which of the following situations requires the taxpayer to obtain a power of attorne 613524

Nature of expense method vs. function of expense method

Entity E operates in retail sales, i.e. E purchases merchandise from wholesalers and resells to customers. The following table presents the expenses from the year 01 according to their nature and function:

Revenue for the year 01 is CU 50.

Required

E prepares its first financial statements according to IFRS as at Dec 31, 01. E decides to prepare a separate income statement (two statement approach). E”s chief financial officer would prefer to present the items of the results of operating activities as shown below if possible. In this statement, cost of sales, administrative expenses, and distribution costs would be presented excluding an allocation of depreciation and amortization. Depreciation and amortization expense would therefore be shown as a separate line item:

Assess whether this presentation of the results of operating activities in E”s separate income statement is possible. If not, prepare new versions for E”s separate income statement which correspond with IFRS.

For simplification purposes, comparative figures are ignored in this example. It is not intended to shift information to the notes.