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Related Party Disclosures

The document discusses the related party considerations for Mireku LTD under IAS 24, focusing on the relationships with Ayariga PLC, Brakatu PLC, and Ayine LTD. It also details the agricultural accounting practices for Kayumba, an emerging farmer, including her transactions and the application of IAS 41 regarding biological assets and agricultural produce. Required tasks include justifying related party status and preparing financial statement extracts for Kayumba's operations.

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22 views4 pages

Related Party Disclosures

The document discusses the related party considerations for Mireku LTD under IAS 24, focusing on the relationships with Ayariga PLC, Brakatu PLC, and Ayine LTD. It also details the agricultural accounting practices for Kayumba, an emerging farmer, including her transactions and the application of IAS 41 regarding biological assets and agricultural produce. Required tasks include justifying related party status and preparing financial statement extracts for Kayumba's operations.

Uploaded by

7qhfwkvpsc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

QUESTION TWO

The diagram below relates to Mireku LTD.

Additional information:
i) Ayariga PLC shares control of Ahmed LTD, with another company Brakatu
PLC, which owns 30% of Ahmed LTD. Under an agreement between Ayariga
PLC and Brakatu PLC all decisions about operating and all other activities are
made jointly.
ii) In all other circumstances above, percentage shareholdings are equivalent to
voting rights and influence.
iii) Ayine LTD is Mireku LTD's main customer, representing approximately 55% of
Mireku's revenue stream.
iv) Dennis pays monthly upkeep allowance to Adorko.

Required:
Justify whether each of the parties in the above diagram is or is not considered
a related party of Mireku LTD in accordance with IAS 24: Related Party
Disclosures.
QUESTION THREE

Since Tanzania’s attainment of independence, agriculture has been the mainstay of


the economic activities in most rural and peri-urban areas. In order to regulate
accounting practice in agricultural undertakings, the International Accounting
Standards Board (IASB) developed an accounting standard, IAS 41: Agriculture.

Kayumba, an emerging female farmer located in central province, prepares


financial statements to 30th September each year in order to align the financial
year to major agricultural activities. On 1st October 2022, Kayumba carried-out
the following transactions:

(i) Purchased a large piece of traditional land in Mkuki farming block for TZS.
1billion
(ii) Purchased 100 dairy cows (with average age of two years), costing TZS.50
million in total.
(iii) Received a non-refundable grant of TZS.20,000,000 towards acquisition of
these cows.
During the year ended 30th September 2023, Kayumba incurred the
following costs: (iv) TZS.25,000,000 to maintain the condition of her animals
(food and disease protection) (v) TZS.15,000,000 in breeding fees to a local
farmer.

On 1st April 2023, 50 calves were born. Kayumba’s established mortality rate for
her biological assets (which she incorporates in her financial statements in line
with best practice and prudence) is 10% per annum of every birth or purchase.
Apart from the forgoing, she recorded no other changes in the number animals
during the year ended 30th September 2023. At year-end (30th September 2023),
Kayumba had 100 litres of unsold milk. This was sold shortly after year end at the
prevailing market price.

Information regarding fair value is as follows

Fair value less point of sale cost at 30 September 2023


(TZS)
Land 1.2 billion
Six-month-old calves (per calf) 125,000
Three-year-old cows (per cow) 685,000
Milk (per litre) 3,000

REQUIRED:
(a) State the provisions of IAS 41: Agriculture, regarding recognition and
measurement of biological assets and agricultural produce in the
preparation and presentation of financial statements.
(b) Prepare extracts of the statement of comprehensive income and the
statement of Financial Position that show how transactions entered into
by Kayumba in respect of purchase and maintenance of dairy herd
would be reflected in the financial statements of the year ended 30th
September 2023.

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