% for the remaining years.

Assume that the effective rate of interest is 10.33% per annum.

(2) 250 000 5% redeemable £1 preference shares were issued on 1 June 2002. Dividends are paid annually commencing on 30 November 2002 and the shares will be redeemed at a premium of £16600 on 30 May 2006.

Assume that the effective rate of finance cost is 6.5% per annum.

(3) A loan from the company’s bankers was obtained on 1 December 2001 for £400 000. No payments are required for the first four years and the repayment terms are four annual instalments of £168 400 starting on 30 November 2005.

Assume that the effective rate of finance cost is 10.06% per annum.

Requirements

(a) Calculate the amounts to be disclosed in the profit and loss account for the year ended 30 November 2002 and in the balance sheet of Tealing plc as at that date, preparing the appropriate extracts of these primary statements. (10 marks)

(b) Explain the appropriate accounting treatment for each of the items in

(a) with appropriate reference to the Statement of Principles, noting any differences in treatment to International Accounting Standards. (7 marks)

ICAW, Financial Reporting, December 2002 (17 marks)