Reference no: EM133166311

Question - Consider following two independent scenarios:

a) During the preparation of financial statement for Master Ltd for 2023 it was discovered that an amount of $22,000, incurred in September 2021 and payable to an overseas supplier, was overlooked and not paid or provided for in the financial statement ending 30 June 2022. The amount is considered to be material and will be permitted as a deduction for tax purposes (tax rate 30%).

Required - Prepare the necessary journal entry to correct this error.

b) On 30 June 2023, the end of the current reporting period, Master Ltd decided, using the information obtained over the past few years, to revise the useful life of a Machine acquired 2 years earlier for $100,000. The useful life was revised from being a total of 10 years to being a total of 14 years. The machine was depreciated on straight-line basis over its useful life and have no residual value. No depreciation has been provided in the current year.

Required - Prepare the journal entry to account for the change in accounting estimate.

Prepare an appropriate supporting note assuming that change in accounting estimate had a material effect on financial performance for the period.