Reference no: EM132805608

LESTERRIFIC Co. reports profit before tax of ?200,000 in its 2nd quarter interim financial statements before consideration for the following:

1. Inventory with a carrying amount ?10,000 has a net realizable value of ?12,000. It is expected that the change in value will reverse in the 3rd There have been no write-downs of inventory recognized in previous periods.
2. An investment property measured under the cost model has a carrying amount of ?150,000 but its recoverable amount is ?140,000.
3. An investment in FVPL measured at acquisition cost of ?20,000 has a fair value of ?38,000 as at the end of 2nd the quarter. However, the increase in fair value is expected to be only temporary.
4. No depreciation is recognized during the 2nd The annual straight-line depreciation of items of PPE is ?60,000.
5. ABC Co. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full year is ?140,000. However, only ?20,000 worth of paid vacation leaves have been availed of during the quarter.
6. It was discovered that depreciation in the previous year was overstated by ?7,000.

Requirement:

Problem 1: Compute for the adjusted profit before tax.