Reference no: EM132924055
Question 1 - KKK is startup electric appliance manufacturer which has three main products in the brand of WEM - Air conditioners, Washing machines and Refrigerators. In the production of air conditioners and washing machines, KKK has to purchase components used in production from various suppliers. For refrigerators, KKK imports refrigerators from Vietnam and sells them as the brand of WEM. If you are the head of accounting department of this company, please clearly explain these following issues related to IAS 2 - Inventory.
1) Could you define these three main products as KKK's inventory?
2) Explain pros and cons if KKK applied the perpetual inventory system to record transactions related to inventory.
3) Explain the most suitable method to compute the cost of three main products.
4) According to 3), define costs which should be included in the cost of three main products.
5) Explain the end-of-period accounting processes which should be applied to KKK.
6) According to IAS 2, how does KKK report the value of inventory at the end of fiscal year?
Question 2 - ACCFIX is an accounting firm is in Canada and provides accounting service to MTN company. ACCFIX company wants to acquire real estate and needs some advices. If you are stuff of ACCFIX accounting firm, please clearly give advices to MTN company with these following issues related to IAS 16 - Property, Plant and Equipment.
1) Explain the definition of real estate and provide examples of real estate.
2) Explain the initial recognition of real estate and define costs which should be included in the cost of real estate.
3) Explain the subsequent recognition of real estate if MTN company uses Cost model. How should MTN report this account in the statement of financial position?
4) Explain the most suitable calculation method of depreciation if MTN needs the highest net income in statement of profit or loss.
Question 3 - TOOLS4U company acquired building in the last year. This building has 3 floors and TOOLS4U will use the 2nd and 3rd floor to be his office. The 1st floor will be rent to SMG. Then, SMG renovated and built additional parts to operate new restaurant.
According to the above-mentioned story, please clearly explain these following questions:
1) In accordance with related IFRS standards, how does TOOLS4U company recognize this building?
2) Explain how different between the recognition of 1st floor under IAS 16 and the recognition of 1st floor under IAS 40 when using Revaluation model in these two situations:
a. An increase of fair value at the end of fiscal year
b. A decrease of fair value at the end of fiscal year
Question 4 - SWANGRTI Corporation - Statement of financial position - For year ended on December 31, 2021.
Cash and cash equivalents 10,000
Loan receivables 10,000
Prepaid expenses 10,000
Accounts receivables 10,000
Other receivables 10,000
Plant and Equipment 15,000
Less: Accumulated depreciation (5,000) 10,000
Property 20,000
Total Assets 80,000
Accounts payable 10,000
Loan payable 10,000
Other payable 10,000
Bonds payable 10,000
Common stock 30,000
Retained earnings 10,000
Total Liabilities and Equities 80,000
Required -
1) Is the above statement of financial position prepared following eight general principles provided by IAS 1 - Presentation of financial statement?
2) According to 1), please show me the correct form of statement of financial position if we prepare following IAS 1 - Presentation of financial statement.
3) To be the most useful to users of financial statements, what characteristics of financial information should be included in?