P a p e r F 7
Section B – ALL THREE questions are compulsory and MUST be attempted弹古筝
Plea write your answers to all parts of the questions on the lined pages within the Candidate Answer Booklet.
1The following trial balance it is not a complete trial balance) relate to Moston as at 30 June 2015:
$’000$’000 Revenue (note (i))113,500
Cost of sales 88,500
Rearch and development costs (note (ii))7,800
Distribution costs3,600
Administrative expens (note (iv))6,800
Loan note interest and dividends paid (notes (iv) and (vii))5,000
Investment income300
Equity shares of $1 each (note (vii))30,000手鼓音乐前10首
5% loan note (note (iv))20,000
Retained earnings as at 1 July 20146,200
Revaluation surplus as at 1 July 20143,000
Other components of equity9,300
Property at valuation 1 July 2014 (note (iii))28,500
Plant and equipment at cost (note (iii))27,100
Accumulated depreciation plant and equipment 1 July 20149,100
Financial ast equity investments at fair value 1 July 2014 (note (v))8,800
The following notes are relevant:
(i)Revenue includes a $3 million sale made on 1 January 2015 of maturing goods which are not biological asts.
The carrying amount of the goods at the date of sale was $2 million. Moston is still in posssion of the goods (but they have not been included in the inventory count) and has an unexercid option to repurcha them at any time in the next three years. In three years’ time the goods are expected to be worth $5 million. The repurcha price will be the original lling price plus interest at 10% per annum from the date of sale to the date of repurcha.
(ii)Moston commenced a rearch and development project on 1 January 2015. It spent $1 million per month on rearch until 31 March 2015, at which date the project pasd into the development stage. From this date it spent $1·6 million per month until the year end (30 June 2015), at which date development was completed.
However, it was not until 1 May 2015 that the directors of Moston were confident that the new product would be a commercial success.
Expend rearch and development costs should be charged to cost of sales.
(iii)Non-current asts:
Moston’s property is carried at fair value which at 30 June 2015 was $29 million. The remaining life o
f the property at the beginning of the year (1 July 2014) was 15 years. Moston does not make an annual transfer to retained earnings in respect of the revaluation surplus. Ignore deferred tax on the revaluation.
Plant and equipment is depreciated at 15% per annum using the reducing balance method.
No depreciation has yet been charged on any non-current ast for the year ended 30 June 2015. All depreciation is charged to cost of sales.
(iv)The 5% loan note was issued on 1 July 2014 at its nominal value of $20 million incurring direct issue costs of $500,000 which have been charged to administrative expens. The loan note will be redeemed after three years at a premium which gives the loan note an effective finance cost of 8% per annum. Annual interest was paid on
30 June 2015.
(v)At 30 June 2015, the financial ast equity investments had a fair value of $9·6 million. There were no acquisitions or disposals of the investments during the year.
(vi) A provision for current tax for the year ended 30 June 2015 of $1·2 million is required, together
with an increa to the deferred tax provision to be charged to profit or loss of $800,000.
2
(vii)Moston paid a dividend of 20 cents per share on 30 March 2015, which was followed the day after by an issue of 10 million equity shares at their full market value of $1·70. The share premium on the issue was recorded in other components of equity.
Required:
(a)Prepare the statement of profit or loss and other comprehensive income for Moston for the year ended
30 June 2015.(11 marks)
(b)Prepare the statement of changes in equity for Moston for the year ended 30 June 2015.(4 marks) Note: The statement of financial position and notes to the financial statements are NOT required.
(15 marks)
3[P.T.O.
2Xpand is a public company which has grown in recent years by acquiring established business. The following financial statements for two potential target companies are shown below. They operate in the same industry ctor and Xpand believes their shareholders would be receptive to a takeover. An indicative price for 100% acquisition of the companies is $12 million each.
Statements of profit or loss for the year ended 30 September 2015
Kandid Kovert
$’000 $’000 Revenue25,00040,000
Cost of sales(19,000)(32,800)
––––––––––––––Gross profit6,0007,200
Distribution and administrative expens(1,250)(2,300)
Finance costs(250)(900)
––––––––––––––Profit before tax4,5004,000
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Income tax expen(900)(1,000)
––––––––––––––Profit for the year3,6003,000
––––––––––––––Statements of financial position as at 30 September 2015
Non-current asts
Property nil3,000
Owned plant 4,8002,000面包树
Lead plant nil5,300
––––––––––––––
4,80010,300
––––––––––––––Current asts
Inventory1,6003,400
T rade receivables2,1005,100
Bank1,100200
––––––––––––––
4,8008,700
––––––––––––––T otal asts9,60019,000
––––––––––––––Equity and liabilities
Equity
Equity shares of $1 each1,0002,000
Property revaluation surplus nil900
Retained earnings1,6002,700
––––––––––––––
2,6005,600
––––––––––––––Non-current liabilities
Finance lea obligation nil4,200
5% loan notes (31 December 2016)5,000nil
10% loan notes (31 December 2016)nil5,000
––––––––––––––
5,0009,200
––––––––––––––Current liabilities
T rade payables1,2502,100
Finance lea obligation nil1,000
T axation7501,100
破案记
––––––––––––––
2,0004,200
––––––––––––––T otal equity and liabilities9,60019,000
––––––––––––––
4
Notes
(i)Carrying value of plant:
Kandid Kovert
$’000$’000 Owned plant – cost8,00010,000
Less government grant(2,000)
––––––
6,000
Accumulated depreciation(1,200)(8,000)
––––––––––––
4,8002,000 Lead plant – original fair value nil8,000
(ii)The following ratios have been calculated:
Kandid Kovert Return on year-end capital employed (ROCE)62·5%31·0%
周郭颐
(finance lea obligations are treated as debt)
Net ast (taken as same figure as capital employed) turnover 3·3 times2·5 times
Gross profit margin 24·0%18·0%
Profit margin (before interest and tax)19·0%12·3%
Current ratio 2·4:12·1:1
Closing inventory holding period 31 days38 days
T rade receivables’ collection period 31 days47 days
T rade payables’ payment period (using cost of sales) 24 days23 days
Gearing (debt/(debt + equity)) 65·8%64·6% Required:
(a)Using the above information, asss the relative performance and financial position of Kandid and Kovert for
the year ended 30 September 2015 in order to assist the directors of Xpand to make an acquisition decision.
(11 marks)
(b)Describe what further information may be uful to Xpand when making an acquisition decision.(4 marks)
(15 marks)
盘存账户5[P.T.O.
