AC330 Financial Accounting, Analysis and Valuation Class Exercises 2012-13

Hansenpheet PLCIncome from AnnuityJanus (2006) PLCMuniswerth LtdEyedeal Inc.Tricky Flying andTwo Companies andA Manufacturing CompanyLetsleaseagen PLCSummer 110Horsone, Callaghan &RentierIntangiblesRMv 330 EX13RMv(330/20)Your class teachers will tell you which exercises are to be submitted (with coursework coversheets) forformative assessment. It is important that you prepare answers to all questions each week if you are toobtain proper benefit from the classes and to make the contribution to each class that is expected ofyou under the Schools Code of Practice. It is essential that you answer the discussion parts ofquestions as well as the parts requiring numerical calculation. Remember also that individualexamination questions may range across more than one lecture/class topic.NB: As explained in the lectures, for Ac330, you are not expected to know the detailedrequirements of IFRS beyond the level covered in the lectures; nor are you required to use theirprecise terminology; and instructions (here or in exam questions) to prepare published accounts oflisted companies in conformity with IFRS are to be interpreted in that sense. Whatever the datesin the questions, use the latest version of relevant IFRS (as well as the relevant provisionsof the Companies Act 2006) with which you have been made familiar during the lectures.Specimen solutions will go up on the course website via Moodle after the last class each week, andhardcopies will be available, normally the following week, in SIC (OLD 3.20).AC330: HANSENPHEET PLCHansenpheet plc has been trading for a number of years. The trial balance as at 30 June 2011, as extractedfrom the company’s accounting records, shows the following balances:Dr000Share capital: ordinary shares of 50pShare premium accountRetained earnings at 1 July 2010Freehold land and buildings: costprovision for depreciation at 1 July 2010Plant, machinery and equipment: costprovision for depreciation at 1 July 2010Inventories at 1 July 2010Trade receivablesCash at bankTrade payablesTaxation account8% Debenture Stock at parIssue costs and discount on debenturesSales less returnsPurchasesDistribution costsWages and salariesOther administrative expensesInterest paidInterim dividend paidSuspense accountCr0002,1004001,0741,5001202,4001,0801,3593,1391,6102,125502,00015225,92517,9161,8472,7751,82616021034,8942034,894The following information is relevant:(1)Inventories at 30 June 2011, at the lower of cost and net realisable value, totalled 1,425,000.(2)Depreciation is to be provided to write down non-current assets on a straight-line basis asfollows:Freehold buildings to zero residual value over 50 yearsPlant, machinery and equipment to an estimated residual value of 240,000 at 12% perannum.No depreciation is provided in the year of disposal of a non-current asset.Included in the cost of freehold land and buildings is land to which a cost of 300,000 has beenattributed.Rmv330Ex2 a [301111]1(3)The freehold land and buildings were professionally valued on 30 June 2011 at 1,800,000 (ofwhich 400,000 was attributable to the land) and the revalued amount is to be included in theaccounts at 30 June 2011. No change was made to the estimate of the buildings’ useful lives.N.B. Depreciation for the year, in (2) above, is to be based on the cost of freehold buildings at 1July 2010.(4)Provision is to be made for audit fees of 60,000.(5)The debentures were issued on 1 July 2010 and are redeemable at par on 30 June 2015. The netproceeds of issue were 1,848,000. The accountant of Hansenpheet has recorded the debenturesin the books at their nominal value and debited the issue costs and discount on debentures to theaccount shown in the trial balance. Interest on the debentures is payable annually in arrears on 30June, and was paid on the due date.(6)Included in purchases are some goods purchased on 15 April 2011 from a company inForcurrencia, where the unit of currency is the FC. These goods cost FC 720,000 and they hadnot been paid for at 30 June 2011; the amount owing is included in trade payables at the cost inon 15 April 2011. The rate of exchange between the FC unit and the was 1= FC 4.5 at 15 April2011 and 1= FC 5 at 30 June 2011.(7)The balance on the suspense account as at 30 June 2011 consists of:000Cash received by the company in respect ofa debt written off in 2009 as irrecoverableLoss arising on scrapping of obsolete plantand machinery: costaccumulated depreciation255200000755520(8)The company’s authorised share capital is 5,000,000 in ordinary shares of 50p each. On 30 June2011, the company received 840,000 as the proceeds of a Rights Issue of one ordinary share forevery five already held at 1.00 per share. The cash was deposited in a special bank account.Expenses of the issue estimated at 35,000 will be paid in July 2011. No entries have yet beenmade for the Rights Issue in the company’s accounting records.(9)An interim dividend of 5p per share was paid on 1 May 2011.(10)Provision is to be made for corporation tax on the profit for the year, estimated to be 300,000.The balance on taxation account represents an overprovision in the previous year. Ignoredeferred taxation.Required:Prepare an income statement and statement of comprehensive income for Hansenpheet plc for the yearended 30 June 2011 and a statement of financial position (i.e. balance sheet) as at that date. These shouldbe in good form and comply with international accounting standards, so far as the information givenpermits. Include also a statement of changes in equity showing the reconciliation of opening and closingshare capital, reserves and accumulated profit.Work to the nearest 000.