Florry Ltd is a large Irish company which manufactures and supplies specialised electrical products to the European market. Florry Ltd also provides support services to its customers through online platforms.

It is January 2022 and Florry Ltd is currently drafting its financial statements for the year ended, 31 December 2021. The Finance Director is seeking a report which provides details on the accounting treatment behind a number of accounting items which are relevant to the financial statements for the financial year ended 31 December 2021.

Below are the details on the items:

Item 1: Property Revaluation

At the start of the year, 1 January 2021, Florry Ltd decided to change its accounting policy from the cost model to the revaluation model. At this date, independent valuers valued the companys property at 1,250,000, the revaluation included 350,000 relating to the land element of the property. The Property had cost 750,000 8 years ago of which 100,000 related to the land element. Company policy is to depreciate property over a 20-year useful economic life, and this is not expected to change as a result of the revaluation.

Item 2: Revenue

On 30 June, Florry Ltd sold one of its specialised electrical products to a customer at a price of 50,000. The sale included a 12-month online support service for the product commencing 1 July. This particular product can be purchased without the online support for a price of 45,000. The online support for all the companys products are generally 14,000 plus a mark up of 25%.

Item 3: Share Capital

For the year ended 31 December 2021, Florry Ltd paid half of the preference dividend for the year and an interim ordinary dividend of 5 cent per share on ordinary shares. A final ordinary dividend of 3 cent per share was authorised and approved before the 31 December 2021.

The issued share capital of Florry Ltd as at 31 December 2021:

	EUROS
Ordinary shares	2,000,000
8% Preference shares of 1 each	1,200,000

Page 2 of 3

Item 4: Events after the Reporting Period

• - A number of years ago, Florry Ltd invested in another company, Damler Ltd. The companys policy is to value the investment at its cost price of in the Statement of Financial Position at 600,000. Earlier this month (January 2022), the Finance Director reviewed the financial statements of Damler Ltd for the year ended 31 December 2021. On review, the financial statements indicated a permanent decline in the value of the company. The value of the investment in the company now stands at 350,000.
• - Early in January 2022, inventory to the value of 80,000 was damaged in a flood at one of the companys warehouses. The company insurance fully covers the value of the damaged inventory and there has been no impact on the trading operations of the company.

Required:

a) Prepare a report to the Finance Director detailing the relevant accounting treatment for each of the above items with reference to the relevant accounting standard and outline how each item should be accounted for by Florry Ltd. Show journal entries where appropriate.

b) Provide extracts of the Statement of Profit or Loss and Other Comprehensive Income and the Statement of Financial Position for the year ended 31