Q2.

Sincere Request not to copy from other answers. This is a different question. If seen copying, will report your account and downvote the answer.

Q3.

Gamma prepares financial statements to 31 March each year. The following exhibits, available on the left-hand side of the screen, provide information relevant to the question: 1. Lease of machine - information on the lease of a machine during the year ended 31 March 20X5. 2. Purchase of property - details of a property purchased during the year ended 31 March 20X5. 3. Additional information - further information regarding the financial statements of Gamma for the year ended 31 March 20X5 This information should be used to answer the question requirements within your chosen response option(s). On 1 October 20X4 Gamma began to lease a machine. The lease gave Gamma the sole right to direct the use of the machine and receive all the economic benefits arising from its use. The lease was for a five-year term, with annual rentals of $200,000 being payable in advance. The first rental was paid on 1 October 20X4 and the final rental is due for payment on 1 October 20X8. The total estimated useful life of the machine on 1 October 2004 was ten years. There are no terms in the lease agreement that allow the lease to be extended beyond the five-year term. The annual rate of interest implicit in the lease is 8%. On 1 October 20X4 when the first rental was paid Gamma debited $200,000 to profit or loss. Gamma has made no other entries regarding this lease in its draft financial statements for the year ended 31 March 20X5. 8% discount factors which may be relevant are as follows: Cumulative present value of $1 payable in: 1 year 2 years 3 years 4 years 5 years 0-926 1.783 2-577 3.312 3.993 On 1 April 20X4 Gamma purchased an overseas property on credit for 4-4 million crowns. Of the initial carrying amount, 60% of the value of the property was attributed to the buildings element. On 1 April 20X4 Gamma estimated that the useful life of the buildings element was 40 years. On 30 June 20X4 Gamma paid 4-4 million crowns to the seller. Gamma uses the revaluation model to measure property. On 31 March 20x5 Gamma estimated that the fair value of the property was 4-8 million crowns. The only entries made by Gamma in its draft financial statements regarding the purchase of the property were to record the cash paid on 30 June 20x4 as an operating expense in the statement of profit or loss. Relevant exchange rates are: Date Exchange Rate 1 April 20X4 2 crowns to $1 30 June 20X4 1.76 crowns to $1 31 March 20X5 1-60 crowns to $1 1. The draft financial statements of Gamma for the year ended 31 March 20X5 show a profit after tax of $10 million. This amount is before taking account of the implications of the information in exhibits 1 and 2. 2. On 1 April 20X4 Gamma had 70 million ordinary shares and 50 million preference shares in issue. The preference shares are irredeemable, and any preference dividends are discretionary. 3. On 1 October 20X4 Gamma made a 1 for 4 rights issue. The new shares were issued at a price of $1 per share. On 1 October 20X4 the shares of Gamma had a listed price of $1-50 immediately before the rights issue. The rights issue was fully taken up. 4. On 31 December 20X4 Gamma paid a dividend of $3 million to its ordinary shareholders and $2 million to its preference shareholders. These were the only dividends paid by Gamma in the year ended 31 March 20X5. (a) Using the information in exhibits 1 and 2, explain and show how the lease of machine and purchase of property would be reported in the financial statements of Gamma for the year ended 31 March 20X5. Marks will be awarded for BOTH calculations AND explanations. (b) Using the information in exhibit 3 and the adjustments for the lease and purchase of property in part (a), compute the earnings per share o Gamma for the year ended 31 March 20X5. Comparative figures and explanations of your calculations are not required. Omega has a herd of 300 cattle which are all six months old on 31 March 20x5 and a herd of 200 sheep which are all one year old at 31 March 20X5. The herd of cattle will be sold when the cattle are two years old. The herd of sheep is expected to be sold within the next 12 months. There are two markets available to Omega in which they could sell the cattle and the sheep, Market 1 and Market 2. Market 1 is the principal market in which cattle could be sold but Omega sells its sheep in both Market 1 and Market 2 in roughly equal proportions. Therefore, neither Market 1 nor Market 2 can be identified as the principal market in which Omega could sell sheep. Relevant market prices and relevant costs of sale at 31 March 20x5 are as follows: Market 1 Market 2 Cattle Sheep Cattle Sheep $ $ $ $ Gross selling price per animal 80 61 85 63 Transport costs per animal 4 3 5 5 Selling costs per animal 2 2 3 4 4 110