Study buddy for F3 & F2

Well I have some practice questions of F2 and F3 i can mail you soon as possible. For more exams relates Microsoft then go down.
https://dumps4free.com/vendor/Microsoft

F2 Question”
MW is a car dealership and in the year ended 30 June 2014 had cars on its premises that had been supplied by a manufacturer LR. Trading between the two entities was subject to a contractual agreement that stated that MW could hold up to 150 vehicles on its premises. MW was responsible for insuring all the vehicles on its property.
LR retained the legal title until the cars were sold by MW to a third party, at which point MW was required to inform LR within 10 days of the sale. LR then raised an invoice to MW based on the list price at the date of sale to a third party. MW had the right to return any vehicle at any time to LR without incurring a penalty.
MW had included vehicles supplied by LR and held on MW’s premises in its year-end inventories.

Answers:

IAS 1 (Revised) Presentation of Financial Statements requires that financial statements must reflect the economic substance of transactions and not merely their legal form, where economic substance is determined by considering which party to the transaction holds the principal risks and benefits associated with, in this case, an asset.
Therefore in order to determine the correct accounting treatment we need to consider whether it is MW or LR which holds the significant risks and benefits of the vehicles and therefore which entity should record the vehicles held on MW’s premises as inventory.
In this situation the key factors are:
• MW is responsible for insuring the vehicles whilst on its premises. This would indicate that MW holds the risk of holding and storing the inventory.
• MW can return the vehicles at any time to LR without penalty. This would indicate that LR holds the risk of inventory obsolescence.
• The vehicles are sold at the price determined on the date of sale to 3rd party. This would indicate that the risk of ultimate price movements (ie: with respect to the end customer) is with LR.
This is a consignment inventory arrangement as the above factors show there is no clear cut answer as to who holds the significant risks and benefits. In this situation, we should consider the key risks which are likely to be the risk of obsolescence and the fact the LR is not protected from price changes up to date of sale. Given the terms of right of return, the obsolescence risk is with LR and therefore it is LR which should record the vehicles held at MW’s premises at the year end as inventory. Therefore the books of MW should be amended to de-recognise the inventory and adjust cost of sales.

https://freedumps.info/vendor/Amazon-braindumps-questions

I have F2 and F3 questions if any need then contact me. For more exam questions like Microsoft then visit https://www.dumps4download.us/microsoft-question-answers.html

Hi ! I would like to try the study buddy?