Question 2

MJs draft financial statements for the year ended 30 June 2020 and financial statements for the year ended 30 June 2010 are as follows: Statement of Financial Position as at 30 June Other Information Non-current assets Property, plant & equipment Deferred development expenditure Current assets (i) to (v) (vi) 2020 2019 R000 R000 5,675 4,785 170 69 5,845 4,854 95 80 190 145 95 160 380 385 6,225 5,239 910 760 665 400 600 0 2,899 1,982 5,074 5,239 Inventory Trade receivables Cash and cash equivalents Equity and liabilities Equity Share capital Share premium Revaluation reserve Retained earnings Non-current liabilities (vii) (vii) Deferred tax Long-term loans Current liabilities Trade payables Income tax Interest payable Provision for restructuring costs Provision for legal claim (ix) (viii) 410 0 250 1,500 660 1,500 60 85 321 305 5 32 0 100 105 75 491 597 6,225 5,239 Statement of comprehensive income for the year ended 30 June 2020 Revenue Cost of Sales Administration expenses and distribution costs Loss on disposal of plant Profit from operations Interest payable Profit before tax Income tax Profit after tax Other comprehensive Income Revaluation of property, net of deferred tax Total comprehensive income R000 2,300 (450) 1,850 (200) (15) 1,635 (95) 1,540 (455) 1,085 600 1,685 Other information: (i) Non-current assets property, plant and equipment, balances at 30 June 2019 were: Cost or valuation: Property 4,150 Plant 2,350 Equipment Depreciation: Property 450 Plant 1,350 Equipment Net book value 985 7,485 900 2,700 4,785 R000 R000 (ii) Equipment was purchased during the year at a cost of R275,000 and plant was purchased for R215,000. (iii) During the year MJ disposed of plant with a book value of R30,000 and accumulated depreciation of R60,000. (iv) On 1 July 2019 property was revalued to R4,500,000. At that time the average remaining life of property was 90 years. Property is depreciated on a straight line basis. (v) Depreciation for the year was R280,000 and R40,000 for plant and equipment respectively. (vi) Development expenditure incurred during the year to 30 June 2020 was R114,000. Deferred development expenditure is amortised over its useful economic life. (vii) MJ issued equity shares during the year at a premium. (viii) Provision was made by MJ for outstanding legal claims against the entity at the year end. (ix) The restructuring costs relate to a comprehensive restructuring and re-organisation of the entity that began in 2018. MJs financial statements for the year ended 30 June 2019 included a provision for restructuring costs of R100,000. Restructuring costs incurred in the year to 30 June 2020 were R160,000. No further restructuring and re-organisation costs are expected to occur. MJ treats restructuring costs as a cost of sales. Required: Prepare a statement of cash flows, for MJ for the year ended 30 June 2020 using the indirect method, in accordance with the requirements of IAS 7 Statement of Cash Flows.