Page 3 - 28. COMPILER QB - IND AS 8

SOLUTION

Profit or loss under weighted average valuation method is as follows:
2018-2019 2017-2018(Restated)
Revenue 324 296
Cost of goods sold (168) (159)
Gross profit 156 137
Expenses (83) (74)
Profit 73 63

Statement of changes in Equity (extract)
Retained earnings Retained earnings
(Original)

At 1st April, 2017 423 423
Change in inventory valuation policy 10 -
At 1st April, 2017 (Restated) 433 -
Profit for the year 2017-2018 63 58
At 31st March, 2018 496 481
Profit for the 2018-2019 73 68
At 31st March, 2019 569 549

Q2 (RTP Nov 19 & Also Newly added in ICAI May 22 Module)

During 20X4-X5, Cheery Limited discovered that some products that had been sold during 20X3-X4 were
incorrectly included in inventory at 31st March, 20X4 at Rs. 6,500.
Cheery Limited‖s accounting records for 20X4-X5 show sales of Rs. 104,000, cost of goods sold of Rs. 86,500
(including Rs. 6,500 for the error in opening inventory), and income taxes of Rs.5,250.
In 20X3-X4, Cheery Limited reported:

Rs.
Sales 73,500
Cost of goods sold (53,500)
Profit before income taxes 20,000
Income taxes (6,000)
Profit 14,000
Basic and diluted EPS 2.8
The 20X3-X4 opening retained earnings was Rs. 20,000 and closing retained earnings was Rs. 34,000. Cheery

Limited‖s income tax rate was 30% for 20X4-X5 and 20X3-X4. It had no other income or expenses.
Cheery Limited had Rs. 50,000 (5,000 shares of Rs.10 each) of share capital throughout, and no other
components of equity except for retained earnings.
State how the above will be treated /accounted for in Cheery Limited‖s Statement of profit and loss,
statement of changes in equity and in notes wherever required for current period and earlier period(s) as per
relevant Ind AS.

28. 2