Raiders plc prepares accounts annually to 31 March. The following figures, prepared on a conventional historical cost basis, are included in the company€™s accounts to 31 March 20X5.

1 In the income statement:

2 In the statement of financial position:

The inventor y held on 31 March 20X4 and 31 March 20X5 was in each case purchased evenly during the last six months of the company€™s accounting year.

Equipment is depreciated at a rate of 15% per annum, using the straight-line method. Equipment owned on 31 March 20X5 was purchased as follows: on 1 April 20X2 at a cost of £16 million; on 1 April 20X3 at a cost of £20 million; and on 1 April 20X4 at a cost of £21.6 million.

Required:

(a) Calculate the following current cost accounting figures:

(i) The cost of goods sold of Raiders plc for the year ended 31 March 20X5.

(ii) The statement of financial position value of inventory at 31 March 20X5.

(iii) The equipment depreciation charge for the year ended 31 March 20X5.

(iv) The net statement of financial position value of equipment at 31 March 20X5.

(b) Discuss the extent to which the figures you have calculated in (a) above (together with figures calculated on a similar basis for earlier years) provide information over and above that provided by the conventional historical cost statement of comprehensive income and balance sheet figures.

(c) Outline the main reasons why the standard setters have experienced so much difficulty in their attempts to develop an accounting standard on accounting for changingprices.

Transcribed Image Text:

£000 £000 ) Cost of goods sold: Inventory at I April 20X4 9,600 Purchases 39,200 48,800 11,300 Inventory at 31 March 20X5 37,500 (i) Depreciation of equipment 8,640