- 10 Marks
FR – L2 – Q14 – Financial Reporting Standards and Their Applications
Discuss accounting for a repurchase agreement and consignment arrangement for Accra Healthcare Manufacturing Limited per IFRS standards.
Question
The following transactions took place at Accra Healthcare Manufacturing Limited in the year ended 31 March 20X9.
(1) On 1 January Accra Healthcare Manufacturing Limited sold goods to a bank for GH₵18m cash and agreed to repurchase the personally identifiable information repurchase the goods for GH₵20m cash on 31 December 20X9.
(2) On 31 March Accra Healthcare Manufacturing Limited consigned several motorised mobility aids to independent medical salespeople for sale to third parties. The sales price to the dealer is Accra Healthcare Manufacturing Limited’s list price at the date of sale to third parties. If a mobility aid is unsold after six months, the medical rep has a right to return it to Accra Healthcare Manufacturing Limited.
Required
Discuss how the above transactions should be accounted for in the financial statements of Accra Healthcare Manufacturing Limited for the year ended 31 March 20X9.
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