You have recently joined the finance team of Vizza plc (Vizza), a listed company which operates a chain of vegan pizza restaurants. The Finance Director has emailed you asking for some help to address the following issues before the financial statements can be finalised for the year ended 31 March 2021.
a) The Finance Director would like to revalue Vizza’s London restaurant as a one-off on 1 January 2021. She does not want to revalue any of the other properties as many of them have fallen in value. The Finance Director thinks the property should be revalued to £3m from 1 April 2020 based on a property TV programme she watched.
b) In February 2021 a customer made a claim against Vizza, stating that they suffered from food poisoning after visiting one of Vizza’s restaurants. It is a difficult case to prove and lawyers have advised that it is 30% likely that the customer will win the claim if it goes to court. If the case is lost, it is expected that damages of £30,000 will be payable to the customer.
c) On 1 April 2020, Vizza started developing two new vegan products in-house: V1 and V2. The following costs have been incurred on the projects for the year ended 31 March 2021:
a) Write an email to the Finance Director explaining the required International Financial Reporting Standard treatment of issues a), b) and c) above in the financial statements of Vizza plc for the year ended 31 March 2021, preparing all relevant calculations. Extracts of the financial statements are not required.
b) Listed companies which report under International Financial Reporting standards are always directly comparable. Discuss this statement, referring to two specific International Financial Reporting Standards in your answer.
