Question One $(20$ 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 $31$ December $2023.$ 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 $2022,$ 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 $5$ January $2023,$

arrived on $10$ February $2023,$ and the purchase invoice, for $160,000,$ 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 $31$ December $2023.$

The spot exchange rates were as follows:

$5$ January $20231$: P$0\mathrm{.}85$

$10$ February $20231$: P$0\mathrm{.}90$

$31$ December $20231$: P$0\mathrm{.}95$

Required

Explain the above issue's IFRS reporting treatment in Afiq Diamond's financial statements for the

year ended $31$ December $2023.$ Prepare all applicable calculations and journal entries to reflect the

required changes. $(6$ marks$)$

b$)$ In a joint venture, Letso owns $30\%$ 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 $30,2019$:

$$ The manufacturing plant, which cost P$30$ million to construct and was completed on December

$1,2018,$ will be decommissioned after a $10-$year projected useful life. Using an $8\%$ discount rate,

the present value of this dismantling expense to the joint agreement at $1$ December $2018$ was

P$3$ million.

$$ During the fiscal year ended November $30,2019,$ the joint operation completed the following

transactions:

$$ P$36$ million in products were sold for P$50$ million.

$$ P$1$ million in other operating expenses

$$ P$2$ million in administrative expenses

Letso has only paid for its share of the manufacturing facility's cost, which amounts to P$9$ 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

$30$ November $2019$ to show how Letso will account for its $30\%$ shareholding in the joint operation.

$(14$ marks