You are a trainee Chartered Accountant employed by BICA. You have been seconded to work for an

international company called Afiq Diamond Ltd to assist it in finalising its financial accounts for the

year ending $31$ December $2023.$ Afiq Diamond operates several jewellery shops which it designs and

sell a wide range of jeweller products. The management has asked you to address the following

case.

Historically Afiq Diamond purchased jewellery from a single mining company in Botswana. However,

in December $2022,$ Afiq Diamond began to sell jewellery which had been purchased from a different

mine, based in Europe. The first shipment of European jewellery was ordered on $5$ January $2023,$

arrived on $10$ February $2023,$ and the purchase invoice, for $160,000,$ was correctly translated and

processed. No adjustments have subsequently been made to this figure.

At the year end the invoice was unpaid and all the jewellery were unsold. The jewellery has been

included in inventories in the draft financial statements using the spot rate at $31$ December $2023.$

The spot exchange rates were as follows:

$5$ January $20231$: P$0\mathrm{.}85$

$10$ February $20231$: P$0\mathrm{.}90$

$31$ December $20231$: P$0\mathrm{.}95$

Required

Explain the above issue's IFRS reporting treatment in Afiq Diamond's financial statements for the

year ended $31$ December $2023.$ Prepare all applicable calculations and journal entries to reflect the

required changes.