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Question One ( 2 0 marks ) a ) You are a trainee Chartered Accountant employed by BICA. You have been seconded to work for
Question One marks a You are a trainee Chartered Accountant employed by BICA. You have been seconded to work for an international company called Afiq Diamond Ltd to assist it in finalising its financial accounts for the year ending December Afiq Diamond operates several jewellery shops which it designs and sell a wide range of jeweller products. The management has asked you to address the following case. Historically Afiq Diamond purchased jewellery from a single mining company in Botswana. However, in December Afiq Diamond began to sell jewellery which had been purchased from a different mine, based in Europe. The first shipment of European jewellery was ordered on January arrived on February and the purchase invoice, for was correctly translated and processed. No adjustments have subsequently been made to this figure. At the year end the invoice was unpaid and all the jewellery were unsold. The jewellery has been included in inventories in the draft financial statements using the spot rate at December The spot exchange rates were as follows: January : P February : P December : P Required Explain the above issue's IFRS reporting treatment in Afiq Diamond's financial statements for the year ended December Prepare all applicable calculations and journal entries to reflect the required changes. marks b In a joint venture, Letso owns of the stock. Shareholdings are used to allocate the joint operation's properties, liabilities, sales, and costs. The following data pertains to joint agreement operations for the fiscal year that ended on November : The manufacturing plant, which cost P million to construct and was completed on December will be decommissioned after a year projected useful life. Using an discount rate, the present value of this dismantling expense to the joint agreement at December was P million. During the fiscal year ended November the joint operation completed the following transactions: P million in products were sold for P million. P million in other operating expenses P million in administrative expenses Letso has only paid for its share of the manufacturing facility's cost, which amounts to P million. The two other joint operation partners are responsible for the sales and expenses, and they will settle any unresolved sums with Letso after each reporting date. Required Prepare a financial statement of Profit and Loss and Statement of Financial Position for the year ending November to show how Letso will account for its shareholding in the joint operation. marks
Question One marks
a You are a trainee Chartered Accountant employed by BICA. You have been seconded to work for an
international company called Afiq Diamond Ltd to assist it in finalising its financial accounts for the
year ending December Afiq Diamond operates several jewellery shops which it designs and
sell a wide range of jeweller products. The management has asked you to address the following
case.
Historically Afiq Diamond purchased jewellery from a single mining company in Botswana. However,
in December Afiq Diamond began to sell jewellery which had been purchased from a different
mine, based in Europe. The first shipment of European jewellery was ordered on January
arrived on February and the purchase invoice, for was correctly translated and
processed. No adjustments have subsequently been made to this figure.
At the year end the invoice was unpaid and all the jewellery were unsold. The jewellery has been
included in inventories in the draft financial statements using the spot rate at December
The spot exchange rates were as follows:
January : P
February : P
December : P
Required
Explain the above issue's IFRS reporting treatment in Afiq Diamond's financial statements for the
year ended December Prepare all applicable calculations and journal entries to reflect the
required changes. marks
b In a joint venture, Letso owns of the stock. Shareholdings are used to allocate the joint
operation's properties, liabilities, sales, and costs. The following data pertains to joint agreement
operations for the fiscal year that ended on November :
The manufacturing plant, which cost P million to construct and was completed on December
will be decommissioned after a year projected useful life. Using an discount rate,
the present value of this dismantling expense to the joint agreement at December was
P million.
During the fiscal year ended November the joint operation completed the following
transactions:
P million in products were sold for P million.
P million in other operating expenses
P million in administrative expenses
Letso has only paid for its share of the manufacturing facility's cost, which amounts to P million. The
two other joint operation partners are responsible for the sales and expenses, and they will settle any
unresolved sums with Letso after each reporting date.
Required
Prepare a financial statement of Profit and Loss and Statement of Financial Position for the year ending
November to show how Letso will account for its shareholding in the joint operation.
marks
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