Examination Period 3: 2020/21
ACC200221N
Financial Reporting
Module Title
Level Five
Time Allowed Two hours and 30 minutes plus fifteen minutes
reading time
Instructions to students:
Enter your student number not your name on all answer books.
Students are encouraged to use the first fifteen minutes of the exam
to read the questions carefully and to plan answers.
Answer all questions from Section A and 1 from Section B.
The use of a calculator is permitted.
Students are not permitted to remove this examination paper from the
examination room. For all purposes the examination paper remains the
property of the University of Northampton.
No. of Pages 9
No. of Questions 5
Page 1 of 9
ACC200221N
SECTION A – Answer ALL the questions.
Question 1
Lolla Plc is a large supplier of cricket equipment based in Leicestershire.
Lolla Plc’s trial balance at 31st March 2020 was as follows:
£’s £’s
Dr Cr
Revenue 570,000
Purchases 290,600
Distribution Costs 33,500
Administrative costs 36,800
Loan Interest 1,750
Dividends Paid 2,000
Land at cost 200,000
Plant & Equipment at cost 155,500
Property at cost 100,000
Accumulated depreciation: Plant & Equipment 43,500
Accumulated depreciation: Property 25,000
Inventory at 1st April 2019 54,000
Trade receivables 63,000
Trade Payables 32,200
Bank (Overdraft) 5,500
Ordinary Shares of 25p 96,000
Share Premium 55,000
Retained Earnings at 1 April 2019 26,050
5% Loan 70,000
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ACC200221N
Current tax 3,200
Deferred tax 24,600
Goodwill 7,500
947,850 947,850
Additional information: Please use this information to prepare the
financial statements
1. Plant & equipment is depreciated at 6% per annum on a reducing balance
basis. Property is depreciated at 2% straight line method.
All depreciation of non-current assets is charged to cost of sales
2. Taxation for the year ended 31 March 2020 is estimated to be £150,000.
3. The cost of inventory at 31 March 2020 was valued at £85,000 and the
NRV was £115,000.
4. An amount of £9,000 is to be transferred from deferred tax.
5. At the beginning of the year the number of issued shares was 384,000. At
the end of the year another 200,000 ordinary shares were issued at
£0.75p per share. Due to a misunderstanding about the date of the share
issue, this has not been accounted for in the trial balance.
6. Interest on the bank loan for the last six months of the year has not been
included in the accounts in the trial balance
7. The land and property were re-valued on the 1st April 2019 as follows:
Land re-valued to £400,000.
Property re-valued to £200,000.
The directors have decided to include this revaluation into the current year
accounts
Page 3 of 9
ACC200221N
Required
in accordance with International Accounting Standards:
a) Prepare the Statement of Profit & loss & other comprehensive income for
Lolla plc for the year ended 31 March 2020 (14 marks)
b) Prepare a Statement of Financial Position of Lolla plc at the year ended 31
March 2020.
(16 marks)
c) Prepare a Statement of Changes in Equity for the year ended 31 March
2020.
(5 marks)
d) Calculate the basic earnings per share (EPS) for Lolla plc for the year
ended 31 March 2020.
(5 marks)
(Total 40
marks)
Question 2
Page 4 of 9
ACC200221N
The following are the financial statements for Hoba plc for the year ended 31 st
October 2014 and 2015
Statement of Profit & Loss for the year ended 31 October 2015
£’000
Revenue 84,000
Cost of sales 50,400
---------
Gross profit 33,600
Gain on disposal of PPE 756
Distribution costs 18,480
Administration expenses 15,120
-------
Profit from operations 756
Finance cost 420
-------
Profit before tax 336
Tax 705
--------
Loss for the period (369)
Statements of Financial Position at 31st October
2015 2014
£’000 £’000 £’000 £’000
Non current assets
Cost 78,453 66,662
Accumulated depreciation 42,670 39,772
--------- ----------
35,783 26,890
Current assets
Inventory 6,552 5,544
Trade receivables 6,720 5,880
Cash 0 13,272 476 11,900
-------- ---------- --------- --------
Total assets 49,055 38,790
====== ======
Equity and liabilities
Page 5 of 9
ACC200221N
Ordinary share capital 9,000 6,000
Share premium 4,000 2,000
Retained Earnings 23,829 36,829 24,198 32,198
--------- -------- -------- -----------
Non current liabilities
Bank loan 6,000 800
Current liabilities
Bank overdraft 481 0
Trade payables 5,040 4,536
Taxation 705 6,226 1,256 5,792
-------- --------- ------- --------
Total Equity and liabilities 49,055 38,790
====== ======
Additional information:
1. Depreciation charge for the year amounted to £2,898,000.
2. Property, plant & equipment costing £998,000 with accumulated
depreciation of £256,000 was sold in the year.
3. Dividends were not paid in the period.
4. Interest charges have been paid up to 31 October 2015
5. All sales & purchases were on credit. Other expenses were paid for in
cash.
Required:
a) Prepare the statement of cash flows for Hoba Plc for the year ended 31 st
October 2015 in accordance with International Accounting Standards.
(20 marks)
Question 3
Page 6 of 9
ACC200221N
Anthony Plc bought 80% of the share capital of Declan Ltd on 1 January 2019
when the reserves of Declan Ltd were £850,000. Anthony Plc paid £2,500,000
for this acquisition.
The following are the statements of financial positions of the two companies at
31 December 2019.
Anthony Declan
£’000 £’000
Building 2,100 500
Land 470 300
Plant 1,400 400
3,970 1,200
Investment in Declan Ltd 2,500 -
Total 6,470 1,200
Current assets
Inventory 850 530
Trade receivables 450 220
Bank - 385
Current account 40 ____
1,340 1135
7,810 2,335
Equity and liabilities
Ordinary share capital (£1 per share) 4,700 1,200
Retained profits 2,200 990
6,900 2,190
Current liabilities
Trade payables 460 120
Bank 450 -
Current account ____ 25
910 145
7,810 2,335
_____ _____
Additional information:
Page 7 of 9
ACC200221N
1. The fair values of the land and buildings of Declan Ltd at the date of
acquisition were as follows:
Buildings: An increase of £240,000 on book values
Land: An increase of £130,000 on book values
There is no impact on depreciation of these assets.
2. During the year Declan Ltd sold inventory for £200,000 to Anthony,
making £60,000 profit. One quarter of this inventory is still not sold and
is included in Anthony’s statement of financial position.
3. On 30 December 2019, Declan ltd paid £15,000 to Anthony. Anthony
received this on the 2 February 2020.
4. There is no impairment of goodwill on consolidation.
Required:
1. Prepare the statement of financial position of Anthony and subsidiary for
the year ended 31 December 2019 in accordance with International
Accounting standards.
(20 marks Total)
Page 8 of 9
ACC200221N
SECTION B - Answer one question only.
Question 4
The rules and regulations which apply to financial reporting may be collectively
referred to as the ‘regulatory framework’.
a) Explain the main components of this framework ( 5 Marks)
b) Explain what GAAP refers to and its significance in financial reporting
practices ( 5 Marks)
c) What is the roles of the IASB ( 5 Marks)
d) Explain the ‘Conceptual framework ( 5 Marks)
(Total: 20 marks)
Question 5
Flintoff Ltd is a company specialising in developing software, they have
experienced rapid growth over the last few years. As a result of this a number of
staff have been recruited including yourself as chief accountant.
Required
In order that company operates within correct financial discipline, the managing
director has asked you to write short notes for the benefit of the new staff
explaining the following areas and how they are accounted for in financial
statements (provide examples) in accordance with international accounting
standards:
a) Inventory
(4 marks)
a) Share capital account.
(4 marks)
b) Intangible assets
(4 marks)
c) Dividends
(4 marks)
d) Tangible Non current assets
(4 marks)
(Total 20 marks
END OF SECTION B
END OF PAPER
Page 9 of 9
