(c) In August 2004 it was discovered that the inventory at 31 December 2003 had been overs

(c) In August 2004 it was discovered that the inventory at 31 December 2003 had been overstated by $100,000.

(4 marks)

Required:

Advise the directors on the correct treatment of these matters, stating the relevant accounting standard which

justifies your answer in each case.

NOTE: The mark allocation is shown against each of the three matters.