2 Tyre, a public limited company, operates in the vehicle retailing sector. The company is currently preparing its financial

statements for the year ended 31 May 2006 and has asked for advice on how to deal with the following items:(i) Tyre requires customers to pay a deposit of 20% of the purchase price when placing an order for a vehicle. If the

customer cancels the order, the deposit is not refundable and Tyre retains it. If the order cannot be fulfilled by

Tyre, the company repays the full amount of the deposit to the customer. The balance of the purchase price

becomes payable on the delivery of the vehicle when the title to the goods passes. Tyre proposes to recognise

the revenue from the deposits immediately and the balance of the purchase price when the goods are delivered

to the customer. The cost of sales for the vehicle is recognised when the balance of the purchase price is paid.

A．dditionally, Tyre had sold a fleet of cars to Hub and gave Hub a discount of 30% of the retail price on the

transaction. The discount given is normal for this type of transaction. Tyre has given Hub a buyback option which

entitles Hub to require Tyre to repurchase the vehicles after three years for 40% of the purchase price. The normal

economic life of the vehicles is five years and the buyback option is expected to be exercised. (8 marks)

Required:

A．dvise the directors of Tyre on how to treat the above items in the financial statements for the year ended

31 May 2006.(The mark allocation is shown against each of the above items)

[试题]2 Misson, a public limited company, has carried out transactions denominated in foreign currency during the financialyear ended 31 October 2006 and has conducted foreign operations through a foreign entity. Its functional andpresentation currency is t

[试题]2 Marrgrett, a public limited company, is currently planning to acquire and sell interests in other entities and has askedfor advice on the impact of IFRS3 (Revised) ‘Business Combinations’ and IAS27 (Revised) ‘Consolidated and SeparateF．inancial Stat

[试题]5 Ambush, a public limited company, is assessing the impact of implementing the revised IAS39 ‘Financial Instruments:Recognition and Measurement’. The directors realise that significant changes may occur in their accounting treatmentof financial instr

[试题]3 (a) Leigh, a public limited company, purchased the whole of the share capital of Hash, a limited company, on 1 June2006. The whole of the share capital of Hash was formerly owned by the five directors of Hash and under theterms of the purchase agree

[试题]3 Johan, a public limited company, operates in the telecommunications industry. The industry is capital intensive withheavy investment in licences and network infrastructure. Competition in the sector is fierce and technologicaladvances are a characte

[试题]4 Ryder, a public limited company, is reviewing certain events which have occurred since its year end of 31 October2005. The financial statements were authorised on 12 December 2005. The following events are relevant to thefinancial statements for the

[试题]4 (a) Router, a public limited company operates in the entertainment industry. It recently agreed with a televisioncompany to make a film which will be broadcast on the television company’s network. The fee agreed for thefilm was $5 million with a fur

[试题]2 Plaza, a limited liability company, is a major food retailer. Further to the success of its national supermarkets in thelate 1990s it has extended its operations throughout Europe and most recently to Asia, where it is expanding rapidly.You are a ma

[试题](c) Pinzon, a limited liability company and audit client, is threatening to sue your firm in respect of audit fees chargedfor the year ended 31 December 2004. Pinzon is alleging that Bartolome billed the full rate on air fares for auditstaff when subs

[试题](b) Chatam, a limited liability company, is a long-standing client. One of its subsidiaries, Ayora, has made lossesfor several years. At your firm’s request, Chatam’s management has made a written representation that goodwillarising on the acquisition