Question
Kasio Limited is a public company whose headquarters is in Paris, France. It is a manufacturer of automotive products, with a promise to its customers
Kasio Limited is a public company whose headquarters is in Paris, France. It is a manufacturer of automotive products, with a promise to its customers of high quality at affordable prices. It commenced operations on 01 March 2022 with authorised share capital of 600 000 ordinary shares of which 400 000 have been issued at Eur 10 per share.
At the end of 2022 the fixed assets (at carrying value) totalled Eur 2 000 000, inventories amounted to Eur 1 280 000, Eur 2 000 000 was owed by trade debtors, cash in the bank amounted to Eur 320 000, the accumulated undistributed profits amounted to Eur 400 000 and Eur 1 200 000 was owed to the trade creditors. The sales of Kasio Limited for 2022 amounted to Eur 8 000 000.
The following projections and proposals were made for 2023: The sales revenue is expected to increase to Eur 10 000 000. The after-tax return on sales is estimated at 20%. The directors are expected to propose dividends of 200 cents per share at the end of the year (payable during 2024). A vehicle with a cost price of Eur 300 000, which was damaged in an accident during December 2022 and subsequently repaired, is expected to be traded in at a loss of Eur 20 000 during the last quarter of 2023 for a new vehicle with a cost price of Eur 350 000. The accumulated depreciation of the previously damaged vehicle on the date of the trade-in is expected to be Eur 80 000. Depreciation for the year is estimated at Eur 300 000. 50 000 ordinary shares are expected to be issued during March 2023 at Eur 15 per share. Inventories, accounts receivable and accounts payable are to be calculated using the percentage-of-sales method. The amount of cash and cash equivalents must be determined (balancing figure).
Kasio Limited has identified a new machine that it is considering for purchase during 2024. The machine would cost Eur 1 000 000, excluding installation costs of Eur 200 000. The machine is expected to have a useful life of five years and depreciation per year is estimated at Eur 220 000. It is expected that the new machine would generate cash receipts of Eur 540 000 per year and its annual cash outflows would total Eur 220 000. At the end of year 3, the machine would require a major overhaul costing Eur 200 000 cash (not included in the figures above). A scrap value of Eur 100 000 (not included in the figures above) is anticipated. The cost of capital is 15%.
Prepare the Pro Forma Statement of Financial Position as at 31 December 2023. (Ignore the investment opportunity.)
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