Tra balance at une 30, 202T $ $ 26,300,000 4,100,000 6,200,000 38,000,000 16,500,000 12,800,000 34,100,000 75,000,000 880,000,000 164,000,000 31,900,000 78,000,000 66,300,000 Trade roccivables Trade payables Provision for bad debt 6% Redeemablc prcfcrcnce share capital 9% Lirodeemable preference share capital Retained camings Revaluation reserves Ordinary share capital Premises Machinery Fixtures and fittings Motor ychicles Equipment Accumulated depreciation Premises Accumulated depreciation Machinery Accumulated depreciation Fixtures and fittings Accumulated depreciation: Motor vehicles Accumulated depreciation Equipment Bank Cash Investment income Contingent liability Revenues Share premium Goodwill Cost of sales Administrative expenses Distribution costs Other operating expenses Miscellancous expenses Patent Accumulated amortisation Patent Rescarch and development costs 12. Mortgage 8%. Bank loan Mortgage interest payment 133,000,000 41,600,000 8,200,000 27.500,000 11 400.000 4.400,000 700.000 1,600,000 18,800,000 1.862,000,000 37 900.000 33.000.000 726.000.000 313,800.000 106.900.000 202.300.000 38.600.000 82.000.000 14.000.000 192.600,000 566.000.000 103.000.000 31 000.000 Closing inventory Defend tax asset Overprovision of box 15.500,000 2,400,000 800,000 3,004,100,000 3,004,100,000 The following details are deemed relevant to the preparation of the draft financial statements which are to be presented to the entity's auditors: Property, plant and equipment Premises is inclusive of both land and building, with the land accounting for 15% of the total valuc Subsequent to a revaluation which took place on June 30, 2021, the land had a fair valuc of $202 million, while the building had a fair value of $841 million. The building is depreciated evenly over forty years to a nil residual valuc, with the charges allocated in a 3:1 ratio between administrative expenses and cost of sales. There have been no adjustments made for the revaluation relating to premises in the current period, and its cffect has not been included in the accumulated temporary differences noted below The capital allowances granted on the building to date arc cquivalent to the accumulated depreciation charged against it. Four months into the financial year, the entity bought a motor vehicle for $12.6 million, but included the amount in miscellancous expenses. Motor vehicles are depreciated on a straight line basis over eight years to a nil residual value. All depreciation charges on motor vchicles are to be allocated to distribution costs. Fixtures and fittings and machinery are to be depreciated 12% on the reducing balance and 9% on cost respectively, while equipment is to be depreciated over cight years on a straight line basis down to a residual value of 10% of cost. The depreciation on fixtures and fittings is charged to other operating expenses, while for machinery as well as cquipment, depreciation charges are allocated cqually between cost of sales and administrative expenses During the year, management commenced processes to sell all of its existing machinery to facilitate a major upgrade project. The sale was deemed highly probable effective May 1, 2021 when a buyer was identified. The items have a combined fair value of $74 million, with disposal costs amounting to $36 millon. Any impairment or gain on the transaction should be recognised in other operating expenses Included in miscellaneous expenses is a lease payment which relates to the rental of manufacturing cquipment with a uscful life of four years. The agreement commenced on July 1 2020. and requires that a total of five annual payments of S7 8 million arc made - a twelfth of which relates to maintenance expenses, and another 5% of which is attributable to insurance expenses Maintenance and insurance expenses are ordinarily classified as other operating expenses. The lease agreement also speaks to a guaranteed residual value of $L1 million, and Permits the extension of the lease by an additional two years. Management is confident that the company should roccive the intended benefits from the leasod asset within the agreed period, which would negate the need to extend the contract. The incremental borrowing rate is 6%, while the interest rate implicit in the lease is 200 basis points higher. The $7 8 million payment captured in miscellancous expenses is the only record of the lease transaction that has been made to date. Also included in miscellancous expenses is $1.4 million for legal fees incurred to draft the lease agreement on July 1, 2020, while a lcasc incentive of $600,000 which was received by chcque has yet to be recorded. Depreciation on the right of use asset is to be shared cqually between cost of sales, administrative expenses, and other operating expenses. The entity prefers to show the leased asset separately within its property, plant and equipment for presentation purposes. Intangible assets The patent is to be amortised over 18 years to a nil residual valuc, charged to other operating expenses. On February 28, 2021, the cntity acquired a brand for $96 million, but the transaction has not yet been recorded or otherwise accounted for in the books. The brand should be fully amortised over a 22-year period, with charges going to cost of sales and timc-apportioned as necessary Of the total R&D cost on record, 70% relates to research cost, while the balance relates to development. Three-cighths of the amount recognised as development cost was incurred between September 1, 2020 to November 30, 2020. The product achieved commercial feasibility as at December 1 2020 Any capitalised development cost is to be amortised over twelve years and charged to cost of sales, with time apportionment where necessary Any non-capitalised research and development cost should be charged to other operating expenses. Goodwill is to be impaired by 18%, with the impairment charged to other operating expenses. Contingent liability This amount has been recognised in other operating expenses. It relates to a lawsuit for which the chance of payout has been deemed as possible by the entity's attorneys. The treatment of the contingent liability will have no cffect on the accumulated temporary differences noted below Debt instruments On July 1, 2020, the company issued a 6 convertible debenture as well as a 0 loan note with cflective interest rates of 8" and 3 respectively the fourth year, while the lonn note has a nominal value of $350 million, was issued at a 7.5% discount with issue costs of $3.722 million, and is redeemable after five years at a 6% premium. Only the coupon payment relating to the convertible debt instrument has been recorded so far, included in miscellancous expenses. Additionally, there arc interest sums for the existing debt obligations presently on the books that remain unaccounted for at the year end. Equity and reserves The par value of each ordinary share is $0.80. On the first day of the financial year, the entity decided to make a bonus issue of three new shares for every five existing shares held. Subscquently, there was a three for cight rights issue on October 31, 2020 at $1 90 per share. The market price per share at that date was $2.65. The bonus and rights issues have not yet been recorded. In the case of the bonus issue, management's preference is to preserve the retained camnings balance insofar as is possible. Dividends on the preference shares are currently unpaid and remain unaccounted for at the year end. An interim ordinary dividend amounting to $4.6 million was paid on January 1, 2021, but this is yet to be recorded. A further final ordinary dividend was declared on June 30, 2021 for $0.04 per sharc held as at that date, this too is yet to be accounted for The declared dividends are cxpected to be paid on August 1. 2021 Trade receivables of the trade receivables figure currently reported, $3 2 million relates to a reccivables balance that was alrcady paid by the customer during the prior period, but the payment was never accounted for as the monics were stolen by an accounting clerk who has gone into hiding since Ignore thc tax cffcct on any adjustment to be made The provision for bad debt is to be revised to 12% of the adjusted trade receivables balance Adjustments relating to receivables are ordinarily recorded in administrative expenses Discontinued operations Included in administrative expenses is the net result of a discontinued operation An entire division with assets costing $487 million and accumulated depreciation of S326 million was sold for $154 million In addition to the sale the entity also incurred redundancy costs of 362 million The now discontinued operation made profits of Sill million before accounting for the cost of redundancies and the sale of its assets as outlined above. The appropriate taxes on the profits for this segment were already accounted for Laventory A final inventory count on Jume 30, 2021 revealed that $144 million worth of inventory at cost hnd not yet been recorded of that amount, 7% was found to be obsolete and should be written off Lnventory purchases are ordinarily recorded in cost of sales, but any write-offs are charged to other operating expenses. Taxation Texable profits reported for the current year of assessment amounted to $425 million The ovciprovision on the trial balance above relates to prior ycar taxes which have since been paid. The entity has accumulated taxable temporary difference of $460 million, which does not include the effect of the revaluation above or unused tax credits and tax losses carried forward from picvious years. Thcsc unused tax losses and credits amount to $390 million and $112 million respectively The deferred tax assct currently reflected in the trial balance arosc solely from transactions charged to the statement of profit or loss. The current corporation tax rate is 30%. REQUIRED a) Prepare the statement of profit or loss and other comprehensive income for the year cnded June 30, 2021 (9 marks) b) Prepare the statement of changes in cquity for the year ended Junc 30, 2021 (11 marks) C) Prepare the statement of financial position as at Junc 30, 2021 (19 marks) d) Calculate the basic carnings per share for the year ended June 30, 2021 (4 marks) . c) Prepare all relevant workings and explanations, including, but not limited to comprehensive listing of all joumal entries a fixed assets schedule an intangible assets schedule an expense schedule all other appropriate supporting calculations . . . (57 marks) Tra balance at une 30, 202T $ $ 26,300,000 4,100,000 6,200,000 38,000,000 16,500,000 12,800,000 34,100,000 75,000,000 880,000,000 164,000,000 31,900,000 78,000,000 66,300,000 Trade roccivables Trade payables Provision for bad debt 6% Redeemablc prcfcrcnce share capital 9% Lirodeemable preference share capital Retained camings Revaluation reserves Ordinary share capital Premises Machinery Fixtures and fittings Motor ychicles Equipment Accumulated depreciation Premises Accumulated depreciation Machinery Accumulated depreciation Fixtures and fittings Accumulated depreciation: Motor vehicles Accumulated depreciation Equipment Bank Cash Investment income Contingent liability Revenues Share premium Goodwill Cost of sales Administrative expenses Distribution costs Other operating expenses Miscellancous expenses Patent Accumulated amortisation Patent Rescarch and development costs 12. Mortgage 8%. Bank loan Mortgage interest payment 133,000,000 41,600,000 8,200,000 27.500,000 11 400.000 4.400,000 700.000 1,600,000 18,800,000 1.862,000,000 37 900.000 33.000.000 726.000.000 313,800.000 106.900.000 202.300.000 38.600.000 82.000.000 14.000.000 192.600,000 566.000.000 103.000.000 31 000.000 Closing inventory Defend tax asset Overprovision of box 15.500,000 2,400,000 800,000 3,004,100,000 3,004,100,000 The following details are deemed relevant to the preparation of the draft financial statements which are to be presented to the entity's auditors: Property, plant and equipment Premises is inclusive of both land and building, with the land accounting for 15% of the total valuc Subsequent to a revaluation which took place on June 30, 2021, the land had a fair valuc of $202 million, while the building had a fair value of $841 million. The building is depreciated evenly over forty years to a nil residual valuc, with the charges allocated in a 3:1 ratio between administrative expenses and cost of sales. There have been no adjustments made for the revaluation relating to premises in the current period, and its cffect has not been included in the accumulated temporary differences noted below The capital allowances granted on the building to date arc cquivalent to the accumulated depreciation charged against it. Four months into the financial year, the entity bought a motor vehicle for $12.6 million, but included the amount in miscellancous expenses. Motor vehicles are depreciated on a straight line basis over eight years to a nil residual value. All depreciation charges on motor vchicles are to be allocated to distribution costs. Fixtures and fittings and machinery are to be depreciated 12% on the reducing balance and 9% on cost respectively, while equipment is to be depreciated over cight years on a straight line basis down to a residual value of 10% of cost. The depreciation on fixtures and fittings is charged to other operating expenses, while for machinery as well as cquipment, depreciation charges are allocated cqually between cost of sales and administrative expenses During the year, management commenced processes to sell all of its existing machinery to facilitate a major upgrade project. The sale was deemed highly probable effective May 1, 2021 when a buyer was identified. The items have a combined fair value of $74 million, with disposal costs amounting to $36 millon. Any impairment or gain on the transaction should be recognised in other operating expenses Included in miscellaneous expenses is a lease payment which relates to the rental of manufacturing cquipment with a uscful life of four years. The agreement commenced on July 1 2020. and requires that a total of five annual payments of S7 8 million arc made - a twelfth of which relates to maintenance expenses, and another 5% of which is attributable to insurance expenses Maintenance and insurance expenses are ordinarily classified as other operating expenses. The lease agreement also speaks to a guaranteed residual value of $L1 million, and Permits the extension of the lease by an additional two years. Management is confident that the company should roccive the intended benefits from the leasod asset within the agreed period, which would negate the need to extend the contract. The incremental borrowing rate is 6%, while the interest rate implicit in the lease is 200 basis points higher. The $7 8 million payment captured in miscellancous expenses is the only record of the lease transaction that has been made to date. Also included in miscellancous expenses is $1.4 million for legal fees incurred to draft the lease agreement on July 1, 2020, while a lcasc incentive of $600,000 which was received by chcque has yet to be recorded. Depreciation on the right of use asset is to be shared cqually between cost of sales, administrative expenses, and other operating expenses. The entity prefers to show the leased asset separately within its property, plant and equipment for presentation purposes. Intangible assets The patent is to be amortised over 18 years to a nil residual valuc, charged to other operating expenses. On February 28, 2021, the cntity acquired a brand for $96 million, but the transaction has not yet been recorded or otherwise accounted for in the books. The brand should be fully amortised over a 22-year period, with charges going to cost of sales and timc-apportioned as necessary Of the total R&D cost on record, 70% relates to research cost, while the balance relates to development. Three-cighths of the amount recognised as development cost was incurred between September 1, 2020 to November 30, 2020. The product achieved commercial feasibility as at December 1 2020 Any capitalised development cost is to be amortised over twelve years and charged to cost of sales, with time apportionment where necessary Any non-capitalised research and development cost should be charged to other operating expenses. Goodwill is to be impaired by 18%, with the impairment charged to other operating expenses. Contingent liability This amount has been recognised in other operating expenses. It relates to a lawsuit for which the chance of payout has been deemed as possible by the entity's attorneys. The treatment of the contingent liability will have no cffect on the accumulated temporary differences noted below Debt instruments On July 1, 2020, the company issued a 6 convertible debenture as well as a 0 loan note with cflective interest rates of 8" and 3 respectively the fourth year, while the lonn note has a nominal value of $350 million, was issued at a 7.5% discount with issue costs of $3.722 million, and is redeemable after five years at a 6% premium. Only the coupon payment relating to the convertible debt instrument has been recorded so far, included in miscellancous expenses. Additionally, there arc interest sums for the existing debt obligations presently on the books that remain unaccounted for at the year end. Equity and reserves The par value of each ordinary share is $0.80. On the first day of the financial year, the entity decided to make a bonus issue of three new shares for every five existing shares held. Subscquently, there was a three for cight rights issue on October 31, 2020 at $1 90 per share. The market price per share at that date was $2.65. The bonus and rights issues have not yet been recorded. In the case of the bonus issue, management's preference is to preserve the retained camnings balance insofar as is possible. Dividends on the preference shares are currently unpaid and remain unaccounted for at the year end. An interim ordinary dividend amounting to $4.6 million was paid on January 1, 2021, but this is yet to be recorded. A further final ordinary dividend was declared on June 30, 2021 for $0.04 per sharc held as at that date, this too is yet to be accounted for The declared dividends are cxpected to be paid on August 1. 2021 Trade receivables of the trade receivables figure currently reported, $3 2 million relates to a reccivables balance that was alrcady paid by the customer during the prior period, but the payment was never accounted for as the monics were stolen by an accounting clerk who has gone into hiding since Ignore thc tax cffcct on any adjustment to be made The provision for bad debt is to be revised to 12% of the adjusted trade receivables balance Adjustments relating to receivables are ordinarily recorded in administrative expenses Discontinued operations Included in administrative expenses is the net result of a discontinued operation An entire division with assets costing $487 million and accumulated depreciation of S326 million was sold for $154 million In addition to the sale the entity also incurred redundancy costs of 362 million The now discontinued operation made profits of Sill million before accounting for the cost of redundancies and the sale of its assets as outlined above. The appropriate taxes on the profits for this segment were already accounted for Laventory A final inventory count on Jume 30, 2021 revealed that $144 million worth of inventory at cost hnd not yet been recorded of that amount, 7% was found to be obsolete and should be written off Lnventory purchases are ordinarily recorded in cost of sales, but any write-offs are charged to other operating expenses. Taxation Texable profits reported for the current year of assessment amounted to $425 million The ovciprovision on the trial balance above relates to prior ycar taxes which have since been paid. The entity has accumulated taxable temporary difference of $460 million, which does not include the effect of the revaluation above or unused tax credits and tax losses carried forward from picvious years. Thcsc unused tax losses and credits amount to $390 million and $112 million respectively The deferred tax assct currently reflected in the trial balance arosc solely from transactions charged to the statement of profit or loss. The current corporation tax rate is 30%. REQUIRED a) Prepare the statement of profit or loss and other comprehensive income for the year cnded June 30, 2021 (9 marks) b) Prepare the statement of changes in cquity for the year ended Junc 30, 2021 (11 marks) C) Prepare the statement of financial position as at Junc 30, 2021 (19 marks) d) Calculate the basic carnings per share for the year ended June 30, 2021 (4 marks) . c) Prepare all relevant workings and explanations, including, but not limited to comprehensive listing of all joumal entries a fixed assets schedule an intangible assets schedule an expense schedule all other appropriate supporting calculations . . . (57 marks)