Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 11 Below is the trial balance for Planet Ltd. at 31 December 20X7: The following notes are relevant: i). Plant Ltd. has decided to

Question 11

Below is the trial balance for Planet Ltd. at 31 December 20X7:

The following notes are relevant:

i). Plant Ltd. has decided to switch to revaluation model at 1 January 20X7. The properties had a remaining life of 25 years at 1 January 20X7. At 31 December 20X7, a revaluation has been done; and the properties are revalued to be 21m with no change to the remaining useful lif. Under previous cost model, the depreciation is 750,000 per annum. No depreciation or revaluation charge has been recorded at 31 December 20X7. Plant Ltd. needs to make an annual transfer from the revaluation surplus in respect of excess depreciation.

ii). On 1 January 20X7, Planet Ltd. was notified by its legal adviser that an ex-employee had started court proceedings against them. The lawyer advises at the end of year 2017 that there was a 60% chance that Plant Ltd. would lose the case and therefore would need to pay an estimated 120,000. No accounting treatment has been done related to this case.

iii). On 1 January 20X7, Planet Ltd. issued 10,000 4% convertible loan notes. The loan notes can be converted to equity shares on 31 December 20X9 or redeem at par on the same date. An equivalent loan without the conversion rights would require interest of 6%. Interest is payable annually in arrears on 31 December each year. The present value of 1 receivable at the end of each year, based on discount rates of 4% and 6% are:

No accounting treatment has been done in relation to this case.

iv). Inventory at 31 December 20X7 included a damaged item with a cost of 150,000. This item required repairs estimated to cost 50,000, after which it could be sold for 170,000.

a). Prepare the statement of profit or loss for Planet Ltd. for the year ended 31 December 20X7. (40%)

b). Prepare the statement of financial position for Planet Ltd. for the year end 31 December 20X7. (60%)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Mark Nelson, Lawrence Tomassini

5th Edition

0077282078, 9780077282073

More Books

Students also viewed these Accounting questions

Question

Detailed note on the contributions of F.W.Taylor

Answered: 1 week ago

Question

Engage everyone in the dialogue

Answered: 1 week ago