Alpaca plc's trial balance at 31 December 2020 is as follows: Land at cost 750,000 900,000...

 

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Alpaca plc's trial balance at 31 December 2020 is as follows: Land at cost 750,000 900,000 Buildings at cost Accumulated depreciation: buildings Machinery and equipment at cost Accumulated depreciation: machinery and equipment Ordinary shares of £1 Share premium Retained earnings at 1 January 2020 Trade payables Provision for doubtful debts at 1 January 2020 180,000 592,200 317,200 240,000 225,000 771,990 363,870 4,610 31,170 360,000 2,994,930 Bank 9% debentures Sales Inventory at 1 January 2020 Trade receivables 262,560 214,500 1,411,980 175,200 307,200 430,320 321,150 18,660 105,000 5,488,770 Purchase Directors' remuneration Wages and salaries General administrative costs General distribution costs Interest paid Dividends paid 5,488,770 The following information is also available: On 31 December 2020 Alpaca plc has its land professionally revalued at £840,000 and buildings revalued at £750,000. The directors of Alpaca plc decided that the revaluations should be incorporated into the financial i. statements for the year ended 31 December 2020. ii. The buildings are depreciated at 5 percent per annum using the straight-line method (no residual value). Depreciation for machinery and equipment is 25 percent per annum on the reducing balance basis (no residual value). The buildings are used for administrative and distribution functions in the ratio 7:3, while the machinery and equipment are used for production function only. The cost of inventory at 31 December 2020 is £294,840. iii. iv. Trade receivables include bad debts of £6,000, which should be written off. The provision of doubtful debts is to be provided at 2 percent of the trade receivables. Bad debts expenses are to be treated as administrative costs. A new machine, with a useful life of four years, was purchased at £80,000 during the year and has been included in the trial balance. Government grant of £20,000 was received before the year end in respect of the machine and transaction has not been account for in the trial balance. Alpaca plc is to use V. deferred income method to recognise government grants related to assets. Half of the debenture interest for the year has not yet been accounted for. Wages and salaries should be split equally between administrative and vi. vii. distribution costs. Directors' remuneration is to be treated as administrative costs. viii. The taxation for the year is estimated to be £60,000, due on 1 April 2021. Required: a) In respect of the year ended 31 December 2020, prepare the Statement of Comprehensive Income (using format 1) and the Statement of Financial Position for Alpaca plc, in accordance with International Financial Reporting Standards. b) Explain what additional information is provided by the notes, as part of the financial statements, to satisfy users' needs. Alpaca plc's trial balance at 31 December 2020 is as follows: Land at cost 750,000 900,000 Buildings at cost Accumulated depreciation: buildings Machinery and equipment at cost Accumulated depreciation: machinery and equipment Ordinary shares of £1 Share premium Retained earnings at 1 January 2020 Trade payables Provision for doubtful debts at 1 January 2020 180,000 592,200 317,200 240,000 225,000 771,990 363,870 4,610 31,170 360,000 2,994,930 Bank 9% debentures Sales Inventory at 1 January 2020 Trade receivables 262,560 214,500 1,411,980 175,200 307,200 430,320 321,150 18,660 105,000 5,488,770 Purchase Directors' remuneration Wages and salaries General administrative costs General distribution costs Interest paid Dividends paid 5,488,770 The following information is also available: On 31 December 2020 Alpaca plc has its land professionally revalued at £840,000 and buildings revalued at £750,000. The directors of Alpaca plc decided that the revaluations should be incorporated into the financial i. statements for the year ended 31 December 2020. ii. The buildings are depreciated at 5 percent per annum using the straight-line method (no residual value). Depreciation for machinery and equipment is 25 percent per annum on the reducing balance basis (no residual value). The buildings are used for administrative and distribution functions in the ratio 7:3, while the machinery and equipment are used for production function only. The cost of inventory at 31 December 2020 is £294,840. iii. iv. Trade receivables include bad debts of £6,000, which should be written off. The provision of doubtful debts is to be provided at 2 percent of the trade receivables. Bad debts expenses are to be treated as administrative costs. A new machine, with a useful life of four years, was purchased at £80,000 during the year and has been included in the trial balance. Government grant of £20,000 was received before the year end in respect of the machine and transaction has not been account for in the trial balance. Alpaca plc is to use V. deferred income method to recognise government grants related to assets. Half of the debenture interest for the year has not yet been accounted for. Wages and salaries should be split equally between administrative and vi. vii. distribution costs. Directors' remuneration is to be treated as administrative costs. viii. The taxation for the year is estimated to be £60,000, due on 1 April 2021. Required: a) In respect of the year ended 31 December 2020, prepare the Statement of Comprehensive Income (using format 1) and the Statement of Financial Position for Alpaca plc, in accordance with International Financial Reporting Standards. b) Explain what additional information is provided by the notes, as part of the financial statements, to satisfy users' needs.

Answer rating: 100% (QA)

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