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

(b) State whether each of the following is an realised or an unrealised profit or loss and briefly explain the reason for your answer:

(i) a charge to the statement of profit or loss and other comprehensive income as an allowance for irrecoverable 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 summarised statement of financial position at 30 September 2017 of Global Sports Limited is set out below:

The revaluation surplus 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 What are the legally distributable profits of Global Sports if:
(i) it is a private company?
(ii) it is a public company?

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Share premium account Authorised Share Capital 250,000 ordinary shares of 1 each Called-up Share Capital 200,000 ordinary shares of 1 each Revaluation surplus 000 250 200 175 150 Other Reserves: Capital redemption reserve fund 125 General reserve 100 Retained earnings 200 950 Non-current assets Net current assets 400 550 950