(a) What is the general rule for determining distributable profits?

(b) State whether each of the following are realized or unrealized profits or losses. Briefly explain the reason for your answer.
(i) A charge to the statement of comprehensive income as a provision for bad debts;
(ii) The final dividend receivable from a subsidiary in respect of an accounting period ending before the end of the parent company’s financial-year; and (iii) Surpluses arising on revaluation of assets (before sale).

(c) The summarized statement of financial position at 30 September 20X6 of Global Sports Limited is set out below:

The deficit on the revaluation reserve arose as a result of a revaluation of all the non-current assets, and the articles of association state that the general reserve is non-distributable.

Requirement:

(a) What are the legally distributable profits of Global Sports if:
® it is a private company?
e it is a public company?

(b) What difference, if any, would it make to your answers in

(a) if the deficit on the revaluation reserve had arisen on the revaluation of an individual asset?

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Authorised Share Capital 250,000 ordinary shares of 1 each Called Up Share Capital 200,000 ordinary shares of 1 each '000 250 200 Share Premium Account 175 Revaluation Reserve (net deficit) (175) Other Reserves Capital Redemption Reserve Fund 125 General Reserve 100 Retained Earnings 200 625 Non-current Assets Net Current Assets 400 225 625