Please answer either. Workings would be appreciated as well. Thanks!
ANSWER ANY TWO QUESTIONS OUT OF THREE Question 1 Blue Stream plc is a small company with interests in retailing and property. The financial director of Blue Stream plc is currently finalising the financial statements for the year ended 28 February 20X5. The trial balance at that date is shown below: BLUE STREAM pic TRIAL BALANCE AT 28 FEBRUARY 20X5 All the equipment was purchased on 1 March 20X2 at a cost of 1,740,000. At acquisition, the useful life was estimated at seven years and the residual value estimated at 60,000. During the year ended 28 February 20X5, the total useful life was re-estimated at eight years and the residual value estimated to be zero. On 1 March 20X4 Blue Stream plc entered into a lease agreement with Bends plc for the lease of a fleet of delivery vehicles. The contract is a lease. The lease agreement requires Blue Stream plc to pay five instalments of 555,000 in arrears on 28 February each year. The present value of future lease payments at inception of the lease is 2,000,000, discounted at the implicit interest rate of 12% per annum. The estimated useful life of the vehicles is five years and the estimated residual value is zero. The only entry recorded in respect of the lease contract is the recognition of the right of use asset and lease liability at inception. Debit 000 Credit 000 2,500 1,424 1,950 1,740 480 2,000 2,000 Ordinary share capital (1 par value) Retained earnings at 28 February 20X4 Investment property: Fair value (at 28 February 20X4) Equipment: Cost Equipment: Accumulated depreciation (at 28 February 20X4) Right of use asset Lease liability Accounts receivable Inventory at cost HMRC / Tax authority Cash at bank Accounts payable Sales Cost of sales Rental income Salaries and wages Other costs 1,115 1,245 200 974 On 28 February 20X5, the investment property was measured at its fair value of 2,100,000. The investment property was purchased on 1 September 20X2 and is held to earn rental income. The investment property is measured using the fair value model. 870 9,850 The closing inventory has a net realisable value of 1,165,000 and the accounts receivable are expected to realise 995,000. 5,100 100 . 1.200 The tax expense for the year has not been recorded. The corporation tax rate is 20% 1,700 17,224 17,224 Dividends of six pence per share were declared and approved at a shareholder meeting on 25 March 20X5. The financial statements were authorised for issue on 30 March 20X5. The following relevant information needs to be taken into account: Required: . a) Prepare the statement of comprehensive income of Blue Stream plc for the year ended 28 February 20X5, in accordance with International Financial Reporting Standards. (Present your answer to the nearest 000) (15 marks) The company classifies its expenses using the function method. The financial director has identified three functions, namely sales, administration and distribution. The salaries and wages of 1,200,000 are allocated 700,000 to the administration function and 500,000 to the distribution function. 100,000 of the other costs are prepaid and 70,000 are accrued. The other costs are allocated 50% to the administration function and 50% to the distribution function. These costs include expenses for rent, advertising and repairs and are all individually immaterial. The equipment is all used within the administrative function and the leased vehicles are all used within the distribution function. Any bad debts are allocated to the administration function. The company regards any expenses over 100,000 as material. 2 BEA2019 Turn over b) Prepare the statement of financial position of Blue Stream plc at 28 February 20X5, in accordance with International Financial Reporting Standards. (Present your answer to the nearest 000) (15 marks) 3 BEA2019 Turn over
