QUESTIONS ON LASS Question 1 While preparing financial statements of Banda Limited (BL), you noted the following points (a) BL changed its accounting for land and buildings from cost model to revaluation model. (b) The useful life of plant was revised downwards following impairment loss. (c) The depreciation method for depreciating furniture was changed from straight line method to reducing balance method. (d) The cost formula used for valuation of inventories was changed from FIFO to weighted average (e) It was discovered that last year company's inventory sheets were under-casted. (7) It was discovered that actual NRV of inventory was much lower than expected Required State and explain whether the above are changes in accounting policies, accounting estimates or errors. . Question 2 GLtd adopted IFRSs from the beginning of year 2012. As a consequence, G Led changed its accounting policy for the treatment of borrowing costs that are directly attributable to the acquisition of a hydroelectric power station under construction for use by G Lid. In previous periods, G Lad had charged such costs as an expense G Lid has now decided to capitalize these costs, rather than treating them as an expense as a resul of adopting IAS 23. GLtd expensed borrowing costs directly related to construction of qualifying asset incurred of GH 2,600 during 2011 and GH 5.000 in 2010 and GH 4,000 in 2009. G Limited accounting records for 2012 show profit before tax of GH 27,000 (after deducting GH 3,000 borrowing costs relating to qualifying assets) The income tax is GH 8,100. G Ltd has not yet recognised any depreciation on the power station because it is not yet in use. In 2011, GLimited reported GH Profit before interest and tax 20.600 Interest expense (all on qualifying assets) (2,600) Profit before tax 18,000 Tax (5.400) Profit 12,600 Year 2011 reported retained earnings was GH 20,000 and closing retained earnings was GH 32,600. G Lad's tax rate was 30% for 2012, 2011 and prior periods. G Lad had GH 10,000 of share capital throughout, and no other components of equity except for retained earnings Required: In accordance with IAS 8, how will treat the above adjustments in G Ltd's financial statements. Question 3 Akosombo Textiles Limited (ATL) purchased a plant on January 01, 2011 for GH 1,120,000. At this date the useful life of the asset was estimated at 10 years after which it can be sold for GH 120,000. However, during 2013 ATL estimates the remaining useful life of this plant as 6 years and expects to fetch residual value of GH 170,000. ATL, uses straight line method for depreciating such plants. Required: In accordance with IAS 8, calculate the amount of depreciation from year 2011 to 2018 and how it will be treated in the financial statement of ATL