The following information has to be treated independently

(i)

Leg Plc’s accountant had made an error (still remains uncorrected) in the previous year which was identified as material. An invoice for £45,000 was recorded twice into the sales ledger account on 10 December 2019 and was duly posted as such in the respective accounts. This was a unique case where the customer had some concerns over the invoice amount. This amount remains unsettled as of 31 December 2020, although now Leg Plc has managed to resolve the dispute and the customer has agreed to pay the full amount. Explaining the provisions of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, demonstrate with reasons how the above will be reflected in the financial reports of Leg Plc at 31 December 2020. 

(ii)

On 1 January 2020 Leg plc acquired new equipment for £60,000 with a useful life of four years. A government grant of £36,000 was received to help finance the purchase of this equipment as part of the government's drive to encourage investment in new technology and was credited to revenue. Leg plc has an accounting policy of using the deferred income approach. Explaining the provisions of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance demonstrate how grants will be reflected in the financial reports of Leg Plc at 31 December 2020. Include all other areas of financial statements which will be affected resulting from purchase of this asset.

(iii)

On 1 January 2020 Leg plc entered into a three-year contract, to lease an equipment. The first payment of £8,000 was paid on 1 January 2020, with the following two payments of £8,000 each committed to be paid on 1 January 2021 and 1 January 2022. The interest rate implicit in the lease is 6%. The equipment has a useful life of eight years but will be returned to the lessor at the end of the three-year lease term. The first amount paid under the lease of £8,000 was debited to cost of sales and credited to cash. No other adjustments have been made in respect of this lease. Explaining the provisions of IFRS16 Leases, demonstrate how the lease will appear in the financial statements of Leg Plc at 31 December 2020. Include all other areas of financial statements which are affected resulting from the lease of this asset.