following trial balance relates to Kanyembo as at $30$ September $2012$:

K$000$ K$000$

Revenue $($note $($i$))213,500$

Cost of sales $136,800$

Distribution costs $12,500$

Administrative expenses $($note $($ii$))19,000$

Loan note interest and dividend paid $($notes $($ii$)$ and $($iii$))20,700$

Investment income $400$

Equity shares of $25$ cents each $60,000$

$6\%$ loan note $($note $($ii$))25,000$

Retained earnings at $1$ October $201118,500$

Land and buildings at cost $($land element K$10$ million$)($note $($iv$))50,000$

Plant and equipment at cost $($note $($iv$))83,700$

Accumulated depreciation at $1$ October $2011$: buildings $8,000$

plant and equipment $33,700$

Equity financial asset investments $($note $($v$))17,000$

Inventory at $30$ September $201224,800$

Trade receivables $28,500$

Bank $2,900$

Current tax $($note $($vi$))1,100$

Deferred tax $($note $($vi$))1,200$

Trade payables $36,700$

$397,000397,000$

$$

The following notes are relevant

$($i$)$ On $1$ October $2011,$ Kanyembo sold one of its products for K$10$ million $($included in revenue in the

trial balance$).$

As

part of the sale agreement, Kanyembo is committed to the ongoing servicing of

this product until $30$ September $2014($i$.$e$.$ three years from the date of sale$).$

The value of this service has been included in the selling price of K$10$

million. The estimated cost to Kanyembo of the servicing is K$600,000$ per annum

and Kanyembo$$s normal gross profit margin on this type of servicing is $25\%.$

Ignore discounting.

$($ii$)$ Kanyembo issued a K$25$ million $6\%$ loan

note on $1$ October $2011.$ Issue costs were K$1$ million and these have been charged

to administrative expenses. The loan will be redeemed on $30$ September $2014$ at a

premium which gives an effective interest rate on the loan of $8\%.$

$($iii$)$ Kanyembo paid an equity dividend of $8$

cents per share during the year ended $30$ September $2012.$

$($iv$)$ Non$-$current assets:

Kanyembo had been carrying land and buildings at depreciated cost, but

due to a recent rise in property prices, it decided to revalue its property on

$1$ October $2011$ to market value. An independent valuer confirmed the value of

the property at K$60$ million $($land element K$12$ million$)$ as at that date and the

directors accepted this valuation.

The property had a remaining life of $16$ years at the date of its

revaluation. Kanyembo will make a transfer from the revaluation reserve to

retained earnings in respect of the realisation of the revaluation reserve.

Ignore deferred tax on the revaluation.

Plant and equipment is depreciated at $15\%$ per annum using the reducing

balance method.

No depreciation has yet been charged on any non$-$current asset for the year ended $30$ September

$2012.$ All depreciation is charged to cost of sales.

$($v$)$ The investments had a fair value of K$157$ million as at $30$ September $2012.$ There were no

acquisitions or disposals of these investments during the year ended $30$ September $2012.$

$($vi$)$ The balance on current tax represents the

under$/$over provision of the tax liability for the year ended $30$ September $2011.$

A provision for income tax for the year ended $30$ September $2012$ of K$74$ million

is required. At $30$ September $2012,$ Kanyembo had taxable temporary differences

of K$5$ million, requiring a provision for deferred tax. Any deferred tax

adjustment should be reported in the income statement. The income tax rate of Kanyembo

is $20\%.$

Required:

$($a$)$ Prepare the

statement of comprehensive income for Kanyembo for the year ended $30$ September

$2012.(10$ Marks$)$

$($b$)$ Prepare the statement of changes in equity for Kanyembo for the year ended $30$ September

$2012.(5$ Marks$)$

$($c$)$ Prepare the statement of financial position for Kanyembo

as at $30$ September $2012.(10$markS$)$