​ACCT102​​–​​Submission​​Question​

​Tutorial​​2​​–​​IAS​​1​
​ ou​ ​are​ ​good​ ​friends​ ​with​ ​one​ ​of​ ​the​ ​directors​ ​of​ ​MessedUp​ ​(Pty)​ ​Ltd.​​(“MessedUp”).​​The​
Y
​company​ ​lacks​ ​proper​ ​financial​ ​presentation​ ​guidance​ ​and​ ​you​ ​were​ ​approached​​to​​assist​
​them​ ​in​​correcting​​the​​presentation​​of​​their​​financial​​statements,​​as​​per​​IAS​​1:​​Presentation​
​of​​Financial​​Statements.​
​You​​received​​the​​following​​email​​from​​your​​friend:​

​To:​ ​[email protected]​
​From:​ ​[email protected]​
​CC:​ ​[email protected]​
​Subject:​ ​IAS​​1:​​BIG​​PROBLEMS​
​Dear​​Excellent​​Accountant​
​ e​​received​​news​​that​​the​​external​​audit​​firm​​will​​be​​visiting​​us​​next​​week​​and​​our​​financial​
W
​statements​​are​​currently​​in​​a​​very​​poor​​state.​
I​​​am​​sending​​this​​email​​to​​you​​in​​order​​to​​request​​your​​help​​ASAP.​​Will​​you​​be​​able​​to​​advise​
​us​ ​in​ ​rectifying​ ​the​ ​presentation​ ​of​ ​our​ ​financial​ ​information​ ​for​ ​the​ ​year​ ​ended​
​28 February 2024?​​Your​​assistance​​will​​be​​greatly​​appreciated.​
​Please​​find​​our​​current​​financial​​statement​​attached​​to​​this​​email.​

​Kind​​regards,​
​Director​​Friend​

​The​​following​​PDF​​attachments​​were​​available:​
​INCOME​​STATEMENT​​OF​​MESSEDUP​​(PTY)​​LTD​
​INCOME​ ​ ​
R
​Sales​ ​1​​200​​000​
​Current​​year​​revaluation​​of​​land​ ​800​​000​
​Total​​income​ ​2​​000​​000​

​ XPENSES​
E
​Cost​​of​​sales​ ​ 00​​000​
6
​Other​​expenses​ ​250​​000​
​Depreciation​ ​50​​000​
​Net​​difference​​between​​interest​​income​​and​​interest​​expense​ ​20​​000​
​Equipment​​purchased​ ​200​​000​
​Dividends​​paid​ ​50​​000​
​Tax​​for​​the​​year​ ​60​​000​
​Total​​expenses​ ​(1​​230​​000)​
​Net​​profit​​for​​the​​year​ ​770​​000​
​ TATEMENT​​OF​​FINANCIAL​​POSITION​​OF​​MESSEDUP​​(PTY)​​LTD​​ON​
S
​28 FEBRUARY 2024​
​R​
​ASSETS​

​ and​​and​​buildings​
L ​ ​​700​​000​
1
​Revaluation​​surplus​ ​(800​​000)​
​Inventory​ ​60​​000​
​Equipment​ ​120​​000​
​Debtors​ ​250​​000​
​Creditors​ ​(200​​000)​
​Investments​​at​​cost​ ​300​​000​
​Cash​​and​​cash​​equivalents​ ​360​​000​

​Total​​Assets​ ​1​​798​​000​

​ QUITY​​AND​​LIABILITIES​
E
​Equity​
​Ordinary​​share​​capital​ ​ 00​​000​
2
​Preference​​share​​capital​ ​250​​000​

​ iabilities​
L
​Long​​term​​loans​ ​ 00​​000​
7
​Retained​​earnings​ ​530​​000​
​Shareholders​​for​​dividends​ ​50​​000​
​SARS:​​Income​​taxes​ ​60​​000​

​Total​​Equity​​and​​Liabilities​ ​1​​790​​000​

​REQUIRED​​–​​QUESTION​​2​

​a)​ W
​ rite​ ​a​ ​memorandum​ ​to​ ​Director​ ​Friend​ ​in​ ​which​ ​you​ ​advise​ ​him​ ​in​ ​rectifying​ ​the​
​financial​​statements​​provided​​by​​MessedUp​​in​​order​​to​​comply​​with​​IAS 1.​

​ our​ ​answer​ ​should​ ​include​ ​advice​ ​regarding​ ​the​ ​Statement​ ​of​ ​Profit​ ​or​ ​Loss​ ​and​
Y
​Other​ ​Comprehensive​ ​Income​​and​​the​​Statement​​of​​Financial​​Position.​​Calculations​
​are​​not​​required.​​Limit​​your​​answer​​to​​the​​provisions​​of​​IAS 1.​

​Communication​​skills​​–​​structure​​and​​layout​
​TOTAL​​MARKS​