Further analysis revealed that the acquisition dates and cost of the respective assets were as follows: Item Date Cost Shs '000' Motor vehicles 1 July, 2017 210,000 Computers 1 February. 2018 137,500 Land 1 July, 2015 220.000 The land was used to construct a building for AUL's head office in Kampala at a total cost of Shs 350 million. The head office building was put to use 1 July, 2018. AUL charges full year depreciation in the year of acquisition and no depreciation in the year of disposal. Valuation done on 1 .July, 2019 revealed that the fair value of the land upon which the head office was built was Shs 300 million. No adjustment was done in regard to fair value adjustment. AUL acquired 10% long term loan from BBL International Bank of USD 35,000 on 1 July, 2019 and as of 30 June 2020, neither principal nor interest had been paid in relation to the loan and no adjustment was made to the effect. The exchange rate ruling on the date the loan was acquired and reporting date were as below: Date Exchange rate USD/Shs 1 July, 2019 3.600 30 June, 2020 3,700 The company policy is to account for exchange differences through the operating expenses account. Consumables at hand as at 30 June, 2020 were established to have cost Shs 186 million, however market conditions that existed at the same date showed that the materials could easily be sold at Shs 200 million and selling costs of Shs 12 million. During the year, AUL was sued for failure to advertise a product of KIM Manufactures Ltd as per the signed contract. However this was due to delay in the production process at the factory of KIM. It is estimated that AUL is likely to incur Shs 60 million to settle the case however the court is still studying the facts of the case and its decision is unclear to either party. This amount was included in the trade payables and administrative expenses for the year ended 30 June. 2020. Question 1 Advertz Uganda Lid (AUL) is a company that offers advertising services in Uganda. AUL's source of revenue is through commissions from adverting contracts with various manufacturers within the country. The following trial balance was extracted from the financial statements of AUL for the year ended 30 June, 2020. Particulars: Notes Debit Credit Shs '000' Shs '000' Commissions 1,500,000 Discounts 18,000 32,500 Operating expenses 625,000 Administration expenses 329,000 Motor vehicles 189,000 Computers 55,000 Land & buildings 535,000 UA WNNN 10% Long term loan 126,000 Consumables 186,000 Trade receivables & payables 612,000 392,000 Cash & bank 226,500 Share capital 520,000 Retained earnings 1 July, 2019 205,000 Total 2.775.500 2.775,500 Additional information: 1 . On 1 March 2020, AUL entered into a contract to advertise Zarma Telecom Network (ZTN) roaming internet services outside Uganda. AUL was paid Shs 120 million from ZTN as advance payment for the services. As of 30 June 2020, AUL had not completed installing its online advertising services that would aid in the performance of the contract and the accountant had incorporated this amount in the commissions for the year. AUL recognises revenue in accordance with IFRS 15: Revenue from Contracts with Customers. 2. AUL depreciates its non-current assets on a straight line basis using a percentage on cost as follows: Assets: Depreciation Rate Motor vehicle 5% Computers 30% Building 10%6. Corporation tax rate is 30%, and during the year, AUL former Accountants Assistant had not accounted for income taxes in the financial statements. Required: You have been recently recruited at AUL as Senior Accountant. and you have been asked to provide guidance on the preparation of the following financial statements: (a) statement of profit or loss for the year ended 30 June. 2020. (12 marks) (b) statement of financial position as at 30 June, 2020. (18 marks) (0) Prepare notes accompanying the above financial statements for each of the notes given in the additional information where applicable. (10 marks) (Total 40 marks) SECTION B Attempt three of the four questions in this section Question 2 Mega Enterprises Ltd (MEL)'s financial year ends 30 September. During the year ended 30 September 2020. the management of MEL realised that their Accountant had been manipulating their financial statement since 1 October. 2018 and terminated him with immediate effect. The summary of information relating to MEL's performance for the last two years ending 30 September was as follows: 2020 2019 Shs '000' Shs \"000' Revenue 536,000 762,500 Cost of sales 1251.000) (5131.500) Gross profit 289.000 325.000 Operating expenses (130.0001 (211.0001 Profit before tax 91.000 108.000 Income tax 21300) [$1230.01 Profit after tax m m Additional information: 1. There was a certain type of inventory included in the company's inventory as at 30 September. 2020. This type of inventory was purchased on 1 June. 2020 at a cost of Shs 25 million. This type of inventory could easily be sold for Shs 28 million having incurred costs to sell of Shs 4 million as per the