The balances below have been extracted from the accounting records of Quinn Ltd at 31 March 2022:

	000	000
Inventory at 1 April 2021	157
Trade receivables	35
Land and buildings at cost depreciation at 1 April 2021	960
Land and buildings, accumulated		33
Patent at cost	90
Patent, accumulated amortisation at 1 April 2021		27
Plant and equipment at cost	480
Plant and equipment, accumulated depreciation at1 April 2021		234
5% Loan notes redeemable 2025		280
Cash and cash equivalents	44
Ordinary share capital of 550,000 shares		550
Retained earnings at 1 April 2021		121
Share premium		110
Trade and other payables		91
Sales revenue		1200
Purchases	508
Interest	7
Administrative expenses	210
Distribution costs	90
Dividend paid on 1 September 2021	55
Under-provision for income tax for year ended 31 March 2021	10
	2,646	2,646

You are given the following information:

i. The company depreciates its buildings at 3% per annum using the straight-line method. The cost of land included in land and buildings is 260,000. The land is not depreciable.

ii. Up until 31 March 2021 the company policy was to depreciate all plant and equipment at 12.5% per annum using the straight-line method. However, some plant and equipment has been wearing out at a faster rate than expected. On 1 April 2021 the company reassessed the expected useful life of this type of plant and equipment and decided that it should be changed to a total of six years from the date of acquisition. The affected plant and equipment was purchased on 1 April 2017 and had an original cost of 120,000. This plant and equipment has no residual value.

The company did not purchase any plant and machinery during the year. Depreciation is provided on a monthly basis.

iii. On 1 April 2018 the company purchased a patent for a recipe for a manufacturing process for one of its food supplements. The patent gives the owner the right to manufacture the supplement for 10 years with no residual value.

iv. The inventory at 31 March 2022 was valued at a cost of 220,000. This includes 45,000 of slow moving goods. The company is trying to sell these to its regular customers and other retailers. The best price it has been offered is 11,000.

v. Included within administrative expenses is 75,000 which relates to the purchase of an insurance policy. The company paid cash upfront for the policy which is valid from 1 January 2022 until 31 December 2022.

vi. On 22 February 2022 the directors discovered that Warren Ltd, one of its customers, had gone into liquidation. They have been informed that the company will not receive the outstanding balance of 2,500 and the amount should be written off. The directors have also decided to create a provision for doubtful debts of 4% of the remaining trade receivables balance.

vii. The 10-year loan notes incur annual interest at 5% per annum, paid six monthly in arrears.

vill. The income tax expense was under-estimated for the year ended 31 March 2021. The tax due for the year ended 31 March 2022 is estimated to be 52,000.

a) Prepare an Income statement for Quinn Ltd for the year ended 31 March 2022, a Statement of Financial Position and a Statement of Change in Equity at that date, in good style, for the directors. (b) Explain why the historic cost accounting convention has been criticised and explain some of the advantages associated with its use.