SECTION A (70%) The question in this section is compulsory. Question 1 The following notes are relevant: 1) Land \& Buildings Land with a cost of 10 million was included in the cost of land \& buildings at 1th April 2018. Apart from the leased premises referred to below there have been no additions or disposals of land and buildings in the year. Depreciation is charged at a rate of 2% on cost of buildings. Depreciation on buildings is to be allocated 60% to Cost of Sales and 30% to Administrative Expenses and 10% to Distribution Costs. 2) Lease payments for showroom premises On 1He April 2018. Pluto plc entered into a contract to lease new showroom premises for a period of 5 years. The only accounting entry made to date was to record the initial rental payment of 24,000 made on 31 s March 2019. The lease payments include a cleaning service element of 4,000, which is to be allocated to Distribution Costs. The appropriate discount rate is 5%. Depreciation on leased premises is to be allocated to Distribution Costs. 3) Plant \& Machinery There were no additions to, or disposals of, plant and machinery in the year. Plant and machinery is depreciated at 15% on the reducing balance basis. Depreciation on Plant and Machinery is to be allocated 70% to Cost of Sales, 20% to Administrative Expenses and 10% to Distribution Costs. 4) Financial Assets Financial assets relate to investments in shares in quoted companies. Pluto Plc holds these shares for short-term trading purposes. Dividend payments on the shares of 4,000 were received during the year. No accounting entries were made to date to record these. At 31st March 2019 the market valuation of the shares held was 300,000. 5) Inventory Inventory at 31st March 2019 is 14,005,000. 6) Lease payments for a computer On 1st April 2018, Pluto plc also entered into a contract to lease a computer for a 12 -month period. The only accounting entries made to date relate to recording the monthly rental payments of .400 due on the 1xt of each month. These are included in lease payments. Pluto plc chooses to expense lease payments on short-term leases. Expenses on leased computers are to be allocated to Administrative Expenses. 7) Employee costs Employee costs as shown in the ledger are to be allocated 60% to Cost of Sales, 30% to Administrative Expenses and 10% to Distribution Costs. On 3151 March 2019, 100,000 shares were issued to directors under the directors' bonus scheme. At that time the shares had a market value of 200p per share. No accounting entries have been made for this transaction. All directors' remuneration is classed as Administrative Expenses. 8) Borrowings On 1st April 2018, Pluto plc issued 2m convertible bonds. Annual interest payable for the first year is paid on 1st April 2019. The bonds have a 3 -year term and were issued at par. The nominal annual interest rate is 2%. Each 2,000 bond can be converted at any time up to maturity for 100f1 ordinary shares. If the conversion option is not taken up they will be redeemed at par. The prevailing market interest rate for similar debt without conversion options is 4%. The initial cash raised was accounted for as borrowings. No other accounting entries have been made. Ignore the effects of taxation on this transaction. 9) Provision for repairs Pluto pic needs to make a provision for the cost of repairing a faulty motorbike supplied to a customer some weeks previously. The company estimates that there is a 50% chance that this repair will cost 2,000. However, there is a 40% chance that the cost will be 1,000 and a 10% chance that the cost will be 500. No amounts have yet been provided for in the financial statements. Costs for repairs are allocated to Cost of Sales. 10) Corporation tax The company's estimated provision for corporation tax for the year is 300,000. 11) Deferred tax The deferred taxation provision is to be reduced by 10,000 for the year ended 31st March 2019. Required: Prepare a Statement of Profit and Loss and Other Comprehensive Income and a Statement of Financial Position for the year to 31st March 2019 for Pluto plc in accordance with International Financial Reporting Standards. SECTION A (70%) The question in this section is compulsory. Question 1 The following notes are relevant: 1) Land \& Buildings Land with a cost of 10 million was included in the cost of land \& buildings at 1th April 2018. Apart from the leased premises referred to below there have been no additions or disposals of land and buildings in the year. Depreciation is charged at a rate of 2% on cost of buildings. Depreciation on buildings is to be allocated 60% to Cost of Sales and 30% to Administrative Expenses and 10% to Distribution Costs. 2) Lease payments for showroom premises On 1He April 2018. Pluto plc entered into a contract to lease new showroom premises for a period of 5 years. The only accounting entry made to date was to record the initial rental payment of 24,000 made on 31 s March 2019. The lease payments include a cleaning service element of 4,000, which is to be allocated to Distribution Costs. The appropriate discount rate is 5%. Depreciation on leased premises is to be allocated to Distribution Costs. 3) Plant \& Machinery There were no additions to, or disposals of, plant and machinery in the year. Plant and machinery is depreciated at 15% on the reducing balance basis. Depreciation on Plant and Machinery is to be allocated 70% to Cost of Sales, 20% to Administrative Expenses and 10% to Distribution Costs. 4) Financial Assets Financial assets relate to investments in shares in quoted companies. Pluto Plc holds these shares for short-term trading purposes. Dividend payments on the shares of 4,000 were received during the year. No accounting entries were made to date to record these. At 31st March 2019 the market valuation of the shares held was 300,000. 5) Inventory Inventory at 31st March 2019 is 14,005,000. 6) Lease payments for a computer On 1st April 2018, Pluto plc also entered into a contract to lease a computer for a 12 -month period. The only accounting entries made to date relate to recording the monthly rental payments of .400 due on the 1xt of each month. These are included in lease payments. Pluto plc chooses to expense lease payments on short-term leases. Expenses on leased computers are to be allocated to Administrative Expenses. 7) Employee costs Employee costs as shown in the ledger are to be allocated 60% to Cost of Sales, 30% to Administrative Expenses and 10% to Distribution Costs. On 3151 March 2019, 100,000 shares were issued to directors under the directors' bonus scheme. At that time the shares had a market value of 200p per share. No accounting entries have been made for this transaction. All directors' remuneration is classed as Administrative Expenses. 8) Borrowings On 1st April 2018, Pluto plc issued 2m convertible bonds. Annual interest payable for the first year is paid on 1st April 2019. The bonds have a 3 -year term and were issued at par. The nominal annual interest rate is 2%. Each 2,000 bond can be converted at any time up to maturity for 100f1 ordinary shares. If the conversion option is not taken up they will be redeemed at par. The prevailing market interest rate for similar debt without conversion options is 4%. The initial cash raised was accounted for as borrowings. No other accounting entries have been made. Ignore the effects of taxation on this transaction. 9) Provision for repairs Pluto pic needs to make a provision for the cost of repairing a faulty motorbike supplied to a customer some weeks previously. The company estimates that there is a 50% chance that this repair will cost 2,000. However, there is a 40% chance that the cost will be 1,000 and a 10% chance that the cost will be 500. No amounts have yet been provided for in the financial statements. Costs for repairs are allocated to Cost of Sales. 10) Corporation tax The company's estimated provision for corporation tax for the year is 300,000. 11) Deferred tax The deferred taxation provision is to be reduced by 10,000 for the year ended 31st March 2019. Required: Prepare a Statement of Profit and Loss and Other Comprehensive Income and a Statement of Financial Position for the year to 31st March 2019 for Pluto plc in accordance with International Financial Reporting Standards