Question
You are the financial controller of YamYam Tree BSC, a company listed on the Bahrain Bourse prepares annual financial statements in according to the requirements
You are the financial controller of YamYam Tree BSC, a company listed on the Bahrain Bourse prepares annual financial statements in according to the requirements of International Financial Reporting Standards (IFRS). The financial statements for the year ended 30 September 2020 are which will be released soon. A new member of staff who is seconded to your department is going over the financial statements as part of his training. From the review, he has prepared a list of issues. Task 1: Issue One
I know that brand names can be valued and be included in the statement of financial position. The YamYam Tree brand name has been developed within YamYam Tree since the company started many years ago and is well regarded by all our customers and competitors. Therefore I expected to see a figure for the YamYam Tree brand name included within intangible assets. I have searched and I cannot find any amount for the YamYam Tree brand name included within intangible assets and I don't understand why. Why have we not included it? (2 Marks)
Task 2: Issue Two
I have read in the accounting policies that YamYam Tree initially measures intangibles assets using the cost model and subsequently measures those assets using either the cost model or revaluation model. Would you please explain to me clearly as to whether we can use the fair value model to measure intangible assets? (3 Marks) Task 3: Issue Three
I have read in the financial statements that there have been changes in some accounting estimates and that these have been recognized prospectively. I am not sure I fully understand this thing about accounting estimates. I get confused about the exact meaning of a change in accounting estimate. What exactly is a change in accounting estimate according to IAS 8? (3 Marks) Task 4: Issue Four
I looked at the bank statement dated 30 September 2020 and it showed cash at bank as BD 45,000. However the financial statements show cash at bank as BD 23,000. I do not understand why the auditors have not identified this obvious error. If it not an error, would you please explain this to me, why it is not? (2 Marks)
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