QUESTION THREE he following trial balance relates to Ndumba at 31 March 2017 K000 Leasehold Plant and equipment (owned)- at cost (note ()) Plant and equipment (leased) at cost (note ()) Accumulated depreciation at 31 March 2016 property- at valuation 31 March 2016 (note () 25,200 46,800 20,000 12,800 Owned plant and equipment Leased plant and equipment 6,000 Finance lease payment (paid on 31 March 2017) (note (0) Obligations under finance lease at 1 April 2016 (note () Construction contract (note (i)) Inventory at 31 March 2017 Trade 14,300 28,200 5,500 33,400 310,000 Revenue (note (ilil) Cost of sales (note (in)) 234,500 Distribution costs Administrative expenses Preference dividend paid (note (iv)) Equity dividend paid Equity shares of 50 Ngwee each 6% redeemable preference shares at 31 March 2016 (note (iv)) Retained earnings at 31 March 2016 Current tax (note (v) Deferred tax (note (v)) 27,500 2.400 8,000 40,000 41,600 4,900 700 8,400 471.700471,700 The following notes are relevant: (1) Non-current assets The 15 year leasehold property was acquired on 1 April 2016 at cost K30 million. The company policy is to revalue the property at market value at each year end. The valuation in the trial balance of K25.2 million as at 31 March 2017 led to an impairment charge of K2.8 million which was reported in the statement of profit or loss and other comprehensive income of the previous year (i.e. year ended 31 March 2016). At 31 March 2017 the property was valued at K24.9 million. owned plant is depreciated at 25% per annum using the reducing balance method. for four years payable in arrears on 31 March each year. The interest rate implicit in the lease is 8% per annum. Leased plant is depreciated at 25% per annum using the straight-line method. No depreciation has yet been charged on any non-current assets for the year ended 31 March 2017. All depreciation is charged to cost of sales (i) On 1 October 2016 Ndumba entered into a contract to construct a bridge over a river. The performance obligation will be satisfied over time. The agreed price of the bridge is K50 million and construction was expected to be completed on 30 September 2018. The K14.3 million in the trial balance is Materials, labour and overheads Specialist plant acquired 1 October 2016 Payment from customer K000 12,000 8,000 14,300 The sales value of the work done at 31 March 2017 has been agreed at K22 million and the estimated cost to complete (excluding plant depreciation) is K specialist plant will have no residual value at the end of the contract and should be 10 million. The ed on a monthly basis. Ndumbarecognises progress towards satisfaction of the performance obligation on the percentage of completion basis as determined by the agreed work to date compared to the total contract price in Pricewell's revenue includes K8 million for goods it sold acting as an agent for Trilby Ndumbaeamed a commission of 20% on these sales and remitted the difference of K6.4 milion (included in cost of sales) to Trilby (iv) The 6% preference shares were issued on 1 April 2007 at par for K40 million. They have an effective finance cost of 10% per annurn due to a premium payable on their redemption. (v) The directors have estimated the provision for income tax for the year ended 31 March 2017 at K4.5 milion. The required deferred tax provision at 31 March 2017 is K5.6 million; all adjustments to deferred tax should be taken to the statement of profit or loss. The balance of current tax in the trial balance represents the underlover provision of the income tax liability for the year ended 31 March 2016 Required Prepare the statement of profit or loss and other comprehensive income for the year ended 31 March 2017 (b) Prepare the statement of financial position as at 31 March 2017. (10 marks) (c) Explai explain how the items in notes (i) and (li) follow these principles. (5 marks) (10 marks) in how revenue should be recognised in relation to goods and services, and Total: 25 marks) QUESTION THREE he following trial balance relates to Ndumba at 31 March 2017 K000 Leasehold Plant and equipment (owned)- at cost (note ()) Plant and equipment (leased) at cost (note ()) Accumulated depreciation at 31 March 2016 property- at valuation 31 March 2016 (note () 25,200 46,800 20,000 12,800 Owned plant and equipment Leased plant and equipment 6,000 Finance lease payment (paid on 31 March 2017) (note (0) Obligations under finance lease at 1 April 2016 (note () Construction contract (note (i)) Inventory at 31 March 2017 Trade 14,300 28,200 5,500 33,400 310,000 Revenue (note (ilil) Cost of sales (note (in)) 234,500 Distribution costs Administrative expenses Preference dividend paid (note (iv)) Equity dividend paid Equity shares of 50 Ngwee each 6% redeemable preference shares at 31 March 2016 (note (iv)) Retained earnings at 31 March 2016 Current tax (note (v) Deferred tax (note (v)) 27,500 2.400 8,000 40,000 41,600 4,900 700 8,400 471.700471,700 The following notes are relevant: (1) Non-current assets The 15 year leasehold property was acquired on 1 April 2016 at cost K30 million. The company policy is to revalue the property at market value at each year end. The valuation in the trial balance of K25.2 million as at 31 March 2017 led to an impairment charge of K2.8 million which was reported in the statement of profit or loss and other comprehensive income of the previous year (i.e. year ended 31 March 2016). At 31 March 2017 the property was valued at K24.9 million. owned plant is depreciated at 25% per annum using the reducing balance method. for four years payable in arrears on 31 March each year. The interest rate implicit in the lease is 8% per annum. Leased plant is depreciated at 25% per annum using the straight-line method. No depreciation has yet been charged on any non-current assets for the year ended 31 March 2017. All depreciation is charged to cost of sales (i) On 1 October 2016 Ndumba entered into a contract to construct a bridge over a river. The performance obligation will be satisfied over time. The agreed price of the bridge is K50 million and construction was expected to be completed on 30 September 2018. The K14.3 million in the trial balance is Materials, labour and overheads Specialist plant acquired 1 October 2016 Payment from customer K000 12,000 8,000 14,300 The sales value of the work done at 31 March 2017 has been agreed at K22 million and the estimated cost to complete (excluding plant depreciation) is K specialist plant will have no residual value at the end of the contract and should be 10 million. The ed on a monthly basis. Ndumbarecognises progress towards satisfaction of the performance obligation on the percentage of completion basis as determined by the agreed work to date compared to the total contract price in Pricewell's revenue includes K8 million for goods it sold acting as an agent for Trilby Ndumbaeamed a commission of 20% on these sales and remitted the difference of K6.4 milion (included in cost of sales) to Trilby (iv) The 6% preference shares were issued on 1 April 2007 at par for K40 million. They have an effective finance cost of 10% per annurn due to a premium payable on their redemption. (v) The directors have estimated the provision for income tax for the year ended 31 March 2017 at K4.5 milion. The required deferred tax provision at 31 March 2017 is K5.6 million; all adjustments to deferred tax should be taken to the statement of profit or loss. The balance of current tax in the trial balance represents the underlover provision of the income tax liability for the year ended 31 March 2016 Required Prepare the statement of profit or loss and other comprehensive income for the year ended 31 March 2017 (b) Prepare the statement of financial position as at 31 March 2017. (10 marks) (c) Explai explain how the items in notes (i) and (li) follow these principles. (5 marks) (10 marks) in how revenue should be recognised in relation to goods and services, and Total: 25 marks)