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Trade Receivable 40,3 00,000 Bank 5,850,000 Revenue Cost of sales 162,600,000 Distribution costs 20,000,000 Administrative expense 22,000,000 Trade Payable 44 1 50,000 Note: 267,900,000 64,650,000

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Trade Receivable 40,3 00,000 Bank 5,850,000 Revenue Cost of sales 162,600,000 Distribution costs 20,000,000 Administrative expense 22,000,000 Trade Payable 44 1 50,000 Note: 267,900,000 64,650,000 441.050.000 I- The share capital ofthe company consists ofordinaler shares wi'lhanominal value of 1 each 2-1'heRevezule includesmamountoflrmillionforasalemadeon-l-'lanuaxy 2016. The sale relates to a single product and. includes ongoing smrieing from M Co. forve years. The normal seingpxiee ofthc product andle savieing muldbe 2? million and 600,000 per mm (30 million in total) respectively- __Inmtestonthebankloanforihescalyear2016hasnotbeenincludedinthetrial 3- Interest on the bank loan for le scal year 2016 has not been included in the trial balance- 4- 'The board has decided to pa);r dividends as Spe'share- 5- The allowance fordoubtil debt istobemaintainedat 5% ofthe endingbalanceof ue tlade receivable accounts 6 During the current year the income from royalties relating to the patent had declined considerably and the directors are concerned that the value of the patent may be iinpaired- Anexaminationataeyearendconeludedthatthepresentvalue ofthe future estimated net cash ows fromthe patent at 31 December 2016 is 3.25 million; mmmsohasaconrmedo'erofiB-4mliontosellthepatent mediatelyatthat date- 7. Non-current assets-tangible: a)- Due to rising property prices: m decides to revalue its land and buildings on 1" Janliaty 2016 to their market value- 'I'lie values were conrrned at that date as land 15 million and buildings 50- 4 million urith the buildings having an. estimated remainingfeoflSyearsatthedateofrevalIJaon- Wmmakea trans-at rom the rmlmm surplus to retained earnings in respect of the annual m of the revaluation smplus- Ignore deferred tax on the revaluation. b). Plant and equipment is depreciated at 15% per annum using the reducing balance method 8 Nonelm assets intangible a)- In addition to the W development expenditure (of 4, 000, 000), rmer research and development costs were incurred on a. new project which. W on 1 January 2016- The research stage of the new project lasted until 31 m. 2016 and incurred 105,000 of costs- ow. that date the project incurred developinent costs of 35,000 per month- On 1st EL 2016 the directors are condent that the project wotild be successil and yield a prot well in excess of its costs. The project is still in development at 31 M. 2016 b). m development expenditure is W at 20% per anni'nn using the straightline method. All expensed research and development is charged to cost of sales- No Watson/Wm yet been charged on any noncurrent asset for the _ V . 1 on 1 Januaxy 2016 The research stage of the new project lasted until 31 m. 2016 and. incurred 105 ,000 of costs. from that date the project incurred development costs of 35, 000 per month- On. lst M. 2016 the directors are condent that the project would be successful and yield a prot \"Fell in excess of its costs- The project is still in. development at 31 w 2016 b)- maevopmemmeismmm20%permusingme straightline method, All sniper-sec]. research and develommt is charged to cost of sales. No depreciamfmmhasyetbeenchargedmmynon-cmrentassetforme year ended 31 December 2016- Alldepreciaonfmm is charged to cost of sales- Requiretnent: a. Show relevant journal. entries for all the transactions whenever adjustment is needed- (30%) b- Dra the SW of comprehensive income of MLRL for the year ended Blwlol (10%) c- Draft the statelnent of nancial position ofMLtd- for the year ended 315': m. 2016 (20%) d- Echlain the purpose of depreciation according to its denition, and the factors affecting the assessment of useful life according to IAS 16 Propel-gr, Plant and Equipment. (20 0) e- Distinguish between the eost model and the revaluation model for the measurement different impact of the two models on. the nancial statements. (20%) Thcfonovm'ngisanexu'act'omtheu'ialbalancc ometd forleycarmdBIst December 2016- Debits Credits Equity shapes of 1 each 25,000,000 Retained earnings at 3 1" Decanbet, 2015 8,000,000 6% bank loan repayahle 2020 30,000,000 Land and. buildings a: cost (land clement 14 million) 64,000,000 Plant and. equipment at cost 82,700,000 Patent at cost (ten-year life) 7,500,000 Accmnulated WWW a1 3 1 Decanter 2015 Buildings 5,000,000 Plant and equipment 36,700,000 Patent 3,000,000 m developanent expendinn'e-at cost 4,000,000 iacmulated ammzztion 800,000 Inventory at 31 December 2.016 32,100,000 Trade Receivable 40,300,000 Bank 5,850,000 Revenue 267,900,000 Em. nip-\"J4... .1.'::_ mann

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