Question
Thedirectors of KMSD ,alimited liabilitycompany, arereviewingthecompany's draft financial statement for the year ended 30 June2015. Thefollowingmaterial matters areunder discussion: a. Afterthe balancesheet date oneof thecompany
Thedirectors of KMSD ,alimited liabilitycompany, arereviewingthecompany's draft financial statement for the year ended 30 June2015. Thefollowingmaterial matters areunder discussion:
a. Afterthe balancesheet date oneof thecompany 'sfactories was seriouslydamaged by fire.Insurancewillonly cover part of the loss suffered. The company's going concern status is notaffected.
b. Oneof thecompany's buildings was revalued duringtheyear. Thedirectors areuncertain as to how the revaluation surplus should be included in the financial statements. The surplus has been separatelydisclosed as an item in the draft income statement.
c. Thed raftfinancial statements forthe entityfortheyearended 30 June prepared. A finalreviewof thedraft reveals an overvaluation of theclosing inventoryof GHS 200,000 at 30 June2014. Further investigation shows that there was an overvaluation at 30 June2013 of GHS 120,000.
Explain how each of these matters should bedealtwith in the financial statements for the year ende 30 June2015, statingin each casetherelevant accountingstandard.
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