TheBestBuy (Pty) ltd (Best) is a leading personal care company specialising in the retail of skin care, sun protection, make-up, perfume, and hair care. The company has a 30 June year-end. The annual financial statements for the June 2023 year-end will be approved on 28 July 2023. To finalise their 30 June 2023 year-end annual fi-nancial statements, the following transactions must be considered:

DIVIDENDS:

The board of directors of Best declared an ordinary dividend of R240 000 on 7 July 2023 for the 2023 financial year-end. Upon declaration of the dividend, the financial department recorded an accrual for the amount, as well as the related tax in annual financial statements for the year ended 30 June 2023.

	2023	2022
Authorised share capital	2 000 000	2 000 000
Issued share capital	1 500 000	1 500 000

Best does not have a fixed dividend policy.

LAWSUIT: Best received a legal notice on 10 July 2023 of a pending R1 500 000 lawsuit against the company. Best consumers have claimed that the companys new eyeshadow palette is not intended to be used around the eye area. The new eye-shadow palette has caused consumers eye injuries such as eye irritation, rashes, discoloration, skin inflammation and pain. According to the lawyers of Best, the possibility exists that that the lawsuit will succeed which may require Best to settle the claims. The claim of R1 500 000 is material to Best. The lawyers have communicated to Best that the matter will be deliberated and finalised in court on 1 August 2023.

REQUIRED: 1.1) (i) Discuss, in terms of IAS 10, whether TheBest (Pty) Ltd has correctly accounted for the dividends declared in the 30 June 2023 annual financial statements. (3 marks)

(ii) Disclose the dividends declared in the notes to the financial statements of TheBestr (Pty) Ltd for the year ended 30 June 2023 in accordance with IAS 1.(2 marks)

1.2) (i) Discuss, in terms of IAS 10, how TheBest (Pty) Ltd should account for the pending lawsuit in its annual financial statements for the June 2023 year-end.(5 marks)

(ii) Disclose the pending lawsuit in the notes to the financial statements of TheBest (Pty) Ltd for the year ended 30 June 2023 in accordance with IAS 37.(4 marks)