LC PLC Question - Financial statements practice PDF

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Financial statements practice ...

Description

LC plc is a company listed on a stock exchange. It produces accounts under generally accepted accounting practice in conformity with IFRS and IAS. You have been provided with the following trial balance and information so that you may draft its annual financial statements for the year ending 31st December 2013.

Dr £ ‘000

Cr £ ‘000

Property at valuation Property - accumulated depreciation Plant at cost Plant – additions Plant - accumulated depreciation Equipment at cost Equipment – additions Equipment – accumulated depreciation Development costs Development costs -accumulated amortisation Inventories Trade receivables Allowance for receivables Prepaid expenses Cash and cash equivalents Trade payables Accrued expenses Ordinary share capital Share premium account Revaluation surplus Long-term loan Sales Purchases Dividend paid Administrative expenses Selling and distribution costs Interest paid on long-term loan Retained earnings at 1st January Suspense account

17,500

Totals

47,175

6,540 1,250 1,150 1,560 550 410 1,260 240 650 550 50 40 515 440 55 4,000 9,200 1,750 600 20,135 12,292 195 2,189 2,060 24 3,565 5,580 47,175

Other information: 1. The company had two properties at 1st January 2013. Property A consisted of land at a valuation of £4m and buildings at a valuation of £3.5m. There was a surplus on valuation at 31st December 2012 of £0.5m relating to this property. On 31st March 2013 this property was sold for £6.8m cash. The sales proceeds have been credited to the suspense account. Property B consisted of land at a valuation on 31st December 2012 of £5m and buildings at a valuation of £5m on the same date. The company has been able to consolidate all its activities into property B and accepted what was felt to be an unexpected but good offer for property A. Buildings are depreciated on a straight line basis at a rate of 2% per annum. Additional building expenditure on property B of £3m incurred on 31st March 2013 has been charged to suspense account. 2. Plant is depreciated using the reducing balance method at a rate of 15% on all assets at the end of the financial year. 3. Equipment is depreciated on a straight line basis at a rate of 25% per annum. 4. Additions to plant and equipment were £1.25m and £0.55m respectively and for the purpose of depreciation calculations equipment expenditure was assumed to be incurred on 30th June 2013. 5. Additional qualifying development expenditure of £220,000 was incurred during the year but has been debited to suspense account. Amortisation of development costs has been determined as £25,000 for the year ending 31st December 2013. 6. On the 30th June 2013 LC plc made a 1 for 4 bonus issue of shares using the share premium account for this purpose. No entry has been made to reflect the bonus issue. 7. On 30th September LC plc made a successful 1 for 5 rights issue at a price of £2.00. This has been credited to cash but has not otherwise been accounted for. 8. No adjustments have been made for depreciation, amortisation or for profits or losses on disposal for the year to 31st December 2013. 9. The long-term loan is repayable in full on 31st March 2015. Interest is payable on 1st July and 1st January at a rate of 8% per annum. 10. Corporation tax for the year to 31st December 2013 is estimated at £475,000 11. The allowance for receivables is to be increased to £55,000 12. A final dividend of £205,000 has been proposed for the year to 31st December 2013 13. Property was revalued at £13.15m on 31st December 2013 14. The nominal value of the ordinary shares is £1.00 each. 15. All depreciation and amortisation is charged as administrative expenses. 16. Closing inventory was £550,000.

Required: Compile financial statements consisting of a statement of profit or loss and other comprehensive income, a statement of financial position and a statement of changes in equity for LC plc for the year ended 31st December 2013 in conformity with GAAP with clear workings to support what you have done. (30 marks)...