properties for $1.7 million on 1 December 2020 and designated them as investment properties under the cost model. No depreciation was charged as a real estate agent valued the properties at $1.9 million at the year end. (iv) Whitebirk has an intangible asset valued at $1 million on 1 December 2020. The asset has an indefinite useful life, and in previous years had been reviewed for impairment. As at 30 November 2021, there are no indications that the asset is impaired. (b) MARKS REQUIRED: Sub- total Total Discuss how the above transactions should be dealt with in the financial statements of Whitebirk, with reference to the IFRS for SMEs. 11 11