G Ltd adopted IFRS from the beginning of year 2021. As a consequence, G. Ltdchanged its accounting policy for the treatment of borrowing costs that are directly attributable to the acquisition of a hydroelectric power station under construction for use by G Ltd. In previous periods, G Ltd had charged such costs as an expense. G Ltd has now decided to capitalise these costs rather than treating them as an expense as aresult of adopting IAS 23. G Ltd expensed borrowing costs directly related to construction of qualifying asset incurred of GHS 2,600 during 2011 and GHS 5,000 in 2010 and GHS 4,000 in 2009. G Ltd accounting records for 2012 show profit before tax of GHS 27,000 (after deducting GHS 3,000 borrowing costs relating to qualifying assets). The income tax is GHS 8,100. G Ltd has not yet recognized any depreciation on the power station because it is not yet in use. In 2011, G Ltd reported: Profit before interest and tax 20,600 Interest expense (all on qualifying assets) (2,600) Profit before tax 18,000 Tax (5,400) Profit 12,600 Year 2011 reported retained earnings was GHS 20,000 and closing retained earnings was GHS 32,600. G Ltd's tax rate was 30% for 2012, 2011 and prior periods. G Ltd had GHS 10,000 of share capital throughout and no other components of equity except for retained earnings. Required: In accordance with IAS 8, how will you treat the above adjustments in G Ltd's financial statements?
G Ltd adopted IFRS from the beginning of year 2021. As a consequence, G. Ltdchanged its accounting policy for the treatment of borrowing costs that are directly attributable to the acquisition of a hydroelectric power station under construction for use by G Ltd. In previous periods, G Ltd had charged such costs as an expense. G Ltd has now decided to capitalise these costs rather than treating them as an expense as aresult of adopting IAS 23. G Ltd expensed borrowing costs directly related to construction of qualifying asset incurred of GHS 2,600 during 2011 and GHS 5,000 in 2010 and GHS 4,000 in 2009. G Ltd accounting records for 2012 show profit before tax of GHS 27,000 (after deducting GHS 3,000 borrowing costs relating to qualifying assets). The income tax is GHS 8,100. G Ltd has not yet recognized any
Profit before interest and tax 20,600
Interest expense (all on qualifying assets) (2,600)
Profit before tax 18,000
Tax (5,400)
Profit 12,600
Year 2011 reported
Required: In accordance with IAS 8, how will you treat the above adjustments in G Ltd's financial statements?
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