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Chapter 12: Company financial statements under IFRS
1 Hexham plc
The following is the trial balance of Hexham plc at 31 March 20X8:
£ £
Sales 1,150,000
Inventories at 1 April 20X7 75,000
Purchases 465,000
Distribution costs 220,000
Administrative expenses 340,000
Irrecoverable debts expense 36,000
Loan interest paid 8,000
Land and buildings cost 600,000
Plant and equipment cost 340,000
Land and buildings accumulated depreciation at 1 April 20X7 96,000
Plant and equipment accumulated depreciation at 1 April 20X7 63,000
Trade receivables 60,000
Allowance for receivables 5,000
Bank 24,000
Equity share capital (£1 shares) 400,000
Share premium 100,000
Bank loan 200,000
Retained earnings 61,000
Equity dividends paid 15,000
Trade payables 54,000
Advance deposits from customers 6,000
2,159,000 2,159,000
The following adjustments have yet to be accounted for:

1 Hexham plc holds two lines of inventory at 31 March 20X8.
Details are as follows:
Item CX100 BY200
£ £
Total cost 16,200 76,000
Selling price 15,000 83,600
2 Hexham plc paid an annual insurance premium of £16,800 for the year 1 September 20X7
to 31 August 20X8. This payment is included in administrative expenses.
3 The company's depreciation policy is as follows:
Buildings Straight-line over 50 years

Plant and equipment 10% straight-line
The cost of the land was £200,000, and all non-current assets are assumed to have zero
residual values.
There were no additions to or disposals of non-current assets during the year ended
31 March 20X8.
Depreciation on buildings is charged to administrative expenses, and depreciation on plant
and equipment is charged to cost of sales.
ICAEW 2019 Chapter 12: Company financial statements under IFRS 117
4 At the year end, trade receivables include a balance of £4,800 which is considered
irrecoverable. Hexham plc wishes to adjust the allowance for receivables at 31 March 20X8
to £2,760. The company presents irrecoverable debts as other operating expenses on the
face of the statement of profit or loss.
5 The bank loan was received on 1 July 20X7 and is repayable in full in five years. Interest is
charged at a fixed rate of 8% per annum.
6 Income tax for the year ended 31 March 20X8 is estimated at £10,000.
7 Hexham plc products come with a six-month warranty. Management estimates that 5% of
warranties will be invoked, at a cost of £15,000 to Hexham plc. Provisions are charged to
other operating expenses.
8 Hexham plc paid rent of £25,000 on 27 March 20X8 which covers the period 1 April 20X8 to
30 June 20X8. This amount has been included in administrative expenses.
Requirement
Prepare the statement of profit or loss for Hexham plc for the year ended 31 March 20X8 and
the statement of financial position at that date.
Statement of profit or loss for the year ended 31 March 20X8
£
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating expenses
Profit/(loss) from operations
Finance costs
Profit/(loss) before tax
Income tax expense
Profit/(loss) for year
Statement of financial position at 31 March 20X8
£
Non-current assets
Property, plant and equipment
Land and buildings
Plant and equipment
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Equity share capital
Share premium
Retained earnings
Non-current liabilities
Borrowings
118 Accounting: Question Bank ICAEW 2019

£
Current liabilities
Bank overdraft
Trade payables
Accruals
Deferred income
Provision
Income tax payable
Total equity and liabilities
2 Shindig plc
The following trial balance was extracted from the nominal ledger of Shindig plc, a computer
console and games manufacturer, on 31 December 20X4.
£ £
Licence 60,000
Work in progress, 1 January 20X4 125,500
Leasehold buildings 300,000
Equity share capital – £1 nominal value 500,000
5% Preference share capital (redeemable) – £1 nominal value 120,000
Revenue 1,705,600
Production staff costs (charged to cost of sales) 620,400
Accumulated depreciation on buildings, 1 January 20X4 60,000
Inventories of finished games, 1 January 20X4 155,600
Consultancy fees paid (charged to other operating expenses) 44,000
Computers used on site 50,000
Accumulated depreciation on computers, 1 January 20X4 20,000
Income tax 12,400
Equity dividend paid, 30 September 20X4 125,000
Allowance for receivables 18,765
Bank account 440,200
Raw materials 294,500
Suspense account 83,765
Retained earnings, 1 January 20X4 102,300
2,700,500 2,700,500
The following additional information is available.

1 Closing finished inventories are valued at cost of £180,000 whilst work in progress has
increased to £140,000. These valuations do not take into account the fact that, at the year
end physical inventory count, it was discovered that ten computer games consoles with a
cost of £500 each had been badly damaged. These items have a scrap value of £50 each.
2 The licence was acquired on 1 January 20X4 in respect of exclusive rights to sell games in a
specific market for a period of three years. If the company chose to do so it could sell these
rights on without there being a significant impact on the remainder of the business.
3 Buildings are depreciated over 30 years. Computers are depreciated over five years. Both
depreciation and amortisation are charged to other operating expenses.
4 Shindig plc received notice on 15 January 20X5 that one of its customers, X Limited, had
gone into liquidation. This customer owed £45,000 at the year end which should be written
off as an irrecoverable debt. Shindig plc determined that an allowance for receivables
totalling £18,765 was required. There was no allowance for receivables in the prior year.
The credit entry has been correctly recorded but the debit entry has been made to the
suspense account. Irrecoverable debts are charged to other operating expenses.
5 There is an estimated income tax bill in relation to 20X4 of £120,000. The income tax figure
in the trial balance (a credit balance) represents the difference between the income tax
payable balance at 31 December 20X3 and the income tax paid in the year.
6 During the year, Shindig plc made a 1 for 4 bonus issue of equity shares from share
premium. The correct entry has been made to share capital, however the corresponding
entry has been made to the suspense account.
7 A cheque was issued to a supplier in the amount of £5,000 on 28 December 20X4. This was
not recorded in the books of Shindig plc.
8 There has been a lot of publicity surrounding Shindig plc's newest game, 'Warpaint', which
is due to be released in March 20X5. Due to the high level of interest Shindig plc have
allowed customers to pay for the game in advance to ensure that they receive their copy of
the game on the release date. Shindig plc was unclear how to account for this revenue of
£35,000 so included it in the suspense account.
9 Shindig plc sold a product with a warranty of two years. It is estimated that 3% of the
warranties will be invoked at a cost of £10,000. Provisions are charged to other operating
expenses.
Requirement
Prepare the statement of profit or loss for Shindig plc for the year ended 31 December 20X4
and the statement of financial position at that date.
Statement of profit or loss for the year ended 31 December 20X4
£
Revenue
Cost of sales
Gross profit
Finance costs
Income tax expense
Statement of financial position at 31 December 20X4
£
Non-current assets
Leasehold buildings
Computers
Intangible assets
Current assets
Inventories
Trade receivables
Cash and cash equivalents
Total assets
Equity
Retained earnings

£
Borrowings
Current liabilities
Trade payables
Accruals
Deferred income
Provision
Income tax payable
3 Ford plc
Ford plc is a company which publishes a single textbook and provides tuition courses relating to
that text. The following trial balance was extracted from the nominal ledger of Ford plc on
31 March 20X6.
£ £
Manufacturing costs 4,450,000
Administrative salaries 410,500
Inventories at 1 April 20X5 113,400
Freehold land and buildings
Cost (land £1,750,000) 2,550,000
Accumulated depreciation at 1 April 20X5 480,000
Plant and machinery
Cost 620,000
Accumulated depreciation at 1 April 20X5 337,000
Borrowings 200,000
Retained earnings at 1 April 20X5 212,500
Equity share capital – 50p nominal value 400,000
Preference share capital – 5% irredeemable £1 shares 200,000
Dividend paid 20,000
Cash and cash equivalents 43,500
Revenue 6,700,000
Finance costs 35,000
8,654,900 8,654,900
The following additional information is relevant.

1 The borrowings are repayable in 10 equal instalments, commencing on 1 April 20X6.
2 Revenue is made up of the following.
£
Tuition fees 1,500,000
Book sales 5,100,000
Advances 100,000
6,700,000
The tuition fees all relate to courses held during the year except for fees of £300,000 which
relate to a 10-week course. Five weeks of this course had already been held by the year
end. The remainder is to be held in June 20X6. The advances relate to the delivery of a new
publication which Ford plc has commissioned and advertised heavily but which is not yet in
production.
3 There were no movements of non-current assets during the year. Plant is depreciated on a
10% straight-line basis, taking into account the month of sale or purchase. Freehold
buildings are depreciated over their useful life of 40 years. Depreciation on plant is charged
to cost of sales. Depreciation on freehold land and buildings is charged to administrative
expenses.
4 At the year end the company was in the process of a legal action by one of its competitors
which claims that Ford's textbook has breached copyright. The case is not due to be
decided until June 20X6 but Ford plc's legal advisors think that the company has a 70%
chance of losing the case and estimates that this would cost Ford plc £100,000.
5 One of Ford plc's customers who owed £10,000 at the year end was declared insolvent on
1 May 20X6. The liquidator does not expect to pay any money to creditors and the amount
is considered irrecoverable.
6 Closing inventories at cost amounted to £120,000. Within this valuation is an over-allocation
of fixed overheads, of £10,000.
7 The following should be accounted for at the year end.
Income tax of £350,000
The preference dividend
8 Ford plc employed the services of a training and consultancy firm for a six month period
commencing on the 1 February 20X6 for a total fee of £60,000. 50% of this fee is due for
payment on 1 April 20X6, while the balance is to be paid within 30 days of the contract's
conclusion. No record has been made in respect of this in the accounts of Ford plc. The
contract fee should be included in administrative expenses.
9 Ford plc rent some additional office space for administrative staff. Rent is due quarterly in
advance. Ford plc made a payment of £20,000 on 31 March 20X6, and this has been
included in administrative expenses.
10 During the year, Ford plc issued a 1 for 4 bonus issue from share premium. This has not
been reflected in the accounts.
Requirement
Prepare the statement of profit or loss for Ford plc for the year ended 31 March 20X6 and the
statement of financial position at that date.
£
Revenue
Cost of sales
Gross profit
Distribution costs

Finance costs
Income tax expense

£
Non-current assets
Property, plant, and equipment
Land and buildings
Plant and machinery
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Preference share capital
Retained earnings
Borrowings
Current liabilities
Borrowings
Accruals
Dividends payable
Trade payables
Deferred income
Provision
Income tax payable
4 Jayne plc
The following trial balance was extracted from the nominal ledger of Jayne plc on
31 December 20X2.
£ £
Accrued expenses at 31 December 20X2 2,500
Administration expenses 198,076
Cost of sales 426,772
Cash and bank 15,477
Payables due within one year (includes preference dividends
payable) 49,809
Receivables 12,691
Preference dividend paid 3,600
Equity dividend paid 4,000
Non-current assets at cost 157,680
10% loan (repayable in 10 years) 33,000
£1 equity share capital 11,000
£ £
60% £1 preference share capital (irredeemable) 6,000
Accumulated depreciation at 31 December 20X1 40,630
Retained earnings at 31 December 20X1 26,014
Suspense account 1,350
Share premium 7,500
Inventories at 31 December 20X2 39,323
Revenue 726,370
Income tax at 31 December 20X1 15,000
919,173 919,173
The following additional information is relevant.

1 Jayne plc sold a motor vehicle during the year ended 31 December 20X2. The motor
vehicle sold had a cost of £2,000 and a carrying amount of £1,100. Any profits or losses on
disposal are treated as a cost of sales. Jayne plc for this transaction has been to record the
sales proceeds in cash at bank and used the suspense account as the other side of the
entry. There are no other entries in the suspense account.
2 The non-current assets account includes freehold land which cost £25,000.
Depreciation is charged at 20% on the carrying amount of depreciable assets in use at the
year end. This charge is to be distributed 40% to cost of sales, 30% to distribution costs and
30% to administrative expenses.
3 A bonus issue of 1 for 5 equity shares made during the year out of the share premium
account has not been reflected above.
4 Included in administrative expenses is a rates payment of £1,500 for the year to
1 April 20X3. An invoice for insurance of £1,200 for the year to 30 November 20X3 was
received and processed on 5 January 20X3.
5 The following accruals are to be made.
(a) Loan interest (12 months)
(b) Income tax of £12,000
6 The income tax liability of £15,000 at 31 December 20X1 was settled at £15,400 in
September 20X2. The payment was debited to administration expenses.
7 At 31 December 20X2 Jayne plc considers an amount owing of £453 from Mr Maguire
should be written off as irrecoverable, and a further allowance for receivables of 3% of the
remaining receivables is necessary. Irrecoverable debts expenses are included in
administrative expenses.
8 Jayne plc received a letter in December 20X2 from the solicitor of a former employee
claiming that their client was unfairly dismissed. Jayne plc's legal advisors estimate that
there is a 70% chance that the claim will be successful and they estimate that the award to
the claimant will be £20,000. Provisions are charged to administrative expenses.
9 A cheque for £12,000, sent to a supplier, was incorrectly recorded as £21,000. This error
has not been corrected in the accounting records of Jayne plc.
Requirement
Prepare the statement of profit or loss for Jayne plc for the year ended 31 December 20X2 and

£
Revenue
Cost of sales
Gross profit
Distribution costs
Finance costs
Income tax expense
£
Non-current assets
Land
Other non-current assets
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Share premium
Retained earnings
Borrowings
Current liabilities
Borrowings
Bank overdraft
Trade payables
Provision
Accruals
Deferred income
Income tax payable
5 Skylar plc
The trial balance for Skylar plc as at 31 October 20X7 is shown below.
£'000 £'000
Share capital 15,000
Accruals at 31 October 20X7 387
5% bank loan repayable in 10 years 20,000
Cash at bank 7,997
Property (freehold buildings) cost 20,000
Property (freehold buildings) – accumulated depreciation at
1 November 20X6 2,500
Plant and equipment – Accumulated depreciation at
Interest 750
Sales 53,761
Purchases 30,946
Inventories as at 1 November 20X6 8,456
Dividends paid 1,300
128,469 128,469
Further information
1 Depreciation has not yet been charged. There were no movements in non-current assets
during the year. Plant is depreciated at 10% straight-line on a monthly basis taking into
account the month of sale or purchase. Freehold buildings are depreciated over their useful
life of 40 years. Depreciation on plant is charged to cost of sales. Depreciation on freehold
buildings is charged to administrative expenses.
2 The inventories at the close of business on 31 October 20X7 had a sales value of
£12,232,500. Goods are sold at an average mark-up of 25%.
3 The company paid £48,000 insurance costs in June 20X7, which covered the period from
1 July 20X7 to 30 June 20X8. This was included in administrative expenses in the trial
balance.
4 Interest on the bank loan for the last three months of the year has not been included in the
accounts in the trial balance.
5 The income tax charge for the year has been calculated as £1,254,000.
6 A cheque received from customer Broke plc for £15,000 on 27 October 20X7, which was
recorded in the accounting records of Skylar plc, has not cleared. A liquidator was
appointed to Broke plc on 15 November 20X7 and he has confirmed that the cheque will
not be reissued. Management have advised that Broke plc's total outstanding balance of
£30,000 should be written off as an irrecoverable debt and recorded in administrative
expenses.
7 During the year Skylar plc renewed its contract with haulage company Distributers plc. The
contract commenced on 1 September 20X7 and no payment has been made to date. The
annual contract fee is £200,000.

8 All of Skylar's goods come with a 12 month warranty. Management estimate that 2% of
these warranties will be exercised, and the cost of repair or replacement of these goods will
be £250,000 in total. The warranties expense should be presented in administrative
expenses.
Requirement
Prepare the statement of profit or loss for Skylar plc for the year ended 31 October 20X7 and the
Statement of profit or loss for the year ended 31 October 20X7
£'000
Revenue
Cost of sales
Gross profit
Distribution costs
Finance costs
Income tax expense
Statement of financial position at 31 October 20X7
£'000
Non-current assets
Land and buildings
Plant and equipment
Current assets
Inventories
Prepayments
Trade receivables
Total assets
Equity
Retained earnings
Borrowings
Current liabilities
Trade payables
Accruals
Income tax payable
Provision
6 Corolla plc
Corolla plc's trial balance as at 31 October 20X8 is shown below.
Debit Credit
£'000 £'000
Share capital (£1 per share) 20,000
Share premium 5,000
Land and buildings – cost 35,152
Land and buildings – accumulated depreciation at 1 November 20X7 7,000
Plant and equipment – cost 12,500
Plant and equipment – accumulated depreciation at 1 November 20X7 7,400
Accruals at 31 October 20X8 436
Cash at bank 9,774
Interest paid 600
Revenue 58,411
Purchases 41,620
Inventories as at 1 November 20X7 9,032
125,846 125,846
Further information
1 The inventories at the close of business on 31 October 20X8 were valued at £7,878,000.
2 Depreciation is to be charged for the year as follows:
Buildings 2% per annum straight-line basis
Plant and equipment 20% per annum reducing balance basis
Depreciation is apportioned as follows:
%
Cost of sales 40
Distribution costs 40
Administrative expenses 20
Land, which is non-depreciable, is included in the trial balance at a cost of £15,152,000.
3 The company began a series of television adverts for the company's range of products on
1 October 20X8 at a cost of £45,000. The adverts were to run for three months and were to
be paid for in full at the end of December 20X8. Advertising expenses are to be included in
distribution costs.
4 Interest on the bank loan for the last six months of the year has not been included in the
accounts in the trial balance.
5 The income tax charge for the year has been calculated as £970,000.
6 During the year, Corolla plc made a 1 for 4 bonus issue of equity shares. This has not been
reflected in the accounts.

7 Management have calculated that an allowance for receivables equal to 5% of the trade
receivables balance at 31 October 20X8 is required. The allowance should be charged to
8 Corolla plc paid an insurance premium for annual cover up to 30 June 20X9. Due to a
reference number error, the computerised accounting system posted the payment of
£45,000 to a trade supplier's account.
Requirement
Prepare the statement of profit or loss for Corolla plc for the year ended 31 October 20X8 and
£'000
Revenue
Cost of sales
Gross profit
Distribution costs
Finance costs
Income tax expense
£'000
Non-current assets
Land and buildings
Plant and machinery
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Retained earnings
Borrowings
Current liabilities
Trade payables
Accruals
Income tax payable
7 Ariel plc
The following trial balance was extracted from the nominal ledger of Ariel plc on 31 March 20X2.
£'000 £'000
Equity share capital (£1 per share) 5,000
Buildings – cost/value 17,630
Plant and machinery – cost/value 14,000
Buildings – accumulated depreciation 16,276
Plant and machinery – accumulated depreciation 3,600
Accruals at 31 March 20X2 129
Cash at bank 2,578
Interest paid 720
Revenue 35,547
Purchases 27,481
Inventories as at 1 April 20X1 3,790
Dividends paid 920
73,344 73,344
Further information:
1 The inventories at the close of business on 31 March 20X2 were valued at £4,067,000.
2 Depreciation has already been provided on property, plant and equipment for the year
ended 31 March 20X2.
3 On 31 March 20X2 items of plant with a cost of £12,750,000 and accumulated depreciation
of £3,100,000 were assessed to have a value of £8,500,000 in an impairment review. Any
adjustment should be included in cost of sales.
4 The company rented some office photocopiers for the period 1 March to 30 June 20X2.
The contract price for the four months was £164,000 and this was paid in full on 3 March
and is charged to administrative expenses.
5 The company sourced extra warehousing space, for the storage of goods prior to their sale,
for a period of three months from 1 February to 30 April 20X2. The invoice for the full three
months of £114,000 was paid on 16 April. No entry has been made in the accounts for this
transaction, which should be charged to distribution costs.
7 On 15 April 20X2 one of the company's customers went into liquidation. Trade receivables
at 31 March 20X2 include a balance of £95,000 owed by this customer. The directors have
been advised that they are unlikely to receive any of this amount and wish to write the debt
off as irrecoverable. Irrecoverable debts are written off to administrative expenses.
8 Ariel plc provides a warranty for certain lines of product. It is estimated that 1% of these
warranties will be invoked at a cost of £25,000.
Requirement
Prepare the statement of profit or loss for Ariel for the year ended 31 March 20X2 and the

£'000
Revenue
Cost of sales
Gross profit
Distribution costs
Finance costs
Income tax expense
£'000
Non-current assets
Buildings
Plant and machinery
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Retained earnings
Borrowings
Current liabilities
Trade payables
Accruals
Provision
Income tax payable
8 Enercell plc
The trial balance for Enercell plc as at 31 October 20X7 is shown below.
£'000 £'000
Share premium 2,500
Accruals 580
Cash at bank 11,996
Interest 1,125
Gross profit 39,539
Closing inventories 18,000
Property (freehold buildings) – cost 30,000
Property (freehold buildings) – accumulated depreciation as at
Plant and equipment – accumulated depreciation as at
151,601 151,601
Further information
1 There were no movements in non-current assets during the year. Plant and equipment is
depreciated on a 10% straight-line basis. Freehold buildings are depreciated over their
useful life of 40 years. Depreciation is charged to administrative expenses.
2 The figure for closing inventories in the trial balance is the sales value (goods are sold at a
mark-up of 25%). Inventory should be valued at cost.
3 The company paid £72,000 insurance costs in June 20X7, which covered the period from
1 July 20X7 to 30 June 20X8. This was included in administrative expenses in the trial
balance.
4 Interest on the bank loan for the last three months of the year has not been included in the
trial balance.
5 The income tax charge for the year has been calculated as £1,881,000.
6 A customer was injured by a defective product during the year and has issued proceedings
against the company. Enercell plc's legal team have advised that there is a 75% probability
that this will result in an estimated payout of £750,000. Provisions are charged to
7 Enercell plc rented additional warehouse space during the year for a period of six months,
commencing on 1 August 20X7. The rent payable is £4,000 per month, no payments have
been made to date. Rent is charged to distribution costs.
8 During the year, Enercell plc issued a 1 for 10 bonus share issue from share premium.
9 A cheque which was sent on 23 October 20X7 to a supplier for £32,000 was incorrectly
recorded as £23,000.
Requirement
Prepare the statement of profit or loss for Enercell plc for the year ended 31 October 20X7 and

£'000
Gross profit
Distribution costs
Finance costs
Income tax expense
£'000
Non-current assets
Buildings
Plant and equipment
Intangible assets
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Share premium
Retained earnings
Borrowings
Current liabilities
Trade payables
Accruals
Income tax payable
Provision
9 Liquid plc
The following trial balance was extracted from the nominal ledger of Liquid plc on
31 December 20X6:
£ £
Sales 1,590,000
Inventories at 1 January 20X6 35,000
Purchases 600,000
Irrecoverable debts expense 15,000
Loan interest paid 3,000
Land and buildings cost 975,000
£ £
Land and buildings accumulated depreciation at 1 January 20X6 178,000
Plant and equipment accumulated depreciation at 1 January 20X6 95,000
Bank 8,000
Equity share capital (£1 shares) 300,000
Bank loan 50,000
Equity dividends paid 5,000
Advance deposits from customers 4,000
2,350,000 2,350,000
The following adjustments have yet to be accounted for:

1 Inventories held at 31 December 20X6 are valued at £120,000.

Plant and equipment 10% straight-line
The cost of the land was £100,000, and all non-current assets are assumed to have zero
residual values.
There were no additions to or disposals of non-current assets during the year ended
31 December 20X6.
and equipment is charged to cost of sales.
3 At the year end, trade receivables include a balance of £13,000 which is considered
irrecoverable. The company presents irrecoverable debts as other operating expenses in
the statement of profit or loss. Management believe that an allowance for receivables of
£16,000 is required in respect of the remaining trade receivables balance.
4 Liquid plc paid rent of £20,000 on 20 December 20X6 which covers the period 1 April 20X6
to 31 March 20X7. This amount has been included in distribution costs.
5 Liquid plc's annual insurance premium for plant and equipment is £10,000 for the year
ended 31 December 20X6. Liquid paid £5,000 in respect of this on 25 November 20X6.
This payment is included in administrative expenses.
6 During the year, the company offered a 1 for 6 bonus issue to shareholders, from share
premium.
7 The bank loan was received on 1 July 20X6 and is repayable in full in five years. Interest is
charged at a fixed rate of 12% per annum.
8 Income tax for the year ended 31 December 20X6 is estimated at £45,000.
9 Liquid plc products come with a 6 month warranty. Management estimates that 5% of
warranties will be invoked, at a cost of £25,000 to Liquid plc. Provisions are charged to
other operating expenses.

Requirement
Prepare the statement of profit or loss for Liquid plc for the year ended 31 December 20X6 and
£
Revenue
Cost of sales
Gross profit
Distribution costs
Finance costs
Income tax expense
Profit/(loss) for the period
£
Non-current assets
Land and buildings
Plant and equipment
Intangible assets
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Share premium
Retained earnings
Borrowings
Current liabilities
Borrowings
Bank overdraft
Trade payables
Accruals
Deferred income
Provision
Income tax payable
10 Colbolt plc
The trial balance for Colbolt plc as at 31 March 20X7 is shown below.
£ £
Share premium 4,500
Accruals 140
Cash at bank 9,997
Interest 1,125
Gross profit 33,931
Property (freehold buildings) – cost 32,520
Property (freehold buildings) – accumulated depreciation as at
1 April 20X6 4,878
Plant and equipment – accumulated depreciation as at 1 April 20X6 31,692
147,817 147,817
Further information
1 Plant and equipment is depreciated on a 12.5% straight-line basis. Freehold buildings are
depreciated over their useful life of 40 years. Depreciation is to be charged to
2 The figure for closing inventories in the trial balance is the sales value (goods are sold at a
mark-up of 20%). Inventory should be valued at cost of sales.
3 The bank loan was taken out in 20X4, therefore a full year's interest needs to be recorded.
Interest on the bank loan for the last three months of the year has not been included in the
trial balance.
5 During the year, Colbolt plc issued a 1 for 10 bonus share issue from share premium.
6 A cheque which was sent on 23 March 20X7 to a supplier for £12 was incorrectly recorded
as £21.
7 Colbolt plc received notice on 15 April 20X7 that one of its customers, Pulse Limited, had
gone into liquidation and the debt requires to be written off as irrecoverable. This customer
owed £165 at the year end. Colbolt plc decided to create an allowance for receivables on
the remaining trade receivables balance of £4,500. Irrecoverable debts are charged to
8 Colbolt plc rents some additional office space for administrative staff. Rent is due quarterly
in advance. Colbolt plc made a payment of £30 on 28 February 20X7, and this has been
included in administrative expenses.
9 On 31 March 20X7 items of plant with a cost of £8,000 and accumulated depreciation of
£3,100 were assessed to have a value of £4,500 in an impairment review. Any adjustment
should be included in cost of sales.

Requirement
Prepare the statement of profit or loss for Colbolt plc for the year ended 31 March 20X7 and the
£
Gross profit
Distribution costs
Finance costs
Income tax expense
£
Non-current assets
Freehold buildings
Plant and equipment
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Share premium
Retained earnings
Borrowings
Current liabilities
Trade payables
Accruals
Income tax payable
11 Waterford plc
The trial balance for Waterford plc as at 31 May 20X6 is shown below.
£ £
Share premium 9,000
Trade payables 675
Accruals 567
7.5% bank loan repayable in 8 years 14,000
Cash at bank 5,678
Interest 600
Gross profit 45,998
Dividends paid 600
Property (freehold land and buildings) – cost 80,000
Property (freehold land and buildings) –
accumulated depreciation as at
1 June 20X5 7,000
Plant and equipment – accumulated
7,086
depreciation as at 1 June 20X5
Motor vehicles – cost 17,000
Motor vehicles – accumulated depreciation
5,200
as at 1 June 20X5
Suspense 17,601
180,271 180,271

Plant and equipment 15% reducing balance
Motor vehicles 25% straight-line
The cost of the land within the cost of property was £500, and all non-current assets are
assumed to have zero residual values.
There were no additions to non-current assets during the year ended 31 May 20X6.
and equipment and motor vehicles is charged to cost of sales.
2 On 1 June 20X5 motor vehicles purchased on 1 July 20X4 at a cost of £8,000 were disposed
of for £2,500. The cash received has been correctly recorded but the only other entry was to
the suspense account.
3 Income tax for the year ended 31 March 20X6 is estimated at £8,000.
4 Within the closing inventory carried at cost is an over-allocation of fixed overheads, of £78.
5 During the year, Waterford plc made a 1 for 4 bonus issue from share premium. The correct
entry to share premium has been made, but the corresponding entry was posted to the
suspense account.
6 An accrual needs to be made for the remainder of the interest expense for the year.

7 At 31 May 20X6 Waterford plc determined that £650 owing from a customer is required to
be written off as irrecoverable, and an allowance for receivables of 3% of the remaining
receivables is necessary. Irrecoverable debts are considered an administrative expense.
8 An adjustment has been made to remove £8,851 for sales made in May 20X6 for products
to be delivered in June 20X6. The correct entry has been made to the revenue account but
the corresponding entry has been posted to the suspense account.
9 On 31 May 20X6 Waterford plc paid an insurance premium for annual cover up to
31 May 20X7. The full £55 was included within administrative expenses at 31 May 20X6.
Requirement
Prepare the statement of profit or loss for Waterford plc for the year ended 31 May 20X6 and the
Statement of profit or loss for the year ended 31 May 20X6
£
Gross profit
Distribution costs
Finance costs
Income tax expense
Statement of financial position at 31 May 20X6
£
Non-current assets
Property
Plant and equipment
Motor vehicles
Current assets
Inventories
Trade receivables
Prepayments
Total assets
Equity
Share premium
Retained earnings
Borrowings
Current liabilities
Trade payables
Accruals
Deferred income
Income tax payable

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Chapter 12: Company financial statements under IFRS

The following adjustments have yet to be accounted for:

Buildings Straight-line over 50 years

118 Accounting: Question Bank ICAEW 2019

The following additional information is available.

120 Accounting: Question Bank ICAEW 2019

The following additional information is relevant.

Profit/(loss) from operations

122 Accounting: Question Bank ICAEW 2019

The following additional information is relevant.

124 Accounting: Question Bank ICAEW 2019

126 Accounting: Question Bank ICAEW 2019

128 Accounting: Question Bank ICAEW 2019

130 Accounting: Question Bank ICAEW 2019

132 Accounting: Question Bank ICAEW 2019

The following adjustments have yet to be accounted for:

Buildings Straight-line over 50 years

134 Accounting: Question Bank ICAEW 2019

136 Accounting: Question Bank ICAEW 2019

1 The company's depreciation policy is as follows:

138 Accounting: Question Bank ICAEW 2019

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