Fly Away Limited is a small company offering flight simulator experiences for corporate team building and to members of the public. The following is the summarised trial balance of the company at 31 March 20X4: FLY AWAY LIMITED TRIAL BALANCE AT 31 MARCH 20X4 Cr Dr 260 000 Equipment: cost Equipment: accumulated depreciation - 31/03/X3 Ordinary share capital Long-term borrowings Retained earnings - 31/03/X3 Profit or loss Trade and other receivables Bank Trade and other payables 50 000 80 000 20 000 70 250 54 750 50 000 25 000 60 000 335 000 335 000 The equipment comprises the flight simulator and was purchased on 1 April 20X1. The accumulated depreciation balance at 31 March 20X3 was measured at 10% per annum on the straight line basis to a residual value of 10 000. At 31 March 20X4, the fair value of the equipment was determined by independent appraisal to be 208 000. As part of the same process, the residual value was re-estimated to be 12 000, but the remaining useful life remained unchanged. The entity applies the revaluation model to measure its equipment, using the net replacement value method. The revaluation surplus is transferred to retained earnings on disposal of the equipment. The balance of 55 000 on the trial balance for 'profit or loss' represents the operating profit for the year ended 31 March 20X4. This has been calculated before processing any entries relating to the plant and the following adjustments: . Trade and other receivables include a prepayment relating to an insurance policy of 800 for the period from 1 January 20X4 to 31 December 20X4. Trade and other payables include unearned income of 2 400 relating to flight simulator bookings for the period from 1 January 20X4 to 30 June 20X4. Income is earned evenly over the period. During the year ended 31 March 20X5, the business earned a profit for the period (after all expenses) of 34 000. Other relevant balances at 31 March 20X5 include: . . Trade and other receivables: 75 000 Bank: 30 000 Trade and other payables: 28 000 . The long-term borrowings represent a loan from the bank at an interest rate of 5% per annum. The loan is repayable in two equal instalments on 30 September 20X5 and 30 September 20X6. Required: a) Provide the journal entries relating to depreciation and revaluation of the plant for the year ended 31 March 20X4. (6 marks) b) Prepare the statement of comprehensive income and from the statement of changes in equity of Fly Away Limited for the year ended 31 March 20X4. Begin the statement of comprehensive income with Operating profit. (11 marks) c) Prepare the statement of financial position of Fly Away Limited at 31 March 20X5. (12 marks) d) Prepare the accounting policy note for equipment to be included in the notes to the financial statements of Fly Away Limited for the year ended 31 March 20X5. (3 marks) e) Discuss briefly whether it is necessary for an entity to process depreciation when the fair value of an asset exceeds its carrying amount. (3 marks) Fly Away Limited is a small company offering flight simulator experiences for corporate team building and to members of the public. The following is the summarised trial balance of the company at 31 March 20X4: FLY AWAY LIMITED TRIAL BALANCE AT 31 MARCH 20X4 Cr Dr 260 000 Equipment: cost Equipment: accumulated depreciation - 31/03/X3 Ordinary share capital Long-term borrowings Retained earnings - 31/03/X3 Profit or loss Trade and other receivables Bank Trade and other payables 50 000 80 000 20 000 70 250 54 750 50 000 25 000 60 000 335 000 335 000 The equipment comprises the flight simulator and was purchased on 1 April 20X1. The accumulated depreciation balance at 31 March 20X3 was measured at 10% per annum on the straight line basis to a residual value of 10 000. At 31 March 20X4, the fair value of the equipment was determined by independent appraisal to be 208 000. As part of the same process, the residual value was re-estimated to be 12 000, but the remaining useful life remained unchanged. The entity applies the revaluation model to measure its equipment, using the net replacement value method. The revaluation surplus is transferred to retained earnings on disposal of the equipment. The balance of 55 000 on the trial balance for 'profit or loss' represents the operating profit for the year ended 31 March 20X4. This has been calculated before processing any entries relating to the plant and the following adjustments: . Trade and other receivables include a prepayment relating to an insurance policy of 800 for the period from 1 January 20X4 to 31 December 20X4. Trade and other payables include unearned income of 2 400 relating to flight simulator bookings for the period from 1 January 20X4 to 30 June 20X4. Income is earned evenly over the period. During the year ended 31 March 20X5, the business earned a profit for the period (after all expenses) of 34 000. Other relevant balances at 31 March 20X5 include: . . Trade and other receivables: 75 000 Bank: 30 000 Trade and other payables: 28 000 . The long-term borrowings represent a loan from the bank at an interest rate of 5% per annum. The loan is repayable in two equal instalments on 30 September 20X5 and 30 September 20X6. Required: a) Provide the journal entries relating to depreciation and revaluation of the plant for the year ended 31 March 20X4. (6 marks) b) Prepare the statement of comprehensive income and from the statement of changes in equity of Fly Away Limited for the year ended 31 March 20X4. Begin the statement of comprehensive income with Operating profit. (11 marks) c) Prepare the statement of financial position of Fly Away Limited at 31 March 20X5. (12 marks) d) Prepare the accounting policy note for equipment to be included in the notes to the financial statements of Fly Away Limited for the year ended 31 March 20X5. (3 marks) e) Discuss briefly whether it is necessary for an entity to process depreciation when the fair value of an asset exceeds its carrying amount