Manhattan Plc is a manufacturer of high quality electrical goods and was established in 2017. The following trial balance was drafted for the year ended at 31 March 2024: 000 Revenue Dividends Received Cost of Sales Distribution costs Administrative expenses Finance Costs Interim Dividend Paid Land at cost 31/3/2023 000 130,000 140 81,700 11,000 5,000 200 170 10,000 - Buildings at cost 31/3/2023 10,500 Plant and Machinery at cost 31/03/2023 9,500 Furniture and Fittings 5,000 Leasehold Building 8,000 Accumulated depreciation at 31/03/2023: Buildings 2,600 Plant and Machinery 2,200 Furniture and Fittings 900 Long Term Investments 2,600 Inventory at 31/03/2024 7,000 Trade receivables/ Trade payables 5,000 2,600 Bank 480 10% loan note (redeemable 2028) 4,000 Deferred tax 700 Equity shares of 50p each fully paid 6,000 Retained earnings at 1/4/2023 3,550 Share Premium 2,500 155,670 155,670 The following notes are relevant: 1) On 1 April 2023, Manhattan Plc had its land revalued to 11 million. On the same date, the building was revalued to 12.5 million. The estimated remaining life of the building at that date was 10 years. 2) Depreciation for the year has not been provided. The depreciation policy us as follows: Buildings Plant and Machinery Furniture and Fittings Straight line over the useful life and/or the period of the lease - charged to Cost of Sales 15% reducing balance, charged to Cost of Sales 10% reducing balance, charged to Administrative Expenses The company's depreciation policy is to charge a full year in the accounting year of acquisition of the asset, but none in the year of disposal. 3) At the year end, a research and development department was established, this led to a cost of 5 million, including 1 million for specialised machinery (bought on 1st October 2023). The directors of the company estimate that 3 million of the expenditure relates to the development of a new product that will be launched later in 2024 and the remaining expenses relate to pure research. The new product is expected to earn substantial profits. Whilst the specialised machinery has not been recorded, the rest of the figures have been included within Cost of Sales. 4) Included within the Plant and Machinery was a machine that was imported from Poland on 30th June 2021 and costed 260,000. As production process changed drastically during the current financial year, the imported machine was no longer needed and sold on 31st August 2023 for 140,000. No adjustment was made regarding this sale and the sale proceeds have been included in revenue in the trial balance. 5) Manhattan Plc acquired an office building from Contra Infra Plc for lease on 30th September 2023. The duration of the lease is 20 years. 6) On 31 December 2023, Manhattan Plc closed a division of the company. The division's result from 1 April 2023 to the date of closure, which are included in the figures in the trial balance were: Revenue 000 1,300 Cost of Sales 1,770 The directors of the company decided to sell the plant and machinery used by the discontinued division and started to locate a buyer. The plant had a carrying value at 1 April 2023 of 1 million made up of a cost of 4 million and accumulated depreciation of 3 million. As there is demand for such an asset, the company is relatively confident that this asset would be sold in a short amount of time. The current market value of the plant is 1.2 million and it would cost 400,000 to dismantle the machinery to make it available to the purchaser. 7) The inventory at 31 March 2024 includes 4 million of slow-moving goods. Manhattan Plc is trying to sell these to another company but has not been successful in obtaining a reasonable offer. The best price it has been offered is 2.5 million. 8) Furthermore, inventory had a number of slow-moving items which had a cost value of 5 million and a market value of 3.5 million, these slow moving items have not been included within the accounts. Additionally, during the year end stock-take the auditors noticed that 500,000 of inventory was missing, this had been included in the trial balance. The auditors suspect that the missing inventory might have been stolen. 9) Corporate taxation is to be provided at a rate of 20% of the net profit on continuing activities as shown in the statement of profit and loss. Manhattan Plc accounts for deferred taxation in accordance with IAS12. At 31st March 2024 the difference between the carrying amounts of the net assets of Manhattan Plc and their (lower) tax base was 3,250,000.