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Holly Hunter had been working as a nurse in Long Tong Hospital in Hong Kong when the outbreak of SARS (Severe Acute Respiratory Syndrome) became a real threat to her in her workplace. As a safety precaution, Holly decided to return home to South Africa. She shipped a container of various fashion items (clothes, handbags, and accessories) from Hong Kong to South Africa and on her return, set up shop in the Red Shed market at the Victoria and Alfred Waterfront in Cape Town. After three months of trading, it appeared to Holly that her business was performing well. However, when she read the financial statements, there were a number of things that Holly did not understand. She decided to have lunch with you, her accountant, in order to discuss the questions and concerns that she had about her business. Below is an extract of the conversation that Holly Hunter had with you. The extract out- lines her questions and concerns: 1. "I know that profit and the statement of financial position are connected in some way, but I am not sure how. Can you explain to me the purpose of the statement of comprehensive income, and how it impacts on the statement of financial position?" 2. "In a note to the financial statements, it has been stated that non-current assets have been recorded based on the cost model. This implies that the original cost price of the asset is reflected in the statement of financial position. Is there any other method I can use to value these assets? Can you explain another valuation method that is available to me?" 3. There are a number of customers that have ordered and paid for various goods to be delivered after the current financial year end, 30 June 2022. The total value of the orders amounted to R37,000. Can you explain in detail how this transaction has been treated in the financial statements, for the year ended 30 June 2022? You are required to: Answer Holly's questions, giving a brief explanation in each case.

Holly Hunter had been working as a nurse in Long Tong Hospital in Hong Kong when the outbreak of SARS (Severe Acute Respiratory Syndrome) became a real threat to her in her workplace. As a safety precaution, Holly decided to return home to South Africa. She shipped a container of various fashion items (clothes, handbags, and accessories) from Hong Kong to South Africa and on her return, set up shop in the Red Shed market at the Victoria and Alfred Waterfront in Cape Town. After three months of trading, it appeared to Holly that her business was performing well. However, when she read the financial statements, there were a number of things that Holly did not understand. She decided to have lunch with you, her accountant, in order to discuss the questions and concerns that she had about her business. Below is an extract of the conversation that Holly Hunter had with you. The extract out- lines her questions and concerns: 1. "I know that profit and the statement of financial position are connected in some way, but I am not sure how. Can you explain to me the purpose of the statement of comprehensive income, and how it impacts on the statement of financial position?" 2. "In a note to the financial statements, it has been stated that non-current assets have been recorded based on the cost model. This implies that the original cost price of the asset is reflected in the statement of financial position. Is there any other method I can use to value these assets? Can you explain another valuation method that is available to me?" 3. There are a number of customers that have ordered and paid for various goods to be delivered after the current financial year end, 30 June 2022. The total value of the orders amounted to R37,000. Can you explain in detail how this transaction has been treated in the financial statements, for the year ended 30 June 2022? You are required to: Answer Holly's questions, giving a brief explanation in each case.

Business Its Legal Ethical & Global Environment
Business Its Legal Ethical & Global Environment
10th Edition
ISBN:9781305224414
Author:JENNINGS
Publisher:JENNINGS
Chapter3: The Judicial System
Section: Chapter Questions
Problem 8QAP
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Holly Hunter had been working as a nurse in Long Tong Hospital in Hong Kong when the outbreak of SARS (Severe Acute Respiratory Syndrome) became a real threat to her in her workplace. As a safety precaution, Holly decided to return home to South Africa. She shipped a container of various fashion items (clothes, handbags, and accessories) from Hong Kong to South Africa and on her return, set up shop in the Red Shed market at the Victoria and Alfred Waterfront in Cape Town. After three months of trading, it appeared to Holly that her business was performing well. However, when she read the financial statements, there were a number of things that Holly did not understand. She decided to have lunch with you, her accountant, in order to discuss the questions and concerns that she had about her business. Below is an extract of the conversation that Holly Hunter had with you. The extract out- lines her questions and concerns: 1. "I know that profit and the statement of financial position are connected in some way, but I am not sure how. Can you explain to me the purpose of the statement of comprehensive income, and how it impacts on the statement of financial position?" 2. "In a note to the financial statements, it has been stated that non-current assets have been recorded based on the cost model. This implies that the original cost price of the asset is reflected in the statement of financial position. Is there any other method I can use to value these assets? Can you explain another valuation method that is available to me?" 3. There are a number of customers that have ordered and paid for various goods to be delivered after the current financial year end, 30 June 2022. The total value of the orders amounted to R37,000. Can you explain in detail how this transaction has been treated in the financial statements, for the year ended 30 June 2022? You are required to: Answer Holly's questions, giving a brief explanation in each case.
Transcribed Image Text:Holly Hunter had been working as a nurse in Long Tong Hospital in Hong Kong when the outbreak of SARS (Severe Acute Respiratory Syndrome) became a real threat to her in her workplace. As a safety precaution, Holly decided to return home to South Africa. She shipped a container of various fashion items (clothes, handbags, and accessories) from Hong Kong to South Africa and on her return, set up shop in the Red Shed market at the Victoria and Alfred Waterfront in Cape Town. After three months of trading, it appeared to Holly that her business was performing well. However, when she read the financial statements, there were a number of things that Holly did not understand. She decided to have lunch with you, her accountant, in order to discuss the questions and concerns that she had about her business. Below is an extract of the conversation that Holly Hunter had with you. The extract out- lines her questions and concerns: 1. "I know that profit and the statement of financial position are connected in some way, but I am not sure how. Can you explain to me the purpose of the statement of comprehensive income, and how it impacts on the statement of financial position?" 2. "In a note to the financial statements, it has been stated that non-current assets have been recorded based on the cost model. This implies that the original cost price of the asset is reflected in the statement of financial position. Is there any other method I can use to value these assets? Can you explain another valuation method that is available to me?" 3. There are a number of customers that have ordered and paid for various goods to be delivered after the current financial year end, 30 June 2022. The total value of the orders amounted to R37,000. Can you explain in detail how this transaction has been treated in the financial statements, for the year ended 30 June 2022? You are required to: Answer Holly's questions, giving a brief explanation in each case.
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