iv. Question 3 Attock Technologies Limited (ATL) manufactures five hi-tech products, cach on a different plant. It is in the process of preparing its financial statements for the year ended June 30, 2015. As the CFO of the company, the following matters are under your consideration: i Inventory carried at GH 25 million on June 30, 2015 was sold for GH 15 million after it had been damaged in a flood, in July 2015. ii. On July 5, 2015 one of ATL's corporate customers declared bankruptcy. The liquidator announced on August 25, 2015 that 20% of the debt would be paid on liquidation A new product introduced by a competitor on August 1, 2015 had caused a significant decline in the market demand of one of ATL's major products. As a result, ATL is considering a reduction in price and a cut in production. On August 18, 2015, the government announced a retrospective increase in the tax rate applicable to the company The directors of ATL declared a dividend of Rs. 3 per share on August 28, 2015. Required In accordance with IAS 8, state how the above events should be treated in ATL's financial statements for the year ended June 30, 2015. You may assume that all the above events are material to the company. Question 4 Earley Inc is finalizing its accounts for the year ended 31 December 2014. The following events have arisen since the year end and the financial director has asked you to comment on the final accounts. (a) At 31 December 2014 trade receivables included a figure of GH 250,000 in respect of Nedengy Inc. On 8 March 2015, when the current debt was GH 200,000, Nedengy Inc went into receivership. Recent correspondence with the receiver indicates that no dividend will be paid to unsecured creditors. (b) On 15 March 2015 Earley Inc sold its former head office building, Whitley Wood, for GH 2.7 million At the year end the building was unoccupied and carried at a value of GH 3.1 million (e) Inventories at the year-end included GH 650,000 of a new electric tricycle, the Opasney. In January 2015 the European Union declared the tricycle to be unsafe and prohibited it from sale. This declaration was made after due process followed in European Parliament in preceding months. An alternative market, in Bongolia, is being investigated, although the current price is expected to be cost less 30%. (d) Stingy Inc, a subsidiary in Outer Sonning, was nationalized in February 2015. The Outer Sonning authorities have refused to pay any compensation. The net assets of Stingy Inc have been valued at GH200,000 at the year end. (e) Freak floods caused GH 150,000 damage to the Southcote branch of Earley Inc in January 2015. The branch was fully insured. (1) On 1 April 2015 Earley Inc announced a I for I rights issue aiming to raise GH15 million. Required Explain how you would respond to the matters listed above iv. Question 3 Attock Technologies Limited (ATL) manufactures five hi-tech products, cach on a different plant. It is in the process of preparing its financial statements for the year ended June 30, 2015. As the CFO of the company, the following matters are under your consideration: i Inventory carried at GH 25 million on June 30, 2015 was sold for GH 15 million after it had been damaged in a flood, in July 2015. ii. On July 5, 2015 one of ATL's corporate customers declared bankruptcy. The liquidator announced on August 25, 2015 that 20% of the debt would be paid on liquidation A new product introduced by a competitor on August 1, 2015 had caused a significant decline in the market demand of one of ATL's major products. As a result, ATL is considering a reduction in price and a cut in production. On August 18, 2015, the government announced a retrospective increase in the tax rate applicable to the company The directors of ATL declared a dividend of Rs. 3 per share on August 28, 2015. Required In accordance with IAS 8, state how the above events should be treated in ATL's financial statements for the year ended June 30, 2015. You may assume that all the above events are material to the company. Question 4 Earley Inc is finalizing its accounts for the year ended 31 December 2014. The following events have arisen since the year end and the financial director has asked you to comment on the final accounts. (a) At 31 December 2014 trade receivables included a figure of GH 250,000 in respect of Nedengy Inc. On 8 March 2015, when the current debt was GH 200,000, Nedengy Inc went into receivership. Recent correspondence with the receiver indicates that no dividend will be paid to unsecured creditors. (b) On 15 March 2015 Earley Inc sold its former head office building, Whitley Wood, for GH 2.7 million At the year end the building was unoccupied and carried at a value of GH 3.1 million (e) Inventories at the year-end included GH 650,000 of a new electric tricycle, the Opasney. In January 2015 the European Union declared the tricycle to be unsafe and prohibited it from sale. This declaration was made after due process followed in European Parliament in preceding months. An alternative market, in Bongolia, is being investigated, although the current price is expected to be cost less 30%. (d) Stingy Inc, a subsidiary in Outer Sonning, was nationalized in February 2015. The Outer Sonning authorities have refused to pay any compensation. The net assets of Stingy Inc have been valued at GH200,000 at the year end. (e) Freak floods caused GH 150,000 damage to the Southcote branch of Earley Inc in January 2015. The branch was fully insured. (1) On 1 April 2015 Earley Inc announced a I for I rights issue aiming to raise GH15 million. Required Explain how you would respond to the matters listed above