A) STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31/12/X5

$'000
REVENUE 24300
COS -10900
GROSS PROFIT 13400

ADMIN EXP -9700

DISTRIBUTION COSTS -7300

INVESTMENT INCOME 2500

FINANCE COST -1400
TAXATION 560

LOSS FOR THE YEAR -1940 -2000

B) STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31/12/X5

SHARE SHARE RETAINED

CAPITAL PREMIUM EARNINGS
BALANCE AT 1/1/X5 60000 0 43200
PRIOR PERIOD ADJUSTMENT -700
RESTATED BALANCE AT 1/1/X5 60000 0 42500
RIGHTS ISSUE 15000 37500
LOSS FOR THE YEAR -1940
DIVIDEND PAID -3000

BALANCE AT 31/12/X5 75000 37500 37560

C) EXTRACTS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31/12/X5

CASH FLOWS FROM INVESTING ACTIVITIES

PURCHASE OF IP 20000
PURCHASE OF BRAND 2000
NET CASH IN IA 22000

CASH FLOWS FROM FINANCING ACTIVITIES

PROCEEDS FROM RIGHTS ISSUE 52500

DIVIDEND PAID -3000
49500
WORKINGS

1 INVENTORY ERROR

OVERSTATED STATED 700

ADJUSTING ENTRY

DR RE 700
CR COS 700

2 PROVISION

DR PROVISION 4600
DR SOPL (ADMIN EXP) 1400
CR CASH 6000

3 TAXATION

UNDER PROVISION 140 O/B 7700

TAX REFUND -1200 SOPL 500
INCREASE IN DT 500 C/B 8200
TAXATION -560

4 RIGHTS ISSUE

AMOUNT OF R/I ISSUED 15000 UNITS

SHARE CAPITAL 15000 SOCE

SHARE PREMIUM 37500 SOCE
52500 FIN ACTIVITIES

5 IP

1/1/X5 IP 20000 INVESTING ACT

REV GAIN 2000 INV INCOME
31/12/X5 FV 22000

REVERSE DEPRECIATION CHARGED

DR IP
CR ADMIN 1000
6 INTANGIBLE ASSETS

PROMOTION

DR ADMIN 1300 3300

CR IA 1300 -1300
2000
BRAND ACQUISITION 2000 INV ACT

AMORTISA 100

DR ADMIN 100

7 DIVIDEND PAID

TOTAL SHARES 75000

TOTAL DIV PAID 3000 FIN ACT

DR RE 3000
CR ADMIN 3000

8 COS ADMIN EXP INV INCOME

AS PER TB 11600 10900 500
INVENTOR -700
PROVISION 1400
REVALUATION GAIN ON IP 2000
REVERSE3 DEPR IP -1000
PROMOTION 1300
AMORTISATION 100
DIVIDEND PAID -3000

10900 9700 2500

SCHEDULE OF ADJUSTMENTS TO RETAINED EARNINGS AS AT
30 SEPTEMBER 20X8
$'000
RETAINED EARNINGS DRAFTED 4122
FINANCE CHARGE ON LOAN NOTES -390
REVERSE TRANSACTION COST 125
DEPR FOR THE YEAR
BUILDING -900
FACTORIES -3885
IMPAIRMENT LOSS ON BUILDING -3600
GAIN ON DISPOSAL 500
UNWINDING INT OF PROVISION -61
INCREASED IN DTL -203

ADJUSTED RETAINED EARNINGS -4292

STATEMENT OF FINANCIAL POSITION OF LOUDON CO AS AT

30 SEPTEMBER 20X8

NCA
OFFICE BUILDING 11500
FACTORIES 22015
33515

CA
CURRENT ASSETS 14700
48215

EQUITY
EQUITY SHARES 10000
RETAINED EARNINGS -4292
5708

NCL
5% LOAN NOTES 5015
ENVIRONMENTAL PROVISION 1289
DTL 1703
 8007

CL 34500
48215
WORKINGS
1 LOAN NOTE

O/B INT (8%) INT PAID C/B

X8 4875 390 -250 5015
FC/SOPL SOFP/NCL

ADJUSTMENT FOR ISSUE COST

DR LOAN NOT 125

CR ADMIN EX 125

2 NCA

BUILDING
COST 20000
ACC DEPR -4000
CA 30/9/X7 16000
DEPR FTY -400 SOPL
CA 1/4/X8 15600
REV LOSS/IL -3600 SOPL
FV 1/4/X8 12000
DEPR FTY -500 SOPL
CA 30/9/X8 11500 SOFP/PPE

3 DISPOSAL OF THE FACTORY

SP 3500
CA -3000
GAIN ON DISP 500 SOPL

REMAINING FACTORIES

COST 40000
ACC DEPR -11100
CA 1/10/X7 28900
DISPOSAL -3000
CA 1/10/X7 25900
DEPR FTY -3885 SOPL
CA 30/9/X8 22015 NCA/SOFP
4 ENVIRONMENTAL PROVISION

CA 1/10/X7 1228
UNWIND INT 61 SOPL
CA 30/9/X8 1289 NCL/SOFP

5 DT

PPE
AB TB TTD
CA 33515 TWDV 25000 8515

DTL
O/B 1500
SOPL 203 SOPL
C/B 1703 SOFP/NCL
DTL
1703
ADJUSTED PROFIT FOR THE YEAR ENDED 31 DECEMBER 20X7

DRAFT PROFIT 2250

INCREASE FC -135
REV RECOGNISED 5600
COS RECOGNISED -1900
DEPR -720
REV LOSS -480
INVENTORY 390

ADJUSTED PROFIT 5005

STATEMENT OF CHANGES IN EQUITY

SHARE SHARE OTHER REV

EQUITY PREMIUM EQUITY RESERVE
O/B 20000 3000 800
BONUS ISSUE 4000 -3000
CLN 425
REV LOSS -800
PROFIT FOR THE YEAR
DIV PAID

C/B 24000 0 425 0

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 20X7

NCA
PPE 16000

CA
CONTRACT ASSET 4200
INVENTORIES 4700
TRADE RECEIVABLES 5510
CASH 10320
24730
 40730

EQUITY
ORDINARY SHARES 24000
OTHER EQUITY 425
RETAINED EARNINGS 6655
31080

NCL
4% CONVERTIBLE LOAN 7710

CL 1940
40730
 WORKINGS
1 CONVERTIBLE LOAN NOTES

FACE VALUE
PV OF:
P
INT
LIABILITY ELEMENT
EQUITY ELEMENT

O/B
X7 7575

FC CHARGED 320
INC FC 135

RETAINED 2 REVENUE
EARNINGS
6270 REVENUE 5600
-1000 COS -1900
PROFIT REC T 3700

5005 REVENUE RECOGNISED

-3620 LESS: AMOUNT INVOICED
CONTRACT ASSET
6655
3 BONUS ISSUE

B/I ISSUED 4000

DR SHARE PREMIUM
DR RE
CR SHARE CAPITAL

4 PROPERTY

CA AT 1/1/X7 18000
DEPR FTY -720
CA AT 31/12/ 17280
REV LOSS -1280
 FV AT 31/12/ 16000

5 UNDERSTATED INVENTORY

DR INVENTOR 390
CR COS/SOPL 390
OAN NOTES

8000

6720
855
7575
425 SOFP/E

INT (6%) INT PAID (4%)C/B

455 -320 7710
FC SOFP/NCL

SOPL

5600
-1400
4200 SOFP

3000
1000
4000

DR RS 800
DR SOPL 480
CR PROPERTY 1280
 DR SOPL 720
CR PROPERTY 720

INVENTORY