The following trial balance relates to Dublin Inc as at December 31, 2016: Equity shares of...

   

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The following trial balance relates to Dublin Inc as at December 31, 2016: Equity shares of $1 each Share Premium [note (v)) General Reserve Retained earnings at 1 Jan 2016 Land and buildings at cost (land element $16 million) [note (0) Plant and equipment at cost [note (1) Patent at cost [note (ii)] Copyright [note (ii)] Accumulated depreciation/amortisation at 1 Jan 2016: Buildings plant and equipment Patent Inventory at 31 December 2016 Trade receivables [note (iii) Bank Current tax [note (iv)] Deferred tax [note (iv)) Revenue Cost of sales Distribution costs Administrative expenses Bank interest Other operating income-royalties Trade payables Notes 5000 76,000 124,000 11,000 5,000 33,500 $7,000 10,000 2,000 250,000 27,000 33,000 1,500 630,000 5000 37,500 13,000 4,200 12,000 7,500 55,000 4,500 7,200 420,000 1,100 68,000 630,000 1. Property, Plant and Equipment Dublin Inc treats depreciation of property, plant and equipment as a cost of sale. Depreciation rates as per the company's accounting policy note are as follows: Buildings Straight line over 50 years Plant and equipment 20% reducing balance No depreciation was charged for the year ended December 31, 2016. On December 31, 2016, the company revalued its land $17 million and buildings to $62 million. The company follows the revaluation model of IAS 16 for its land and buildings, but no revaluations had previously been necessary. The company wishes to treat the revaluation surplus as being realised on disposal of the assets. Ignore taxation 2. Intangible Assets Dublin Inc treats amortisation of intangible assets as an administrative expense. The copyright was acquired on January 1, 2016. Both patent and copyright has a useful life of 10 years. No amortisation was charged for the year ended December 31, 2016. 3. Fraud In September 2016, the directors of Dublin Inc discovered a fraud. In total, $7 million, which had been included as receivables in the above trial balance, had been stolen by an employee. $5 million of this related to the year ended December 31, 2016, and the remainder to prior years. The directors do not expect that any amount will be recovered. Ignore taxation. 4. Income Tax The directors estimate a provision for income tax for the year ended December 31, 2016 of $11.4 million is required. The balance on current tax in the trial balance represents the under provision of the tax liability for the year ended December 31, 2016. At 31 December 2016, Dublin Inc had taxable temporary differences of $18.5 million requiring a provision for deferred tax. Any deferred tax movement should be reported in profit or loss. The income tax rate applicable to Dublin Inc 20%. 5. Bonus Issue On October 1, 2016 Dublin Inc made a bonus issue of I share for every 5 already held, capitalising its share premium account. This was not recorded in the company's accounts. 6. Dividend Dublin Inc paid a dividend of $0.10 per share on December 31, 2016, but this was not accounted for in the company's books. Required Based on International Financial Reporting Standards (IFRS): [A] Prepare the statement of profit or loss and other comprehensive income for Dublin Inc for the year ended December 31, 2016. (12 marks) [B] Prepare the statement of changes in equity for Dublin Inc for the year ended December 31, 2016. (5 marks) [C] Prepare the statement of financial position of Dublin Inc as at December 31, 2016. Notes to the financial statements are not required. Work to the nearest $1,000. (8 marks) [25 marks Total] The following trial balance relates to Dublin Inc as at December 31, 2016: Equity shares of $1 each Share Premium [note (v)) General Reserve Retained earnings at 1 Jan 2016 Land and buildings at cost (land element $16 million) [note (0) Plant and equipment at cost [note (1) Patent at cost [note (ii)] Copyright [note (ii)] Accumulated depreciation/amortisation at 1 Jan 2016: Buildings plant and equipment Patent Inventory at 31 December 2016 Trade receivables [note (iii) Bank Current tax [note (iv)] Deferred tax [note (iv)) Revenue Cost of sales Distribution costs Administrative expenses Bank interest Other operating income-royalties Trade payables Notes 5000 76,000 124,000 11,000 5,000 33,500 $7,000 10,000 2,000 250,000 27,000 33,000 1,500 630,000 5000 37,500 13,000 4,200 12,000 7,500 55,000 4,500 7,200 420,000 1,100 68,000 630,000 1. Property, Plant and Equipment Dublin Inc treats depreciation of property, plant and equipment as a cost of sale. Depreciation rates as per the company's accounting policy note are as follows: Buildings Straight line over 50 years Plant and equipment 20% reducing balance No depreciation was charged for the year ended December 31, 2016. On December 31, 2016, the company revalued its land $17 million and buildings to $62 million. The company follows the revaluation model of IAS 16 for its land and buildings, but no revaluations had previously been necessary. The company wishes to treat the revaluation surplus as being realised on disposal of the assets. Ignore taxation 2. Intangible Assets Dublin Inc treats amortisation of intangible assets as an administrative expense. The copyright was acquired on January 1, 2016. Both patent and copyright has a useful life of 10 years. No amortisation was charged for the year ended December 31, 2016. 3. Fraud In September 2016, the directors of Dublin Inc discovered a fraud. In total, $7 million, which had been included as receivables in the above trial balance, had been stolen by an employee. $5 million of this related to the year ended December 31, 2016, and the remainder to prior years. The directors do not expect that any amount will be recovered. Ignore taxation. 4. Income Tax The directors estimate a provision for income tax for the year ended December 31, 2016 of $11.4 million is required. The balance on current tax in the trial balance represents the under provision of the tax liability for the year ended December 31, 2016. At 31 December 2016, Dublin Inc had taxable temporary differences of $18.5 million requiring a provision for deferred tax. Any deferred tax movement should be reported in profit or loss. The income tax rate applicable to Dublin Inc 20%. 5. Bonus Issue On October 1, 2016 Dublin Inc made a bonus issue of I share for every 5 already held, capitalising its share premium account. This was not recorded in the company's accounts. 6. Dividend Dublin Inc paid a dividend of $0.10 per share on December 31, 2016, but this was not accounted for in the company's books. Required Based on International Financial Reporting Standards (IFRS): [A] Prepare the statement of profit or loss and other comprehensive income for Dublin Inc for the year ended December 31, 2016. (12 marks) [B] Prepare the statement of changes in equity for Dublin Inc for the year ended December 31, 2016. (5 marks) [C] Prepare the statement of financial position of Dublin Inc as at December 31, 2016. Notes to the financial statements are not required. Work to the nearest $1,000. (8 marks) [25 marks Total]

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Answers and Explanation A Statement of Profit or Loss and Other Comprehensive Income for Dublin Inc ... View the full answer