chapter 3

Prepare TYV's statement of profit or loss and a statement of changes in equity for the year ended 30 September 2014 and a statement of financial position at that date, in accordance with the require ments of International Financial Reporting Standards. All workings should be to the nearest $000. Notes to the financial statements are not required but all workings must be clearly shown. Do not prepare a statement of accounting policies. (CIMA Financial Operations November 2014) Question 9 TYV is a manufacturing entity and produces a range of products in several factories. TYV's trial balance at 30 September 2014 is shown below $000 1.700 4,510 6,000 Notes $000 Accumulated depreciation at 30 September 2013: Buildings 0 Plant and equipment (iv) Administrative expenses 1,820 Cash and cash equivalents 272 Cost of sales 10,200 Distribution costs 1.110 Equity dividend paid 350 Equity shares $1 each, fully paid at 30 September 2014 Finance charges for new factory building 113 Income tax (V) 80 Inventory at 30 September 2014 brOS 575 Land and buildings at cost at 30 September 2013 (ii) & () 17,386 Long-term borrowings (vi) Long-term borrowings loan interest 233 New factory building cost 1,014 Plant and equipment at cost at 30 September 2013 (iv) 7.750 Provision for deferred tax at 30 September 2013 625 Receipt from disposal of plant and equipment Retained earnings at 30 September 2013 Sales revenue and Share premium at 30 September 2014 bad2 Short-term loan Suspense account Trade payables Trade receivables 2.250 43.153 5,000 7 491 19,460 850 1,500 1.130 1.880 e 43,153 Preparation of internal and published financial stat Cost Notes On 1 October 2013 two of TYV's factories factory A and factory B, were deemed obsolete and no longer suitable for TYV's use. On I June 2014 both factories were closed and production moved to a new facility. TYV disposed of factory B with all legal formalities completed and cash received on 31 August 2014. Factory A was not sold by the financial year-end; however at 30 September 2014 negotiations for the sale of factory A were well advanced and TYV's manage- ment expected to conclude the sale by 31 December 2014. The cost and accumulated depreciation included in land and buildings along with the fair value of each factory is shown below: Depreciation Fair value less Land Buildings at 30 September 2013 cost of disposal at 30 Sept 2014 $1,375,000 $455,000 $364,000 $1.420,000 $1,120,000 $325,000 $286,000 $1,130,000 The suspense account is the cash received from the disposal of factory B. The only entries made in the ledgers for this item was in cash and cash equivalents and suspense account The cost of land included in land and buildings was $11,000,000 on 1 October 2013. TYV built the new factory on land it already owned commencing on 1 October 2013 and completing it on 30 June 2014. To fund the project TYV raised a short-term loan on 1 October 2013. repayable on 30 September 2015 Factory B (w) Plant and equipment in factories A and B was relocated to the new factory, except for plant and equipment with a carrying value of $55,000 (cost $175,000) that was sold as scrap, realising $7.000. Buildings are depreciated at 2% per annum on the straight-line basis. Buildings depreciation is treated as an administrative expense. Plant and equipment is depreciated at 25% per annum using the reducing balance method and is charged to cost of sales. TYV's accounting policy for depreciation is to charge a full year in the year of acquisition and none in the year of disposal. () The directors estimate the income tax charge on the year's profits at $940,000. The balance on the income tax account represents the under provision for the previous year's tax charge. The deferred tax provision is to be reduced by $49.000. () The long-term borrowings consist of one loan issued in 2000 for 20 years at 7% interest per year. Interest is paid half yearly on June and I December Required: Prepare TYV's statement of profit or loss and a statement of changes in equity for the year ended 30 September 2014 and a statement of financial position at that date, in accordance with the require- ments of International Financial Reporting Standards. All workings should be to the nearest $000. Notes to the financial statements are not required but all workings must be clearly shown. Do not prepare a statement of accounting policies. (CIMA Financial Operations November 2014) Prepare TYV's statement of profit or loss and a statement of changes in equity for the year ended 30 September 2014 and a statement of financial position at that date, in accordance with the require ments of International Financial Reporting Standards. All workings should be to the nearest $000. Notes to the financial statements are not required but all workings must be clearly shown. Do not prepare a statement of accounting policies. (CIMA Financial Operations November 2014) Question 9 TYV is a manufacturing entity and produces a range of products in several factories. TYV's trial balance at 30 September 2014 is shown below $000 1.700 4,510 6,000 Notes $000 Accumulated depreciation at 30 September 2013: Buildings 0 Plant and equipment (iv) Administrative expenses 1,820 Cash and cash equivalents 272 Cost of sales 10,200 Distribution costs 1.110 Equity dividend paid 350 Equity shares $1 each, fully paid at 30 September 2014 Finance charges for new factory building 113 Income tax (V) 80 Inventory at 30 September 2014 brOS 575 Land and buildings at cost at 30 September 2013 (ii) & () 17,386 Long-term borrowings (vi) Long-term borrowings loan interest 233 New factory building cost 1,014 Plant and equipment at cost at 30 September 2013 (iv) 7.750 Provision for deferred tax at 30 September 2013 625 Receipt from disposal of plant and equipment Retained earnings at 30 September 2013 Sales revenue and Share premium at 30 September 2014 bad2 Short-term loan Suspense account Trade payables Trade receivables 2.250 43.153 5,000 7 491 19,460 850 1,500 1.130 1.880 e 43,153 Preparation of internal and published financial stat Cost Notes On 1 October 2013 two of TYV's factories factory A and factory B, were deemed obsolete and no longer suitable for TYV's use. On I June 2014 both factories were closed and production moved to a new facility. TYV disposed of factory B with all legal formalities completed and cash received on 31 August 2014. Factory A was not sold by the financial year-end; however at 30 September 2014 negotiations for the sale of factory A were well advanced and TYV's manage- ment expected to conclude the sale by 31 December 2014. The cost and accumulated depreciation included in land and buildings along with the fair value of each factory is shown below: Depreciation Fair value less Land Buildings at 30 September 2013 cost of disposal at 30 Sept 2014 $1,375,000 $455,000 $364,000 $1.420,000 $1,120,000 $325,000 $286,000 $1,130,000 The suspense account is the cash received from the disposal of factory B. The only entries made in the ledgers for this item was in cash and cash equivalents and suspense account The cost of land included in land and buildings was $11,000,000 on 1 October 2013. TYV built the new factory on land it already owned commencing on 1 October 2013 and completing it on 30 June 2014. To fund the project TYV raised a short-term loan on 1 October 2013. repayable on 30 September 2015 Factory B (w) Plant and equipment in factories A and B was relocated to the new factory, except for plant and equipment with a carrying value of $55,000 (cost $175,000) that was sold as scrap, realising $7.000. Buildings are depreciated at 2% per annum on the straight-line basis. Buildings depreciation is treated as an administrative expense. Plant and equipment is depreciated at 25% per annum using the reducing balance method and is charged to cost of sales. TYV's accounting policy for depreciation is to charge a full year in the year of acquisition and none in the year of disposal. () The directors estimate the income tax charge on the year's profits at $940,000. The balance on the income tax account represents the under provision for the previous year's tax charge. The deferred tax provision is to be reduced by $49.000. () The long-term borrowings consist of one loan issued in 2000 for 20 years at 7% interest per year. Interest is paid half yearly on June and I December Required: Prepare TYV's statement of profit or loss and a statement of changes in equity for the year ended 30 September 2014 and a statement of financial position at that date, in accordance with the require- ments of International Financial Reporting Standards. All workings should be to the nearest $000. Notes to the financial statements are not required but all workings must be clearly shown. Do not prepare a statement of accounting policies. (CIMA Financial Operations November 2014)