The ceo determined that the following borrowing costs

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Unformatted text preview: red the following financial statements (see next page) for the year ended 31 December 2002. Unfortunately, the busy CEO had forgotten to tell the Finance Manager of the change in the accounting policy on borrowing costs. 15 ACCT201 Happiest Company Ltd Profit & loss account for the year ended 2002 (draft) Sales COGS SG&A Interest expense Profit before tax Tax Profit after tax 2001 (audited) 1,000,000 1,100,000 (600,000) (650,000) (200,000) (220,000) (100,000) (80,000) 100,000 150,000 (20,000) (30,000) 80,000 120,000 Happiest Company Ltd Balance sheet as at 31-12-02 (draft) 31-12-01 (audited) Fixed assets Residential property WIP Other assets 500,000 3,000,000 100,000 3,600,000 400,000 2,000,000 150,000 2,550,000 Bank loans Deferred tax liability Other liabilities 2,350,000 300,000 200,000 2,850,000 1,500,000 200,000 180,000 1,880,000 Share capital Opening retained earnings Profit for the year 500,000 170,000 80,000 3,600,000 500,000 50,000 120,000 2,550,000 Assume tax rate for all years is 20%. 16 ACCT201 REQUIRED: 1a Using the benchmark approach, calculate the change in accounting policy on the retained earnings as at 1 January 2001. (2 marks) 1b Using the benchmark approach, calculate the amount for the change in accounting policy on the retained earnin...
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This document was uploaded on 04/07/2014.

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