Answer question 16 and not more than one further question 16. The balances below have been extracted from the accounting records of Nelson Lid at.31 December 2020: 8% Debenture loan; repayable in 2026 2.000,000 Prepayment on building insurance 80,000 Bank account 267,000 Retained profits at 1 January 2020 2,058.000 Freehold land 2,000,000 Buildings: cost 8,000,000 X 20 Buildings: accumulated depreciation at 1 January 2,000,000 2020 Plant & machinery: cost 3,750,000 Plant & machinery: accumulated depreciation at 1 2.340,000 January 2020 Trade payables 520,000 Trade receivables 450,000 Return outwards 38.000 Inventory at 1 January 2020 238,000 Revenue 5,006.000 Purchases 3.200 000 Debenture interest 80.000 Return inwards 66,000 Provision for doubtful debts 65,000 Distribution costs 382,000 Administrative expenses 514,000 Ordinary shares of E1 each 4,500,000 Share premium 500,000 19.027,000 19,027,000 You are given the following information: Land 1 400, 000 i. The land was purchased in 2008 for $2,000,000. It was externally valued at 14,000,000 on 31 December 2020_The directors wich to include this figure in theYou are given the following information Land 1400,000 L The land was purchased in 2008 for E2 090,090, I was exformally valued at 64,000,000 on 31 December 2020. The directors wish to include this figure in the I. Inventory at 31 December 2020 cost $300,000.This includes some slow-moving iturns which cost $18,000 which would normally sell for $22 000 but which the directors have decided to soll at $14,000 to clear them. i. The company's depreciation policy is to provide a full year's depreciation in the your of acquisition and no depreciation in the your of disposal with the following rates applicable to the non-current assets: n. Frochold land - no depreciation required. b. Buildings - 2% por your on a straight-line basis. C. Plant and machinery - 10% on a reducing balance method. Iv. A bad debt of $20.000 is to be written off. The company has decided to maintain the provision for doubtful debts at 5% of remaining trade receivables. v. The prepayment on building insurance on 31 December 2020 was $100,000. v. Corporation Tax of $25,000 on the current year's profits is to be provided. An audit foo for $13,000 would also need to be provided. vi. The company issued 12.000 additional shares at C2.50 each on 30 Docomber 2020. The proceeds were paid as Christmas bonuses to employees. No entries have been made in the company's accounting records in respect of this transaction. vill. There was no movement on the debenture account in 2020. Any unpaid interest has yet to be accrued for. Required; Prepare the Statement of Financial Position and the Income Statement for the year ended 31 December 2020 for the directors. (25 marks] "The Matching Principle is the essence of financial accounting, with significant implications for the compilation of both the income statement and the statement of financial position." Discuss the statement above illustrating your discussion with the use of two examples