2 Below is the summarised draft statement of financial position of Dexon, a publicly listed company, as at 31 March
2008.
$’000 $’000 $’000
Assets
Non-current assets
Property at valuation (land $20,000; buildings $165,000 (note (ii)) 185,000
Plant (note (ii)) 180,500
Investments at fair value through profit and loss at 1 April 2007 (note (iii)) 12,500
––––––––
378,000
Current assets
Inventory 84,000
Trade receivables (note (iv)) 52,200
Bank 3,800 140,000
–––––––– ––––––––
Total assets 518,000
––––––––
Equity and liabilities
Equity
Ordinary shares of $1 each 250,000
Share premium 40,000
Revaluation reserve 18,000
Retained earnings – at 1 April 2007 12,300
– for the year ended 31 March 2008 96,700 109,000 167,000
––––––– –––––––– ––––––––
417,000
Non-current liabilities
Deferred tax – at 1 April 2007 (note (v)) 19,200
Current liabilities 81,800
––––––––
Total equity and liabilities 518,000
––––––––
The following information is relevant:
(i) Dexon’s income statement includes $8 million of revenue for credit sales made on a ‘sale or return’ basis. At
31 March 2008, customers who had not paid for the goods, had the right to return $2·6 million of them. Dexon
applied a mark up on cost of 30% on all these sales. In the past, Dexon’s customers have sometimes returned
goods under this type of agreement.
(ii) The non-current assets have not been depreciated for the year ended 31 March 2008.
Dexon has a policy of revaluing its land and buildings at the end of each accounting year. The values in the above
statement of financial position are as at 1 April 2007 when the buildings had a remaining life of fifteen years. A
qualified surveyor has valued the land and buildings at 31 March 2008 at $180 million.
Plant is depreciated at 20% on the reducing balance basis.
(iii) The investments at fair value through profit and loss are held in a fund whose value changes directly in proportion
to a specified market index. At 1 April 2007 the relevant index was 1,200 and at 31 March 2008 it was 1,296.
(iv) In late March 2008 the directors of Dexon discovered a material fraud perpetrated by the company’s credit
controller that had been continuing for some time. Investigations revealed that a total of $4 million of the trade
receivables as shown in the statement of financial position at 31 March 2008 had in fact been paid and the
money had been stolen by the credit controller. An analysis revealed that $1·5 million had been stolen in the
year to 31 March 2007 with the rest being stolen in the current year. Dexon is not insured for this loss and it
cannot be recovered from the credit controller, nor is it deductible for tax purposes.
(v) During the year the company’s taxable temporary differences increased by $10 million of which $6 million
related to the revaluation of the property. The deferred tax relating to the remainder of the increase in the
temporary differences should be taken to the income statement. The applicable income tax rate is 20%.
(vi) The above figures do not include the estimated provision for income tax on the profit for the year ended 31 March
2008. After allowing for any adjustments required in items (i) to (iv), the directors have estimated the provision
at $11·4 million (this is in addition to the deferred tax effects of item (v)).
(vii) On 1 September 2007 there was a fully subscribed rights issue of one new share for every four held at a price
of $1·20 each. The proceeds of the issue have been received and the issue of the shares has been correctly
accounted for in the above statement of financial position.
(viii) In May 2007 a dividend of 4 cents per share was paid. In November 2007 (after the rights issue in item (vii)
above) a further dividend of 3 cents per share was paid. Both dividends have been correctly accounted for in the
above statement of financial position.
Required:
Taking into account any adjustments required by items (i) to (viii) above
(a) Prepare a statement showing the recalculation of Dexon’s profit for the year ended 31 March 2008.
(8 marks)
(b) Prepare the statement of changes in equity of Dexon for the year ended 31 March 2008. (8 marks)
(c) Redraft the statement of financial position of Dexon as at 31 March 2008. (9 marks)
Note: notes to the financial statements are NOT required.
(25 marks) 2 (a) $’000 $’000
Retained profit for period per question 96,700
Dividends paid (w (i)) 15,500
––––––––
Draft profit for year ended 31 March 2008 112,200
Discovery of fraud (w (ii)) (2,500)
Goods on sale or return (w (iii)) (600)
Depreciation (w (iv)) – buildings (165,000/15 years) 11,000
– plant (180,500 x 20%) 36,100 (47,100)
––––––––
Increase in investments ((12,500 x 1,296/1,200) – 12,500) 1,000
Provision for income tax (11,400)
Increase in deferred tax (w (v)) (800)
––––––––
Recalculated profit for year ended 31 March 2008 50,800
––––––––
(b) Dexon – Statement of Changes in Equity – Year ended 31 March 2008
Ordinary Share Revaluation Retained Total
shares premium reserve earnings
$’000 $’000 $’000 $’000 $’000
At 1 April 2007 200,000 30,000 18,000 12,300 260,300
Prior period adjustment (w (ii)) (1,500) (1,500)
––––––––
Restated earnings at 1 April 2007 10,800
Rights issue (see below) 50,000 10,000 60,000
Total comprehensive income
(from (a) and (w (iv)) 4,800 50,800 55,600
Dividends paid (w (i)) (15,500) (15,500)
–––––––– ––––––– ––––––– –––––––– ––––––––
At 31 March 2008 250,000 40,000 22,800 46,100 358,900
–––––––– ––––––– ––––––– –––––––– ––––––––
Rights issue: 250 million shares in issue after a rights issue of one for four would mean that 50 million shares were issued
(250,000 x 1/5). As the issue price was $1·20, this would create $50 million of share capital and $10 million of share
premium. (c) Dexon – Statement of financial position as at 31 March 2008:
Non-current assets $’000 $’000
Property (w (iv)) 180,000
Plant (180,500 – 36,100 depreciation see (a)) 144,400
Investments at fair value through profit and loss (12,500 + 1,000 see (a)) 13,500
––––––––
337,900
Current assets
Inventory (84,000 + 2,000 (w (iii))) 86,000
Trade receivables (52,200 – 4,000 – 2,600 (w (ii) and (iii))) 45,600
Bank 3,800 135,400
––––––– ––––––––
Total assets 473,300
––––––––
Equity and liabilities
Equity (from (b))
Ordinary shares of $1 each 250,000
Share premium 40,000
Revaluation reserve 22,800
Retained earnings 46,100 108,900
––––––– ––––––––
358,900
Non-current liabilities
Deferred tax (19,200 + 2,000 (w (v))) 21,200
Current liabilities (81,800 + 11,400 income tax) 93,200
––––––––
Total equity and liabilities 473,300
––––––––
Workings (figures in brackets in $’000)
(i) Dividends paid
The dividend in May 2007 would be $8 million (200 million shares at 4 cents) and in November 2007 would be
$7·5 million (250 million shares x 3 cents). Total dividends would therefore have been $15·5 million.
(ii) The discovery of the fraud means that $4 million should be written off trade receivables. $1·5 million debited to retained
earnings as a prior period adjustment (in the statement of changes in equity) and $2·5 written off in the income
statement for the year ended 31 March 2008.
(iii) Goods on sale or return
The sales over which customers still have the right of return should not be included in Dexon’s recognised revenue. The
reversing effect is to reduce the relevant trade receivables by $2·6 million, increase inventory by $2 million (the cost of
the goods (2,600 x 100/130)) and reduce the profit for the year by $600,000.
(iv) Property
The carrying amount of the property (after the year’s depreciation) is $174 million (185,000 – 11,000). A valuation of
$180 million would create a revaluation surplus of $6 million of which $1·2 million (6,000 x 20%) would be
transferred to deferred tax.
(v) Deferred tax
An increase in the taxable temporary differences of $10 million would create a transfer (credit) to deferred tax of
$2 million (10,000 x 20%). Of this $1·2 million relates to the revaluation of the property and is debited to the
revaluation reserve. The balance, $800,000, is charged to the income statement. |
发表于 2008-10-11 14:49
| 