QUESTION 16 X Ltd is dependent upon its software to process its purchases and sale transaction...

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Accounting

QUESTION 16 X Ltd is dependent upon its software to process itspurchases and sale transaction and has a year end of 31 January. On15 January 20.5, X Ltd approached a computer consultant toestablish whether or not its software is compliant with its own newopen source operating system. On 31 January 20.5, the consultantinformed X Ltd that the software is not compliant and that X Ltdwould need to spend about N$3 million to make its softwarecompliant. The financial director of X Ltd has decided to providefor the amount of N$3 million in its accounting records for thefinancial year ended 31 January 20.6. X Ltd has not yet appointed acontractor to do the modifications. Required Discuss the financialdirector’s decision to provide for the amount of N$3 million in thefinancial statements of X Ltd for the year ended 31 January 20.6.You must assume that the amount is material. Justify your answer byonly referring to the requirements of the Framework.

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As per GAAP and following the fundamental concepts of accounting the given below concepts should have been taken into consideration while recording a transaction in the books of accounts Accounting period concept See Answer

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