Question:

explain the appropriate financial reporting treatment making reference to relevant accounting standards; and

set out the accounting adjustments required to correct the financial statements for Metalwise plc for the year ended 31 December 2020.

Draft summary statement of comprehensive income for the year ended 31 December 2020- Et ttttt ttttt tt :39.739 000 Revenue 617,000 Cost of sales- (450,000) Gross profit 167,000 Operating expenses See Exhibit 3e_(120,761) Operating profite 46,239 Finance costs (6,500) Profit before tax 39,739 Income tax expense (To be completed) Profit for the year 39,739 Other comprehensive income (To be completed) Total comprehensive income e Draft statement of financial position as at 31 December 2020- 000 ASSETS Non-current assets Property, plant and equipment (Exhibit 3 Issue 1) 100,000- Intangible 10,000 Investment (Exhibit 3 Issue 2) 118,000 Current assets Inventoriese Trade receivables 35,035 Financial assete Cash and cash equivalents 8,322 136,46920 Total assets 254,469 :93,062 tttt 100,000 100,000 q :65,339 - EQUITY AND LIABILITIES Share capital and share premium Retained earnings Other reserves 2 Long-term liabilities Long-term bank borrowingse Deferred tax - Balance at 1 January 2020 (Exhibit 3 Issue 3) ttttttt - 165,339 :35,010 16,000- 51,010 ee Current liabilities Trade and other payables- Current tax payable (Exhibit 3 Issue 3) 38,020 100 100- 38,120- 254.4699 Total equity and liabilities Advance information - Issue 1 Revaluation of Land Included in the balance for PPE is a plot of land. The land has been revalued at 31 December 2020 to 30 million. The directors have decided to include this revaluation of land in the statement of financial position but I have not put through the journal entries to recognise the revaluation. + Additional information The cost of the land included in the PPE on the statement of financial position at 31 December 2020 is 20 million. In the tax jurisdiction where Metalwise operates, gains on land are taxed when the land is sold in the future period