You are provided with the trial balance of Strange Ltd. as at 31st December 2020: Land at cost 1,000,000 Buildings at cost 1,900,000 Equipment at cost 1,592,000 Accumulated depreciation at 1st January 2020: Buildings 180,000 Equipment 352,000 Trade receivables 950,000 Trade payables 234,000 Bank 1,674,000 Ordinary shares at 1 each 400,000 Retained earnings at 1st January 2020 1,002,000 10% debentures (repayable in 2027) 4,180,000 Revenue 4,464,000 Cost of Sales 1,696,000 Inventory at 31 December 2020 238,000 Directors fees 300,000 Wages and salaries 552,000 General distribution costs 402,000 General administration costs 490,000 Dividend paid 40,000 Rents received 60,000 Debenture interest 18,000 Light and Heat 20,000 10,872,000 10,872,000 You are provided with the following information: 1. Invoices for light and heat for November and December 2020 which amount to 4,000 were not received and paid until January 2021. 2. Rent received relates to rental income from a tenant for the period 1 July 2020 to 30 June 2021. 3. One-quarter of wages and salaries were paid to distribution staff and the remaining three-quarters were paid to administrative staff. Question one continues on the next page 3 Question one continued 4. Included in the company's cost of sales is closing inventory at 31st December 2020 valued at 238,000. During the year, an aggressive competitor managed to create adverse publicity regarding the reliability of two of Stranges products. Sales staff are now indicating that they need to discount the price of these products heavily in the market in order to create sales orders. The two products Hero and Blog originally cost 11 per unit and 13.60 per unit to produce. Sales staff suggest that the sales price of Hero be discounted to 12.40 per unit and Blog be discounted to 14.60 per unit. Sales staff are paid commission of 10% of revenue values on all sales. At 31 December 2020, there are 3,000 units of Hero in stock and 5,000 units of Blog. 5. Strange Ltd have decided to adopt a revaluation policy for land and buildings. An independent valuation commissioned at 1 January 2020 valued the land at 1,500,000 and buildings at 1,840,000. Buildings are depreciated on a straight-line basis. The remaining useful life of the buildings are estimated at 20 years, assuming a nil residual value. Strange uses the elimination method to deal with accumulated depreciation on buildings for revaluation. 6. During the year the company disposed of equipment which had originally cost 240,000 on 1 January 2017. The proceeds of sale were agreed at 120,000 and the buyer paid 20,000 up front and agreed to pay the balance on 31 January 2021. No entries have been made in the records with regard to this transaction. Equipment is depreciated at 15% per annum on the reducing balance basis. 7. For all items of property, plant and equipment, a full year's depreciation is charged in the year of acquisition and none in the year of disposal. None of the assets had been fully depreciated by 31 December 2020. 8. The corporation tax liability for the year to 31st December 2020 is estimated to be 60,000 and debenture interest must be provided for.

a) Show the journal entries necessary to record the revaluation of land and buildings in point 5 above and any subsequent year end transactions related to these class of assets and associated balances at 31 December 2020. (6 Marks) b) In accordance with IAS 16 Property, Plant and Equipment prepare the note accompanying the financial statements for Strange Ltd which shows the movement on each class of tangible asset for the year ended 31 December 2020. (9 Marks) Question one continues on the next page 4 Question one continued c) Prepare a Statement of Profit or Loss and Other Comprehensive Income and Statement of Changes in Equity for the year ended 31 December 2020 and a Statement of Financial Position as at that date for Strange Ltd. (30 Marks) d) Describe the appropriate treatment of products Hero and Blog in the yearend financial statements in accordance with IAS 2 Inventories. (5 Marks)