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Posted on Jun 24, 2024

Acc SECTION B Question 3 Statements of Financial Position at each of the last two year-ends for Balham plc are shown below, together with additional

Acc SECTION B Question 3 Statements of Financial Position at each of the last two year-ends for Balham plc are shown below, together with additional extracts from the company's financial statements. The company's year-end is 31 March 2020 2019 Cost! Acc Cost valuation Deprec Deprec. Non-current assets '000 '000 L'000 *000 '000 Tangible assets Property 246,120 26,840 219,280 233,250 23,700 209,550 Equipment 334.280 148,570 185,710 311,920 106,680 205,240 404,990 414.790 Investment Property 4,000 3.500 Current assets Inventories 195,100 186,620 Receivables 211.200 141,370 Bank 400 406,700 5.760 333.750 815,690 752,040 Equity and liabilities Share capital (1 each) 200,000 150,000 Share Premium 50,000 20.000 Profit and loss account 276,090 226,500 526,090 396,500 Non-current liabilities 10% Debentures 126,000 163,000 Finance Leases 4.810 130,810 2,900 165,900 Current liabilities Trade Payables 114,400 140,400 Taxation 34,430 42,190 Finance Leases 9.010 7,050 Bank overdraft 950 158.790 0 189,640 815,690 752,040 Statement of Changes in Equity for the year ended 31 March 2020 Share Share Profit and Total Capital premium Loss Account '000 '000 '000 '000 Balance 1-04-2019 150,000 20,000 226,500 396,500 Profit for the year 107.500 107,500 Dividends (57,910) (57,910) Share issues for cash 50,000 30,000 80,000 Balance 31-03-2020 200,000 50,000 276,090 526,090 continued Page 7 of 9 CRNS 80072187385 ACF318-Financial Accounting Question 3 continued (a) There were no disposals of property during the year. (b) The company accounts for Investment Property under the Fair Value method. (c) Some additions to equipment were funded by leases. The total amount paid in the year to 31st March 2020 in respect of leases was 1.38 m of which 350,000 represented interest costs. (d) The corporation tax charge for the year to 31 March 2020 was 35m. (e) Debenture loans were redeemed on 19 October 2019. () Other than the debenture interest and the interest on leases the only other interest charge was overdraft interest of 6,000. Required: Prepare a Statement of Cash Flows for Balham plc for the year ended 31 March 2020 in accordance with IAS7 Statement of Cash Flows. [Total: 25 Marks] Question 3 Mallow pic acquired a leasehold property some years ago, which it used to accommodate its marketing department. On 1 January 2019 the property was vacated by Mailow plc and reclassified as an investment property Details are as follows ,000 Original Cost 40,000 NBV 1.1.2019 32,000 Fair Value 1.1.2019 60,000 Fair Value 31.12.2019 70,000 Fair Value 31.12.2020 56,000 Useful life remaining 1.1.2019 25 years IAS40 Investment Properties allows a choice of accounting treatment of investment property continued Page 8 of 9 ACF318-Financial Accounting CRNs 80072/87385 Question 4 continued Required: Write a report 1. Explaining the requirements of IAS 40.The report should explain the definition given in the standard and the alternative accounting treatments allowed under the standard. (12 marks) 2. Giving details of the entries to be made in the financial statements of Marcus plc for the year ended 31st December 2019 and 31st December 2020, in accordance with the two alternative treatments allowed by IAS40. (13 marks) [Total 25 marks] Acc SECTION B Question 3 Statements of Financial Position at each of the last two year-ends for Balham plc are shown below, together with additional extracts from the company's financial statements. The company's year-end is 31 March 2020 2019 Cost! Acc Cost valuation Deprec Deprec. Non-current assets '000 '000 L'000 *000 '000 Tangible assets Property 246,120 26,840 219,280 233,250 23,700 209,550 Equipment 334.280 148,570 185,710 311,920 106,680 205,240 404,990 414.790 Investment Property 4,000 3.500 Current assets Inventories 195,100 186,620 Receivables 211.200 141,370 Bank 400 406,700 5.760 333.750 815,690 752,040 Equity and liabilities Share capital (1 each) 200,000 150,000 Share Premium 50,000 20.000 Profit and loss account 276,090 226,500 526,090 396,500 Non-current liabilities 10% Debentures 126,000 163,000 Finance Leases 4.810 130,810 2,900 165,900 Current liabilities Trade Payables 114,400 140,400 Taxation 34,430 42,190 Finance Leases 9.010 7,050 Bank overdraft 950 158.790 0 189,640 815,690 752,040 Statement of Changes in Equity for the year ended 31 March 2020 Share Share Profit and Total Capital premium Loss Account '000 '000 '000 '000 Balance 1-04-2019 150,000 20,000 226,500 396,500 Profit for the year 107.500 107,500 Dividends (57,910) (57,910) Share issues for cash 50,000 30,000 80,000 Balance 31-03-2020 200,000 50,000 276,090 526,090 continued Page 7 of 9 CRNS 80072187385 ACF318-Financial Accounting Question 3 continued (a) There were no disposals of property during the year. (b) The company accounts for Investment Property under the Fair Value method. (c) Some additions to equipment were funded by leases. The total amount paid in the year to 31st March 2020 in respect of leases was 1.38 m of which 350,000 represented interest costs. (d) The corporation tax charge for the year to 31 March 2020 was 35m. (e) Debenture loans were redeemed on 19 October 2019. () Other than the debenture interest and the interest on leases the only other interest charge was overdraft interest of 6,000. Required: Prepare a Statement of Cash Flows for Balham plc for the year ended 31 March 2020 in accordance with IAS7 Statement of Cash Flows. [Total: 25 Marks] Question 3 Mallow pic acquired a leasehold property some years ago, which it used to accommodate its marketing department. On 1 January 2019 the property was vacated by Mailow plc and reclassified as an investment property Details are as follows ,000 Original Cost 40,000 NBV 1.1.2019 32,000 Fair Value 1.1.2019 60,000 Fair Value 31.12.2019 70,000 Fair Value 31.12.2020 56,000 Useful life remaining 1.1.2019 25 years IAS40 Investment Properties allows a choice of accounting treatment of investment property continued Page 8 of 9 ACF318-Financial Accounting CRNs 80072/87385 Question 4 continued Required: Write a report 1. Explaining the requirements of IAS 40.The report should explain the definition given in the standard and the alternative accounting treatments allowed under the standard. (12 marks) 2. Giving details of the entries to be made in the financial statements of Marcus plc for the year ended 31st December 2019 and 31st December 2020, in accordance with the two alternative treatments allowed by IAS40. (13 marks) [Total 25 marks]