Minster is a public limited company. Following are the details of its financial statements for the year
Question:
Minster is a public limited company. Following are the details of its financial statements for the year ended 30 September 20X6.
i) Included in PPE is a coal mine ans related plant that Minster purchased on 1 October 20X5. Legislation requires that in ten years’ time (estimated life of mine) Minster will have to landscape the affected area. The future costs of this has been estimated and discounted at a rate of 8% to a present value of $150,000. This cost has been included in the carrying amount of the mine. $150,000 added with unwinding of the discount has been treated as provision for the year end. The unwinding of the discount is already included in the finance costs in the Statement of Profit/Loss.
Other land was revalued upward by $35,000 during the year.
Depreciation of property, plant and equipment for the year was $255,000.
There were no disposals.
The software was purchased on 1 April 20X6 for $180,000.
ii) On 1 April 20X6, there was a bonus issue of equity shares of one for every four held, utilizing the share premium. A further cash share issue was made on 1 June 20X6. No shares were redeemed during the year.
iii) A dividend of 5 cents per share was paid on 1 July 20X6.
a. Prepare a statement of cash flows for Minster for the year to 30 September 20X6 in accordance with IAS 7.
b. Comment on Minster’s cash flows.
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates