The following trial balance relates to 30 September 20X3. $'000 $ 000 227,800 164,500 4,000 13,500 16,500 900 2,000 9,200 60,000 65,700 35,000 Revenue Cost of sales Long-term contract (note (1)) Distribution costs Administrative expenses Bank interest Dividend Lease rental paid on 30 September 2003 (note (i)) Land ($12 million) and building ($48 million) at cost (note (i)) Owned plant and equipment at cost (note (i)) Leased plant at initial carrying amount (note (n)) Accumulated depreciation at 1 October 20X2: Building Owned plant and equipment Leased plant Inventory at 30 September 20X3 Trade receivables Bank Insurance provision (note (ii)) Deferred tax (note (iv)) Lease obligation at 1 October 20x2 (note ()) Trade payables Current tax (note (iv)) Equity shares of 20 cents each Share premium Loan note (note (v)) Retained earnings at 1 October 20X2 10,000 17,700 7,000 26,600 38,500 5,300 150 8,000 29,300 21,300 1,050 45,800 3,200 40,000 19,800 436,400 436,400 The following notes are relevant. (i) The balance on the long-term contract is made up of the following items. Cost incurred to date $14 million Value of invoices issued (work certified) $10 million The contract commenced on 1 October 20X2 and is for a fixed price of $25 million. Performance obligations are satisfied over time. The costs to complete the contract at 30 September 20x3 are estimated at $6 million. Mojo's policy is to recognise satisfaction of performance obligations and therefore accrue profits) on such contracts based on a stage of completion given by the work certified as a percentage of the contract price. (i) Non-current assets: Mojo decided to revalue its land and buildings for the first time on 1 October 20X2. A qualified valuer determined the relevant revalued amounts to be $16 million for the land and $38.4 million for the building. The building's remaining life at the date of the revaluation was 16 years. This revaluation has not yet been reflected in the trial balance figures. Mojo does not make a transfer from the revaluation surplus to retained earnings in respect of the realisation of the revaluation surplus. The leased plant was acquired on 1 October 20X1 under a five-year lease which has an implicit interest rate of 10% per annum. The rentals are $9.2 million per annum payable on 30 September each year. Owned plant and equipment is depreciated at 12.5% per annum using the reducing balance method. No depreciation has yet been charged on any non-current asset for the year ended 30 September 20X3. All depreciation is charged to cost of sales. (ii) On 1 October 20X2 Mojo received a renewal quote of $400,000 from the company's property insurer. The directors were surprised at how much it had increased and believed it would be less expensive for the company to 'self-insure'. Accordingly, they charged $400,000 to administrative expenses and credited the same amount to the insurance provision. During the year, the company incurred $250,000 of expenses relating to previously insured property damage which it has debited to the provision. (iv) A provision for income tax for the year ended 30 September 20X3 of $3.4 million is required. The balance on current tax represents the under/over provision of the tax liability for the year ended 30 September 20X2. At 30 September 20X3 the tax base of Mojo's net assets was $24 million less than their carrying amounts. This does not include the effect of the revaluation in Note 2 above. The income tax rate of Mojo is 25%. (v) The $40 million loan note was issued at par on 1 October 20X2. No interest will be paid on the loan; however it will be redeemed on 30 September 20X5 for $53,240,000, which gives an effective finance cost of 10% per annum. (vi) A share issue was made on 31 December 20X2 of 4 million shares for $1 per share. It was correctly accounted for. Required (a) Prepare the statement of profit or loss and other comprehensive income for Mojo for the year ended 30 September 20X3. (b) Prepare the statement of changes in equity for Mojo for the year ended 30 September 20X3. The following trial balance relates to 30 September 20X3. $'000 $ 000 227,800 164,500 4,000 13,500 16,500 900 2,000 9,200 60,000 65,700 35,000 Revenue Cost of sales Long-term contract (note (1)) Distribution costs Administrative expenses Bank interest Dividend Lease rental paid on 30 September 2003 (note (i)) Land ($12 million) and building ($48 million) at cost (note (i)) Owned plant and equipment at cost (note (i)) Leased plant at initial carrying amount (note (n)) Accumulated depreciation at 1 October 20X2: Building Owned plant and equipment Leased plant Inventory at 30 September 20X3 Trade receivables Bank Insurance provision (note (ii)) Deferred tax (note (iv)) Lease obligation at 1 October 20x2 (note ()) Trade payables Current tax (note (iv)) Equity shares of 20 cents each Share premium Loan note (note (v)) Retained earnings at 1 October 20X2 10,000 17,700 7,000 26,600 38,500 5,300 150 8,000 29,300 21,300 1,050 45,800 3,200 40,000 19,800 436,400 436,400 The following notes are relevant. (i) The balance on the long-term contract is made up of the following items. Cost incurred to date $14 million Value of invoices issued (work certified) $10 million The contract commenced on 1 October 20X2 and is for a fixed price of $25 million. Performance obligations are satisfied over time. The costs to complete the contract at 30 September 20x3 are estimated at $6 million. Mojo's policy is to recognise satisfaction of performance obligations and therefore accrue profits) on such contracts based on a stage of completion given by the work certified as a percentage of the contract price. (i) Non-current assets: Mojo decided to revalue its land and buildings for the first time on 1 October 20X2. A qualified valuer determined the relevant revalued amounts to be $16 million for the land and $38.4 million for the building. The building's remaining life at the date of the revaluation was 16 years. This revaluation has not yet been reflected in the trial balance figures. Mojo does not make a transfer from the revaluation surplus to retained earnings in respect of the realisation of the revaluation surplus. The leased plant was acquired on 1 October 20X1 under a five-year lease which has an implicit interest rate of 10% per annum. The rentals are $9.2 million per annum payable on 30 September each year. Owned plant and equipment is depreciated at 12.5% per annum using the reducing balance method. No depreciation has yet been charged on any non-current asset for the year ended 30 September 20X3. All depreciation is charged to cost of sales. (ii) On 1 October 20X2 Mojo received a renewal quote of $400,000 from the company's property insurer. The directors were surprised at how much it had increased and believed it would be less expensive for the company to 'self-insure'. Accordingly, they charged $400,000 to administrative expenses and credited the same amount to the insurance provision. During the year, the company incurred $250,000 of expenses relating to previously insured property damage which it has debited to the provision. (iv) A provision for income tax for the year ended 30 September 20X3 of $3.4 million is required. The balance on current tax represents the under/over provision of the tax liability for the year ended 30 September 20X2. At 30 September 20X3 the tax base of Mojo's net assets was $24 million less than their carrying amounts. This does not include the effect of the revaluation in Note 2 above. The income tax rate of Mojo is 25%. (v) The $40 million loan note was issued at par on 1 October 20X2. No interest will be paid on the loan; however it will be redeemed on 30 September 20X5 for $53,240,000, which gives an effective finance cost of 10% per annum. (vi) A share issue was made on 31 December 20X2 of 4 million shares for $1 per share. It was correctly accounted for. Required (a) Prepare the statement of profit or loss and other comprehensive income for Mojo for the year ended 30 September 20X3. (b) Prepare the statement of changes in equity for Mojo for the year ended 30 September 20X3