Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Matrix Limited ---- International Financial Reporting Standards Matrix Limited commenced trading on 1st January 2018 as a manufacturing, retail and distribution business, raising share capital
Matrix Limited ---- International Financial Reporting Standards Matrix Limited commenced trading on 1st January 2018 as a manufacturing, retail and distribution business, raising share capital of 5,180,711. For its financial reporting period ended 31st December 2018, Matrix Limited earned revenue of 2,470,000 and its draft operating expenses for the year amounted to 1,976,000. These figures represent the results of Matrix Limited's entire business, including all its divisions, but do not include depreciation, amortisation or impairment. Additional information 1 On 1st January 2018, Matrix Limited purchased a Sentinel machine for 380,000, of which 152,000 was funded by a non-repayable govemment grant and the rest was paid in cash. In ten years' time, the Sentinel machine is expected to have a Net Realisable Value of 6,840. 2 During the year, some of Matrix Limited's employees worked full time to build a Docbot machine for use in the business, partially funded by an interest-only bank loan of 380,000 taken out on 30th June 2018 at an interest rate of 10% and repayable in ten years' time. The wages of those employees for the period when they were building the Docbot machine, together with associated pension and employer's National Insurance Contributions, amounted to 190,000, which has been included in the operating expenses figure given in the opening paragraphs. The materials used in its construction had cost 237,500, directly allocated electricity costs were 17,100 and apportioned overheads amounted to 16,530. All these costs, other than the interest on the bank loan, have also been included in the operating expenses figure above. Had Matrix Limited contracted out the work, it would have saved space on its own premises which it could have rented out for 2,850 per month. The Docbot machine is a neural-network-powered machine. Due to the regulations surrounding the use of neural-network power, regular inspections were required and so the Docbot machine necessarily took a long time to get ready for its intended use. The cost of the inspections and testing amounted to 2,280, which has been included in the operating expenses figure in the opening paragraphs, and the Docbot machine was finally ready for use on 31st December 2018. 3 Matrix Limited uses the cost model for measuring its plant and machinery, and the revaluation model for measuring its land and buildings. It usually depreciates plant and machinery over a 10-year life, and vehicles over a 5-year life, using straight-line depreciation. Question continues... 4 Matrix Limited accounts for government grants towards the purchase of property, plant and equipment using the deferred credit method. 5 Apart from the items described above, there were no other assets or liabilities at the reporting date (except for cash), nor were there any other revenues or expenses. 6 Ignore Corporation Tax and VAT. Required (a) Prepare a Statement of Financial Position for Matrix Limited as at 31st December 2018 and a Statement of Comprehensive Income for the year then ended, in accordance with International Financial Reporting Standards (including IASs). You may treat cash as the balancing figure in the Statement of Financial Position. (17 marks) (b) Explain your treatment of each of the amounts provided in note 2, regarding the Docbot machine. (8 marks) Total 25 marks available
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started