Below is the trial balance for Haveit Co at 31 December 2020: Convertible loan notes (note())...

  

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Below is the trial balance for Haveit Co at 31 December 2020: Convertible loan notes (note()) Cost incurred on contract to date (note (i)) Cash received from contract customer (note (*)) Ordinary shares SAR1 at 1 January 2020 Share premium at 1 January 2020 Revaluation surplus at 1 January 2020 (note()) Property-carrying amount 1 January 2020 (note()) Retained earnings at 1 January 2020 Draft profit for the year ended 31 December 2020 Dividends paid Inventories (note (iv)) Trade receivables Cash Current liabilities End of year 1 End of year 2 End of year 3 6% 8.5% 0943 0922 SAR'000 SAR'000 4,000 0.890 0849 0.840 0.783 950 9,000 1,810 2.155 2,755 5.160 21,830 700 10,000 1,500 400 The following notes are relevant (i) Haveit Co issued 40,000 short-term bridge facility loan notes SAR100 on 1 January 2020. The interest rate on the loan is 6%. The loan notes can be converted to equity shares on 31 December 2022 or redeemed at par on the same date. An equivalent loan without the conversion rights would have required interest of 8.5%. Interest is payable annually in arrears on 31 December each year. The annual payment has been included in finance costs for the year. The present value of one Saudi Riyal (SAR1) receivable at the end of each year, based on discount rates of 6% and 8.5%, are: 3,135 1,125 970 21,830 (ii) Haveit Co entered into a 7.9 million Saudi riyals contract to construct a building for a customer. The company began the work with satisfying the performance obligation during 2020. The costs to date of SAR950 are included in the above trial balance. Costs to complete the contract are estimated at SAR7.1m. At 31 December 2020, the contract is estimated to be 40% complete. To date. Haveit Co has received SAR700 from the customer and this is shown in the above trial balance. (i) Haveit Co's property had previously been revalued upwards, leading to the balance on the revaluation surplus at 1 January 2020. The property had a remaining life of 25 years at 1 January 2020. At 31 December 2020, the property was valued at SAR8m. No entries have yet been made to account for the current year's depreciation charge or the property valuation at 31 December 2020. Haveit Co does not make an annual transfer from the revaluation surplus in respect of excess depreciation. (iv) It has been discovered that inventory totalling SARO 939m had been omitted from the final inventory count in the above trial balance. Required: Calculate the adjusted profit for Haveit Co for the year ended 31 December 2020, Show the working of your answers. Below is the trial balance for Haveit Co at 31 December 2020: Convertible loan notes (note()) Cost incurred on contract to date (note (i)) Cash received from contract customer (note (*)) Ordinary shares SAR1 at 1 January 2020 Share premium at 1 January 2020 Revaluation surplus at 1 January 2020 (note()) Property-carrying amount 1 January 2020 (note()) Retained earnings at 1 January 2020 Draft profit for the year ended 31 December 2020 Dividends paid Inventories (note (iv)) Trade receivables Cash Current liabilities End of year 1 End of year 2 End of year 3 6% 8.5% 0943 0922 SAR'000 SAR'000 4,000 0.890 0849 0.840 0.783 950 9,000 1,810 2.155 2,755 5.160 21,830 700 10,000 1,500 400 The following notes are relevant (i) Haveit Co issued 40,000 short-term bridge facility loan notes SAR100 on 1 January 2020. The interest rate on the loan is 6%. The loan notes can be converted to equity shares on 31 December 2022 or redeemed at par on the same date. An equivalent loan without the conversion rights would have required interest of 8.5%. Interest is payable annually in arrears on 31 December each year. The annual payment has been included in finance costs for the year. The present value of one Saudi Riyal (SAR1) receivable at the end of each year, based on discount rates of 6% and 8.5%, are: 3,135 1,125 970 21,830 (ii) Haveit Co entered into a 7.9 million Saudi riyals contract to construct a building for a customer. The company began the work with satisfying the performance obligation during 2020. The costs to date of SAR950 are included in the above trial balance. Costs to complete the contract are estimated at SAR7.1m. At 31 December 2020, the contract is estimated to be 40% complete. To date. Haveit Co has received SAR700 from the customer and this is shown in the above trial balance. (i) Haveit Co's property had previously been revalued upwards, leading to the balance on the revaluation surplus at 1 January 2020. The property had a remaining life of 25 years at 1 January 2020. At 31 December 2020, the property was valued at SAR8m. No entries have yet been made to account for the current year's depreciation charge or the property valuation at 31 December 2020. Haveit Co does not make an annual transfer from the revaluation surplus in respect of excess depreciation. (iv) It has been discovered that inventory totalling SARO 939m had been omitted from the final inventory count in the above trial balance. Required: Calculate the adjusted profit for Haveit Co for the year ended 31 December 2020, Show the working of your answers.

Answer rating: 100% (QA)

To calculate the adjusted profit for Havet Co for the year ended 31 December 2020 we need to make several adjustments based on the information provided Lets go through each adjustment step by step 1 C... View the full answer