Test Your Understanding 1

31-Mar-17

Administration expenses £ 250,000.00

Distribution Costs £ 295,000.00
Share Capital £1 £ 270,000.00
Share premium £ 80,000.00
Revaluation Surplus £ 20,000.00
Dividend paid £ 27,000.00
Cash at bank and in hand £ 3,000.00
Receivables £ 233,000.00
Interest paid £ 25,000.00
Dividends Received £ 15,000.00
Interest received £ 1,000.00

Land and Building at cost (land 380, buildings 100) £ 480,000.00

Land and building : accumulated depreciation £ 30,000.00
Plant and Machinery at cost £ 400,000.00
Plant and Machinery: accumulated depreciation £ 170,000.00
Retained earnings account (at 1 April 2016) £ 235,000.00
Purchases £ 1,260,000.00
Sales £ 2,165,000.00
Inventory at 1 April 2016 £ 140,000.00
Trade payables £ 27,000.00
Bank Loan £ 100,000.00
£ 3,113,000.00 £ 3,113,000.00

Statement of P&L £ £
Revenue 2,165,000.00
Cost of Sales 1,389,000.00
Gross profit 776,000.00
Distribution costs 295,000.00
Administrative expenses 250,000.00
Profit from operations 231,000.00
Finance costs 25,000.00
Investment income 16,000.00
Profit before tax 222,000.00
Income tax expense 165,000.00
Profit for the year 57,000.00
Other comprehensive income 0.00
Total comprehensive income 57,000.00
Inventory £ 80,000.00 Goods £ 15,000.00
Goods £ 15,000.00 Sold -£ 5,500.00
Total £ 95,000.00 Commission £ 500.00

Depreciation for Buildings £ 5,000.00

Carrying amount P&M £ 230,000.00
Depreciation for P&M £ 69,000.00
Total Depreciation £ 74,000.00

Land Revaluation £ 480,000.00

Income Tax £ 165,000.00

Inventory £ 1,389,000.00

Share Capital Share Premium Revaluation reserve Retained earnings

Friday, April 1, 2016 270,000.00 80,000.00 20,000.00 235,000.00
Prior year adjustment 0.00
Restated balance 0.00 0.00 0.00 0.00
Total comprehensive income 100,000.00 57,000.00
Issue of share capital 0.00 0.00
Dividends (27,000.00)
Transfer to retained earnings 0.00 0.00
Friday, March 31, 2017 270,000.00 80,000.00 120,000.00 265,000.00
Total Equity Statement of financial position £
605,000.00 Assets
0.00 Non-current assets
0.00 Property, plant, & equipment 706,000.00
157,000.00 Intangible assets 0.00
0.00 Investments 0.00
(27,000.00) Subtotal 706,000.00
0.00 Current assets
735,000.00 Inventory 85,000.00
Trade and other receivables 233,000.00
Cash and cash equivalents 3,000.00
Subtotal 321,000.00
Total 1,027,000.00
Equity
Ordinary share capital 270,000.00
Share premium 80,000.00
Retained earnings 265,000.00
Revaluation surplus 120,000.00
Subtotal 735,000.00
Non-current liabilities
Loan notes/redeemable preferen 100,000.00
Lease liabilities 0.00
Deferred taxation 0.00
Subtotal 100,000.00
Current liabilities
Trade and other payables 27,000.00
Taxation 165,000.00
Lease liabilities 0.00
Bank overdraft 0.00
Subtotal 192,000.00
Total 1,027,000.00
Test Your Understanding 2

31-Mar-11

Administration expenses £ 490,000.00

Distribution Costs £ 370,000.00
Share Capital £1 £ 1,500,000.00
Share premium £ 800,000.00
Revaluation Surplus £ -
Dividend paid £ 390,000.00
Cash at bank and in hand £ 12,000.00
Receivables £ 418,000.00
Interest paid £ 190,000.00
Dividends Received £ 210,000.00
Short Term investments £ 2,700,000.00
Prepayments £ 25,000.00
PPE £ 4,250,000.00
Plant and Machinery at cost £ -
Plant and Machinery: accumulated depreciation £ -
Retained earnings account (at 31 March 2010) £ 1,163,000.00
Cost of Sales £ 1,350,000.00
Revenue £ 5,300,000.00
Inventory at 31 March 2011 £ 114,000.00
Trade payables £ 136,000.00
Bank Loan (payable 2019) £ 1,200,000.00
£ 10,309,000.00 £ 10,309,000.00

Statement of P&L £ £
Revenue 5,300,000.00
Cost of Sales 1,350,000.00
Gross profit 3,950,000.00
Distribution costs 370,000.00
Administrative expenses 490,000.00
Profit from operations 3,090,000.00
Finance costs 190,000.00
Investment income 210,000.00
Profit before tax 3,110,000.00
Income tax expense 470,000.00
Profit for the year 2,640,000.00
Other comprehensive income 0.00
Total comprehensive income 2,640,000.00
Inventory £ 80,000.00 Goods £ 15,000.00
Goods £ 15,000.00 Sold -£ 5,500.00
Total £ 95,000.00 Commission £ 500.00

Depreciation for Buildings £ 5,000.00

Carrying amount P&M £ -
Depreciation for P&M £ -
Total Depreciation £ 5,000.00

Land Revaluation £ 480,000.00

Income Tax £ 165,000.00

Inventory £ 1,384,000.00

Share Capital Share Premium Revaluation reserve Retained earnings

Thursday, April 1, 2010 1,500,000.00 800,000.00 0.00 1,163,000.00
Prior year adjustment 0.00
Restated balance 0.00 0.00 0.00 0.00
Total comprehensive income 0.00 2,640,000.00
Issue of share capital 0.00 0.00
Dividends (390,000.00)
Transfer to retained earnings 0.00 0.00
Thursday, March 31, 2011 1,500,000.00 800,000.00 0.00 3,413,000.00
Total Equity Statement of financial position £
3,463,000.00 Assets
0.00 Non-current assets
0.00 Property, plant, & equipment 4,250,000.00
2,640,000.00 Intangible assets 0.00
0.00 Investments 2,700,000.00
(390,000.00) Subtotal 6,950,000.00
0.00 Current assets
5,713,000.00 Inventory 114,000.00
Trade and other receivables 443,000.00
Cash and cash equivalents 12,000.00
Subtotal 569,000.00
Total 7,519,000.00
Equity
Ordinary share capital 1,500,000.00
Share premium 800,000.00
Retained earnings 3,413,000.00
Revaluation surplus 0.00
Subtotal 5,713,000.00
Non-current liabilities
Loan notes/redeemable preferen1,200,000.00
Lease liabilities 0.00
Deferred taxation 0.00
Subtotal 1,200,000.00
Current liabilities
Trade and other payables 136,000.00
Taxation 470,000.00
Lease liabilities 0.00
Bank overdraft 0.00
Subtotal 606,000.00
Total 7,519,000.00
Purchase of land £ 250,000,000.00 £ 250,000,000.00
Stamp Duty £ 5,000,000.00 £ 5,000,000.00
Legal Fees £ 10,000,000.00 £ 10,000,000.00
Site preparation and clearance £ 18,000,000.00 £ 18,000,000.00
Materials £ 100,000,000.00 -£25,000,000.00 £ 75,000,000.00
Labour (period 1 April 2017 to 1 July 2018) £ 150,000,000.00 -£ 9,000,000.00 £ 141,000,000.00
Architect's fees £ 20,000,000.00 £ 20,000,000.00
General overheads £ 30,000,000.00 -£30,000,000.00 £ -
£ 583,000,000.00 £ 519,000,000.00

Completed on 1st July 2018

Occumpied on 1st Septemeber 2018
 Sunday, April 1, 2018
Fair Value £ 100,000.00 20 Years
Revaluation Surplus £ 20,000.00
Sunday, March 31, 2019
Fair Value £ 86,000.00 20 years
P&L
Depreciation -£ 5,000.00
Revaluation Loss/Comprehensive Income -£ 9,000.00
Financial Position
Property (at Valuation) £ 86,000.00
Equity
Revaluation surplus £ 11,000.00
Changes in equity
Balance at 1 April 2018 £ 20,000.00
Revaluation surplus -£ 9,000.00
Balance at 31 March 2019 £ 11,000.00
 Saturday, April 1, 2000
Fair Value Property £ 24,000,000.00 40 Years
Fair Value Land £ 6,000,000.00
Revaluation Surplus £ -
Thursday, April 1, 2010
Fair Value Property £ 45,000,000.00 30 Years
Fair Value Land £ 15,000,000.00
P&L
Annual Transfer £ 900,000.00
New Depreciation -£ 1,500,000.00
Old Depreciation -£ 600,000.00
Acumulated Depreciation -£ 6,000,000.00
Revaluation Loss/Comprehensive Income £ 36,000,000.00
Financial Position
Property (at Valuation) £ 58,500,000.00
Equity
Revaluation surplus £ 35,100,000.00
Changes in equity
Balance at 1 April 2010 £ -
Revaluation surplus £ 36,000,000.00
Balance at 31 March 2019 £ 35,100,000.00
 Thursday, January 1, 2004
Fair Value Property £ 750,000.00 10 Years
Fair Value Land £ -
Revaluation Surplus £ -
Friday, December 31, 2004
Fair Value Property £ 810,000.00 9 Years
Fair Value Land £ -
Revaluation Surplus £ 135,000.00
Sunday, December 31, 2006
Fair Value Property £ 900,000.00 7 Years
Fair Value Land £ -
Revaluation Surplus £ 405,000.00
P&L
Annual Transfer £ 53,571.43
New Depreciation -£ 128,571.43
Second Depreciation -£ 90,000.00
First Depreciation -£ 75,000.00
Acumulated Depreciation -£ 226,027.40
Revaluation Loss/Comprehensive Income £ 376,027.40
Financial Position
Property (at Valuation) £ 771,428.57
Equity
Revaluation surplus £ 322,455.97
Changes in equity
Balance at 1 April 2010 £ -
Revaluation surplus £ 376,027.40
Balance at 31 March 2019 £ 322,455.97
Grant £ 15,000.00
Equipment £ 100,000.00
Method 1
P&L
20% £ 17,000.00
Financial Position
PPE £ 85,000.00
Accumulated Depreciation £ 17,000.00
Method 2 £ 20,000.00
Defer £ 3,000.00
P&L
Depreciation £ 20,000.00
Financial Position
PPE £ 100,000.00
Accumulated Depreciation £ 20,000.00
Non-Current liabilities £ 9,000.00
Current Liabilities £ 3,000.00
 Monday, January 1, 2018
Loan £ 18,000,000.00
Loan invested £ 6,000,000.00
Interest received -£ 50,000.00 2%
Loan used on building £ 12,000,000.00
Interest for until 31st May 2018 £ 150,000.00 5%
Interest unitl 31 December 2018 £ 525,000.00
Total building interest £ 675,000.00
Interest capitalised -£ 30,000.00
Total Capitilised interest £ 645,000.00
P&L -£ 20,000.00
P&l -£ 150,000.00
 Thursday, January 1, 2015
Site £ 25,000,000.00 40 years
Construction £ 9,000,000.00
Fixtures and fittings £ 6,000,000.00

Loan £ 40,000,000.00
Interest £ 4,000,000.00 10%
Capitalised £ 3,000,000.00
PPE £ 15,000,000.00
Depreciation -£ 625,000.00
£ 43,000,000.00
 Monday, January 1, 2001
Building £ 600,000.00 50 Years
Land £ 400,000.00
Depreciation -£ 12,000.00
Carrying Amount £ 588,000.00
Revaluation Surplus £ 112,000.00
Comprehensive Income £ 100,000.00
 Monday, September 30, 2013
Construction £ 10,000,000.00
Monday, October 1, 2012
Loan £ 10,000,000.00 6%
Interest Capitalised £ 550,000.00
Saturday, August 31, 2013
Loan invested £ 3,000,000.00 4%
Interest Received -£ 40,000.00

P&L £ 50,000.00
1b
2a c
3d
4b
5a
6 215000
7b c
8e
e
c
e
£ 500,000.00
£ 200,000.00
£ 460,000.00
£ 200,000.00
Test Your Understanding 4

30-Jun-17

Revenue £ 390,000.00
Cost of sales £ 210,600.00
Distribution costs £ 6,800.00
Administration expenses £ 12,700.00
Loan interest £ 3,600.00
Property - cost £ 150,000.00
Property - depreciation at 1 July 2016 £ 38,400.00
Plant and equipment - cost £ 176,200.00
Plant and equipment - depreciation at 1 July 2016 £ 48,600.00
Trade receivables £ 31,600.00
Inventory - 30 June 2017 £ 18,100.00
Bank £ 1,950.00
Trade payables £ 25,400.00
Ordinary shares $1 £ 50,000.00
Share premium £ 9,000.00
12% Loan note (issued 1 July 2016) £ 40,000.00
Taxation £ 1,300.00
Retained earnings at 1 July 2016 £ 11,450.00
£ 612,850.00 £ 612,850.00

Statement of P&L £ £
Revenue 390,000.00
Cost of Sales 253,920.00
Gross profit 136,080.00
Distribution costs 6,800.00
Administrative expenses 12,700.00
Profit from operations 116,580.00
Finance costs 4,800.00
Investment income
Profit before tax 111,780.00
Income tax expense 7,800.00
Profit for the year 103,980.00
Other comprehensive income
Total comprehensive income 103,980.00
Inventory Goods
Goods Sold
Total Commission

Depreciation for Buildings £ 43,200.00 £ 4,800.00 Carrying amount 44800

Carrying amount P&M 80% 35840
Depreciation for P&M £ 74,120.00 £ 25,520.00 -2160
Total Depreciation £ 117,320.00 -2100
-580
31000
Land Revaluation Repair machine 31800
Impairment 13000
Income Tax £ 6,500.00

Inventory

Share Capital Share Premium Revaluation reserve Retained earnings

Friday, July 1, 2016 50,000.00 9,000.00 0.00 11,450.00
Prior year adjustment 0.00
Restated balance 0.00 0.00 0.00 0.00
Total comprehensive income 0.00 103,980.00
Issue of share capital 0.00 0.00
Dividends
Transfer to retained earnings 0.00 0.00
Friday, June 30, 2017 50,000.00 9,000.00 0.00 115,430.00
Total Equity Statement of financial position £
70,450.00 Assets
0.00 Non-current assets
0.00 Property, plant, & equipment 195,880.00
103,980.00 Intangible assets 0.00
0.00 Investments 0.00
0.00 Subtotal 195,880.00
0.00 Current assets
174,430.00 Inventory 18,100.00
Trade and other receivables 31,600.00
Cash and cash equivalents 1,950.00
Subtotal 51,650.00
Total 247,530.00
Equity
Ordinary share capital 50,000.00
Share premium 9,000.00
Retained earnings 115,430.00
Revaluation surplus 0.00
Subtotal 174,430.00
Non-current liabilities
Loan notes/redeemable preferen 40,000.00
Lease liabilities 0.00
Deferred taxation 0.00
Subtotal 40,000.00
Current liabilities
Trade and other payables 25,400.00
Taxation 6,500.00
Lease liabilities 1,200.00
Bank overdraft 0.00
Subtotal 33,100.00
Total 247,530.00
Godwill £ 25,000,000.00
Intangibles £ 60,000,000.00 £ 10,000,000.00 £ 50,000,000.00
PPE £ 30,000,000.00 £ 5,000,000.00 £ 25,000,000.00
Inventory £ 15,000,000.00
Trade Receivables £ 10,000,000.00
£ 140,000,000.00

Recoverable Amoun£ 100,000,000.00

Impairment £ 40,000,000.00
Minus Godwill £ 15,000,000.00
 ###
Stamping Machine £ 20,000.00 10 Years
Depreciation to Sep-13 -£ 5,500.00
###
Carrying Amount £ 14,500.00
Fair value £ 13,000.00
Imapirment -£ 1,500.00
PPE £ 13,000.00
 Saturday, January 1, 2011
Stamping Machine £ 20,000.00 10 Years
Depreciation to Sep-13 -£ 5,500.00
Monday, September 30, 2013
Carrying Amount £ 14,500.00
Fair value £ 13,000.00
Imapirment -£ 1,500.00
PPE £ 13,000.00

Statement of P&L £ £ Cards Roses

Revenue 970,000.00 £ 650,000.00 £ 320,000.00 £ 76,000.00
Cost of Sales 546,000.00 £ 320,000.00 £ 226,000.00 £ 37,000.00
Gross profit 424,000.00 £ 98,000.00
Distribution costs 150,000.00 £ 60,000.00 £ 90,000.00
Administrative expenses 365,000.00 £ 120,000.00 £ 245,000.00
Profit from operations (91,000.00)
Finance costs 17,000.00
Investment income
Profit before tax ###
Income tax expense 31,000.00
Profit for the year ###
Other comprehensive income
Total comprehensive income ###
Continued 2016

Statement of P&L £ £ Internet Car Hire

Revenue 25,000,000.00 £ 23,000,000.00 £ 2,000,000.00
Cost of Sales 19,500,000.00 £ 18,000,000.00 £ 1,500,000.00
Gross profit 5,500,000.00
Distribution costs 1,100,000.00 £ 1,000,000.00 £ 100,000.00
Administrative expenses 0.00 £ - £ -
Profit from operations 4,400,000.00
Finance costs 0.00
Investment income
Profit before tax 4,400,000.00
Income tax expense 0.00
Profit for the year 4,400,000.00
Other comprehensive income
Total comprehensive income 4,400,000.00

Discontinued 2016

Statement of P&L £ £
Revenue 14,000,000.00
Cost of Sales 16,500,000.00
Gross profit (2,500,000.00)
Distribution costs 1,500,000.00
Administrative expenses 0.00
Profit from operations (4,000,000.00)
Finance costs 0.00
Investment income
Profit before tax (4,000,000.00)
Income tax expense 0.00
Profit for the year (4,000,000.00)
Other comprehensive income
Total comprehensive income (4,000,000.00)
Total 2016 Total 2015

Statement of P&L £ £ Statement of P&L

Revenue 39,000,000.00 Revenue
Cost of Sales 36,000,000.00 Cost of Sales
Gross profit 3,000,000.00 Gross profit
Distribution costs 2,600,000.00 Distribution costs
Administrative expenses 0.00 Administrative expenses
Profit from operations 400,000.00 Profit from operations
Finance costs 0.00 Finance costs
Investment income Investment income
Profit before tax 400,000.00 Profit before tax
Income tax expense 0.00 Income tax expense
Profit for the year 400,000.00 Profit for the year
Other comprehensive income Other comprehensive income
Total comprehensive income 400,000.00 Total comprehensive income

Total 2015 minus Agency Discontinued 2015

Statement of P&L £ £ Statement of P&L

Revenue 22,000,000.00 Revenue
Cost of Sales 17,000,000.00 Cost of Sales
Gross profit 5,000,000.00 Gross profit
Distribution costs 500,000.00 Distribution costs
Administrative expenses 0.00 Administrative expenses
Profit from operations 4,500,000.00 Profit from operations
Finance costs 0.00 Finance costs
Investment income Investment income
Profit before tax 4,500,000.00 Profit before tax
Income tax expense 0.00 Income tax expense
Profit for the year 4,500,000.00 Profit for the year
Other comprehensive income Other comprehensive income
Total comprehensive income 4,500,000.00 Total comprehensive income
£ £
40,000,000.00
32,000,000.00
8,000,000.00
2,000,000.00
0.00
6,000,000.00
0.00

6,000,000.00
0.00
6,000,000.00

6,000,000.00

£ £
18,000,000.00
15,000,000.00
3,000,000.00
1,500,000.00
0.00
1,500,000.00
0.00

1,500,000.00
0.00
1,500,000.00

1,500,000.00
1A B
2A
3D
4 25000
5B
6 155000
1B 1C
2D 2B
3A 3 Faith Relevance Relevance Faith
4C 4N
5
6
7
5% £ 20,000.00 4 Years Effective rate 5%
Balance Finance Costs Cash Paid Closing
1 £ 20,000.00 £ 1,000.00 -£ 1,000.00 £ 20,000.00
2 £ 20,000.00 £ 1,000.00 -£ 1,000.00 £ 20,000.00
3 £ 20,000.00 £ 1,000.00 -£ 1,000.00 £ 20,000.00
4 £ 20,000.00 £ 1,000.00 -£ 1,000.00 £ 20,000.00

0% £ 40,000.00 3 Years Effective rate 9%

Balance Finance Costs Cash Paid Closing
1 £ 40,000.00 £ 3,600.00 £ - £ 43,600.00
2 £ 43,600.00 £ 3,924.00 £ - £ 47,524.00
3 £ 47,524.00 £ 4,277.16 £ - £ 51,801.16
£ 51,801.16
4% £ 18,966.00 5 Years Effective rate 7%
Balance Finance Costs Cash Paid Closing
1 £ 18,966.00 £ 1,327.62 -£ 800.00 £ 19,493.62
2 £ 19,493.62 £ 1,364.55 -£ 779.74 £ 20,078.43
3 £ 20,078.43 £ 1,405.49 -£ 803.14 £ 20,680.78
4 £ 20,680.78 £ 1,447.65 -£ 827.23 £ 21,301.20
5 £ 21,301.20 £ 1,491.08 -£ 852.05 £ 21,940.24
£ 21,940.24
2% £ 36,000.00 3 Years Effective rate
Balance Finance Costs Cash Flow Discount Factor Closing
1 £36,000 £3,276 £720 0.92 £662
2 £662 £60 £720 0.84 £605
3 £605 £55 £36,720 0.77 £28,274
CR Financial Liability £29,542
CR Equity £6,458

Balance Finance Costs Cash Flow Closing

1 £29,542 £2,688 -£720 £31,510
2 £31,510 £2,867 -£720 £33,657
3 £33,657 £3,063 -£720 £36,000
£101,167
9.1%
 4% £ 5,000,000.00 3
Cash Flow Discount Factor Closing
1 £200,000 0.94 £188,000
2 £200,000 0.89 £178,000
3 £5,200,000 0.84 £4,368,000
CR Financial Liability £4,734,000
CR Equity £266,000

Balance Finance Costs Cash Flow Closing

1 £4,734,000 £284,040 -£200,000 £4,818,040
2 £4,818,040 £289,082 -£200,000 £4,907,122
3 £4,907,122 £294,427 -£200,000 £5,001,550
£14,726,712

P&L
1 2 3
Finance Costs £284,040 £289,082 £294,427

Financial Position
1 2 3
Equity £266,000 £266,000 £266,000
Non-Current Liabilities £4,818,040 £4,907,122
Current Liabilities £5,001,550
Years Effective rate 6.0%
 4% £ 5,000,000.00 3
Cash Flow Discount Factor Closing
1 £200,000 0.94 £188,000
2 £200,000 0.89 £178,000
3 £5,200,000 0.84 £4,368,000
CR Financial Liability £4,734,000
CR Equity £266,000

Balance Finance Costs Cash Flow Closing

1 £4,734,000 £284,040 -£200,000 £4,818,040
2 £4,818,040 £289,082 -£200,000 £4,907,122
3 £4,907,122 £294,427 -£200,000 £5,001,550
£14,726,712

P&L
1 2 3
Finance Costs £284,040 £289,082 £294,427

Financial Position
1 2 3
Equity £266,000 £266,000 £266,000
Non-Current Liabilities £4,818,040 £4,907,122
Current Liabilities £5,001,550
Years Effective rate 6.0%
10% £ 5,000.00 3 Years Effective rate 12%
Balance Finance Costs Cash Paid Closing
1 5,000 600 (500) 5,100
2 5,100 612 (500) 5,212
3 5,212 625 (500) 5,337