Reference no: EM132622388

PropRentals Ltd ('PropRentals') is a Namibian end-to-end rental service provider listed on the Namibian Stock Exchange. PropRentals specialises in providing customers with customised property rental management services. PropRentals is currently preparing its consolidated financial statements for the year ended 31 March 2019 ('FY2019'). PropRentals was founded by Mr John Mouton, the current Chief Executive Officer and Acting Chairman of Board of Directors of PropRentals. You are a senior consultant working for the advisory firm, Smart Partners Inc. You have been tasked with evaluating specified accounting matters related to the new Conceptual Framework and queries raised by PropRentals.

The following key information is applicable:

• Financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).
•  All companies have a 31 March year end.

Matter 1: Cash received by PropRentals from a customer, Ms T Hangala for property management services rendered by PropRentals The company got paid N$ 5 500 for the services rendered to Ms T Hangala. The company would like to know from you, how this transaction should be treated in the books of PropRentals based on the definition and recognition criteria of the New Conceptual Framework.

Matter 2: Outstanding payment for office space leased out PropRentals have not received any cash payment for an office leased out in its own building. The office space is leased out for N$ 8 500 per month. The payment is 2 months in arrears.

REQUIRED:

Problem 1: Provide a well- reasoned argument where you use the "new" definitions of elements and the recognition criteria as set out in the new Conceptual Framework, and briefly explain how the transaction in Matter 1 and Matter 2 should be treated according to the new Conceptual Framework.