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equired: (A) Prepare the income statement for the year ended 31/12/2020 and astatement of financial position as at that date. (Show all calculations) [40 marks] (B) For the financial year ended at 31 December 2020, MALEK ltdachieved a profit for the year of f15 millions. MALEK ltd depreciation policyis to provide depreciation at the rate of 10% per annum using straight linemethod. There is no residual value. The company policy is a full year'sdepreciation is provided in the year of purchase of the asset and none in theyear of sale. However, after the preparation of the financial statements,MALEK ltd later found that 1. Purchases include f1.5 million paid to acquire a new equipment to beused in the production. 2. Operating expenses already include f25,000 paid immediately inrespect of a contract with a supplier to provide painting services from 1stAugust 202030st November 2020 3. Operating expenses includes a Land revaluation loss of f50,000 as itscurrent market value is 270,000. The land was previously revaluated in 2015from 250,000 to 320,000. 4.. Revenues includes 30,000 collected immediately on 1st of October2020 for selling a product delivered and accepted by the customer on 15th ofDecember 2020. 5. Revenue includes f2 millions received as proceeds from the sale of anequipment no longer used. This has been already recorded under cashaccount and no other entries have been made. The equipment was originallybought in May 2018 for f1.5m.

Section A At 31st December 2020, MALNOU Plc had the following balances in its accounts: 000 000 Vehicles at cost 900 Vehicles - Accumulated depreciation at 01.01.2020. 150 Freehold land and buildings (Land cost 4,640) 14,640 Freehold buildings - Accumulated depreciation at 01.01.2020. 1,125 Fixtures and fittings at cost 5,250 Fixtures and fittings- Accumulated depreciation at 01.01.2020. 2,250 Allowance for doubtful debts at 01.01.2020. 186 Revenues 75,000 Trade receivable 5,400 Inventory at 01.01.2020 6,000 Cash and bank 1,500 Retained earnings at 01.01.2020. 4,845 Debentures 3,000 Revaluation reserve 90 Trade payable 1,845 Ordinary shares 600 Share premium 75 Interest expense 270 Purchases 52,000 Development cost 506 Operating expenses (General and Administrative Expenses) 2,700 The following transactions are yet to be recorded. 1- On the 5th of December 2020, MALNOU Plc paid 145,000 to its suppliers and collected 300,000 from its credit customers. 2- On the 15th of December 2020, MALNOU Plc made a rights issue of 1 share for every 4 shares held at issuing (market) value of 0.50 per share and this was taken up in full. The nominal value is 0.30 per share. 3- On the 20th of December 2020, Building bought on 2010 for a cost of 400,000 was sold for 420,000 cash. However, this transaction has not been recorded yet. This building was already revaluated to 450,000 in January 2015 with no change in its estimated useful life. 4- The Debenture was received in full on the 1st of May 2020 and the interest rate is 10% per annum. 5- On the 30th of December 2020, MALNOU Plc paid the last dividend of 0.02 per share. 6- The annual rent is 48,000 and pays quarterly in arrears. The last payment made covered the quarter ending 30 September 2020. 7- Trade receivables include a balance of 100,000 owing by a customer having severe financial difficulties and the company decided to write this debt off. 8- The allowance for doubtful debts is estimated to be 3% of the remaining trade receivables. 9- Development cost includes 200,000 spent in developing a new product. However, the board of directors has decided that it is not feasible to complete the development of this new product. 10- Corporation tax of 80,000 has been estimated in respect of the profit for the year and this amount is yet to be provided for. 11- The company applies the following depreciation policies: a) Fixture and fitting 10% straight-line method. b) Motor vehicles 6% reducing-balance method. c) Buildings Straight-line method over 50 years. d) The company policy is to provide a full year's depreciation in the year of purchase of the asset, and none in the year of sale. In addition, depreciation is allocated to General and Administrative (Operating) Expenses 12- The cost of closing inventory is 2,500,000. However, included in this amount 600 units costing 50 per unit and having some minor damage. However, MALNOU Plc will re-package them at a cost of 2 per unit and therefore they can be sold for 32 per unit. Required: (A) Prepare the income statement for the year ended 31/12/2020 and a statement of financial position as at that date. (Show all calculations) [40 marks] (B) For the financial year ended at 31 December 2020, MALEK Itd achieved a profit for the year of 15 millions. MALEK Itd depreciation policy is to provide depreciation at the rate of 10% per annum using straight line- method. There is no residual value. The company policy is a full year's depreciation is provided in the year of purchase of the asset and none in the year of sale. However, after the preparation of the financial statements, MALEK Itd later found that 1. Purchases include 1.5 million paid to acquire a new equipment to be used in the production. 2. Operating expenses already include 25,000 paid immediately in respect of a contract with a supplier to provide painting services from 1st August 2020 - 30st November 2020. 3. Operating expenses includes a Land revaluation loss of 50,000 as its current market value is 270,000. The land was previously revaluated in 2015 from 250,000 to 320,000. 4. Revenues includes 30,000 collected immediately on 1st of October 2020 for selling a product delivered and accepted by the customer on 15th of December 2020. 5. Revenue includes 2 millions received as proceeds from the sale of an equipment no longer used. This has been already recorded under cash account and no other entries have been made. The equipment was originally bought in May 2018 for 1.5m. Required: Discuss whether you agree or disagree with how MALEK Itd treated these transactions and show the implication on profits. You should support your answer with calculations. [10 marks] (C) Discuss how to account for Goodwill under the international Accounting Standards. [up to 200 words] [5 marks] Section A At 31st December 2020, MALNOU Plc had the following balances in its accounts: 000 000 Vehicles at cost 900 Vehicles - Accumulated depreciation at 01.01.2020. 150 Freehold land and buildings (Land cost 4,640) 14,640 Freehold buildings - Accumulated depreciation at 01.01.2020. 1,125 Fixtures and fittings at cost 5,250 Fixtures and fittings- Accumulated depreciation at 01.01.2020. 2,250 Allowance for doubtful debts at 01.01.2020. 186 Revenues 75,000 Trade receivable 5,400 Inventory at 01.01.2020 6,000 Cash and bank 1,500 Retained earnings at 01.01.2020. 4,845 Debentures 3,000 Revaluation reserve 90 Trade payable 1,845 Ordinary shares 600 Share premium 75 Interest expense 270 Purchases 52,000 Development cost 506 Operating expenses (General and Administrative Expenses) 2,700 The following transactions are yet to be recorded. 1- On the 5th of December 2020, MALNOU Plc paid 145,000 to its suppliers and collected 300,000 from its credit customers. 2- On the 15th of December 2020, MALNOU Plc made a rights issue of 1 share for every 4 shares held at issuing (market) value of 0.50 per share and this was taken up in full. The nominal value is 0.30 per share. 3- On the 20th of December 2020, Building bought on 2010 for a cost of 400,000 was sold for 420,000 cash. However, this transaction has not been recorded yet. This building was already revaluated to 450,000 in January 2015 with no change in its estimated useful life. 4- The Debenture was received in full on the 1st of May 2020 and the interest rate is 10% per annum. 5- On the 30th of December 2020, MALNOU Plc paid the last dividend of 0.02 per share. 6- The annual rent is 48,000 and pays quarterly in arrears. The last payment made covered the quarter ending 30 September 2020. 7- Trade receivables include a balance of 100,000 owing by a customer having severe financial difficulties and the company decided to write this debt off. 8- The allowance for doubtful debts is estimated to be 3% of the remaining trade receivables. 9- Development cost includes 200,000 spent in developing a new product. However, the board of directors has decided that it is not feasible to complete the development of this new product. 10- Corporation tax of 80,000 has been estimated in respect of the profit for the year and this amount is yet to be provided for. 11- The company applies the following depreciation policies: a) Fixture and fitting 10% straight-line method. b) Motor vehicles 6% reducing-balance method. c) Buildings Straight-line method over 50 years. d) The company policy is to provide a full year's depreciation in the year of purchase of the asset, and none in the year of sale. In addition, depreciation is allocated to General and Administrative (Operating) Expenses 12- The cost of closing inventory is 2,500,000. However, included in this amount 600 units costing 50 per unit and having some minor damage. However, MALNOU Plc will re-package them at a cost of 2 per unit and therefore they can be sold for 32 per unit. Required: (A) Prepare the income statement for the year ended 31/12/2020 and a statement of financial position as at that date. (Show all calculations) [40 marks] (B) For the financial year ended at 31 December 2020, MALEK Itd achieved a profit for the year of 15 millions. MALEK Itd depreciation policy is to provide depreciation at the rate of 10% per annum using straight line- method. There is no residual value. The company policy is a full year's depreciation is provided in the year of purchase of the asset and none in the year of sale. However, after the preparation of the financial statements, MALEK Itd later found that 1. Purchases include 1.5 million paid to acquire a new equipment to be used in the production. 2. Operating expenses already include 25,000 paid immediately in respect of a contract with a supplier to provide painting services from 1st August 2020 - 30st November 2020. 3. Operating expenses includes a Land revaluation loss of 50,000 as its current market value is 270,000. The land was previously revaluated in 2015 from 250,000 to 320,000. 4. Revenues includes 30,000 collected immediately on 1st of October 2020 for selling a product delivered and accepted by the customer on 15th of December 2020. 5. Revenue includes 2 millions received as proceeds from the sale of an equipment no longer used. This has been already recorded under cash account and no other entries have been made. The equipment was originally bought in May 2018 for 1.5m. Required: Discuss whether you agree or disagree with how MALEK Itd treated these transactions and show the implication on profits. You should support your answer with calculations. [10 marks] (C) Discuss how to account for Goodwill under the international Accounting Standards. [up to 200 words] [5 marks]