Section B (60%) Both questions are equally weighted (each question is worth 30%) Question 11 The following shows and extract from Archy Ltd. at 31 December, 20X7: Administration expenses Distribution costs Purchases Finance costs Investment income Revenue 950,000 531,000 2,875,000 9,000 5,700 5,350,000 Ordinary share capital 1,000,000 Receivables 123,700 Inventory at 1 January, 20X7 1,670,000 Cash and cash equivalents 242,000 Land and buildings Cost 900,000 Accumulated depreciation at 1 January 20X7 36,000 Plant and equipment Cost 102,800 Accumulated depreciation at 1 January 20X7 36,400 Retained earnings at 1 January 20X7 813,300 4% convertible loan notes 100,000 Payables 62,100 Page 5 of 8 The following transactions need to be taken into account: (1). Non-current assets are depreciated as follows: Plant and equipment 20% per annum straight line and charged to cost of sales. Land and buildings were originally acquired on 1 January 20X4 for 900,000 of which 300,000 related to land. Depreciation is calculated on a straight line basis over a 50 year life and charge to administration expenses. (2). At the beginning of the year a piece of plant costing 56,000 and accumulated depreciation of 21,000 met the criteria of IFRS5 No-current Assets Held for sale and discontinued Operations. The plant is available for sale the price of 32,000 and costs of 1,000 will be incurred to complete the sale. (3). At the beginning of the year Archy Ltd. revalued their land and buildings to 1,400,000 of which 460,000 relates to land. The remaining life remains unchanged. This has not been accounted for. (4). Closing inventory was valued at 1,820,000. This included a damaged line of items with a cost of 150,000. Repairs are estimated to cost 50,000, after which the items could be sold for 180,000. (5). On 1 January 20X7, Planet Ltd. issued 100,000 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: End of year 1 End of year 2 End of year 3 4% 0.962 0.925 0.889 6% 0.943 0.890 0.840 The convertible loan notes has been recorded as a normal loan in the record, no accounting treatment has been adjusted in relation to this case. Required: (a). Prepare a statement of profit or loss and other comprehensive income for the year ended 31 December 20X7. (50%) (b). Prepare a statement of financial position for the year ended 31 December 20X7. (50%)