QUESTION $11$

Rose Limited is a private company that the directors are considering to have listed on the

Jamaican Stock Exchange soon. Below is the entity's final accounts for December $31,2021$

before the adjustments listed in $($a$)-($j$)$ below: The following information below have not yet been taken into account and is relevant

to the entity$$s financial statements for the year ended $31$ December $2021$:

a$)$ A revaluation of property took place on January $1,2021,$ which revealed that the

property had a fair value of $$150,000,000$ on that date $($carrying value

$$80,000,000).$ The effect of the revaluation has not been included in the books

b$)$ Property is depreciated straight line over $50$ years and depreciation charges are

split equally between administrative expenses and distribution expense.

c$)$ Equipment $($Cost $$50,000,000)$ is depreciated over $10$ years on the straight$-$line

basis and charged $60\%$ to distribution costs and $40\%$ to administrative

expenses.

d$)$ Non$-$current asset $($under plant$)$ held for sale of at a cost of $$5,000,000($accumulated

depreciation, $$1,000,000)$ had not been accounted for.

e$)$ A year$-$end provision for bad of $8\%$ of gross receivables is to be made. Any

provision for bad debts should be recorded in administrative expenses $($refer to

note h$).$

f$)$ The entity sold a defective product and was sued by the customer. On December $30,$

$2021$ the entity$$s attorney indicated that it is probable that the entity will lose and

have to pay $$10$ million. Settlement is likely to be within the next six months. Any

amount provided for should be charged to distribution costs.

g$)$ The entity made a one for five rights issue on June $30,2021($fully taken up$)$ at a price

of $$1\mathrm{.}40.$

h$)$ On January $10,2022$ a debtor $($included in receivables$)$ for $$900,000$ is declared

bankrupt

i$)$ Corporation tax is rate is $25\%$ of net profit before tax $($the taxation displayed in the

Statement of profit and loss has not been paid$)$

j$)$ Provide for an ordinary dividend of $15\%$ on all shares in issue on $31$ December $2021.$

Required:

i$.$Prepare the statement of profit or loss for the year ended December $31,2021$

ii$.$Prepare the statement of financial position as at December $31,2021$