Professional Documents
Culture Documents
30 am
Distribution costs 90
Patent (vii) 90
Trade payables 61
2,747 2,747
Additional information:
(i) The income tax balance in the trial balance is a result of the under provision of tax for the
year ended 31 March 2019.
(ii) There were no sales of non-current assets during the year ended 31 March 2020.
(iii) The tax due for the year ended 31 March 2020 is estimated at £52,000.
(iv) Depreciation is charged on buildings using the straight line method at 3% per annum. The
cost of land included in land and buildings is £260,000. Buildings depreciation is treated as
an administrative expense.
(v) Up to 31 March 2019 all plant and equipment was depreciated using the straight line
method at 12.5%. However some plant and equipment has been wearing out and needing to
be replaced on average after six years. TK management have therefore decided that from 1
April 2019 the expected useful life of this type of plant and equipment should be changed to
a total of six years from acquisition. The plant and equipment affected was purchased on 1
April 2014 and had an original cost of £120,000. This plant and equipment is estimated to
have no residual value. All plant and equipment depreciation should be charged to cost of
sales.
(vi) The sales revenue for the year to 31 March 2020 includes £15,000 received from a new
overseas customer. The £15,000 was a 10% deposit for an order of £150,000 worth of goods.
TK is still waiting for the results of the new customer’s credit reference and at 31 March
2020 has not dispatched any goods.
(vii) On 1 April 2016 TK purchased a patent for a secret recipe and manufacturing process for one
of its products. Due to recent world economic difficulties TK has carried out an impairment
review of its patent. At 31 March 2020 the patent was found to have the following values:
Required:
Prepare the statement of profit or loss and statement of changes in equity for TK for the year ended
31 March 2020 and statement of financial position as at the 31 December in accordance with the
relevant international financial reporting standards.