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The following trial balance relates to Atlas at 31 March 2013: 

  $'000 $'000
Equity shares of 50 cents each (note (v))    50,000
Share premium    20,000
Retained earnings at 1 April 2012    11,200
Land and buildings
– at cost (land $10 million) (note (ii)) 
60,000  
Plant and equipment – at cost (note (ii))  94,500  
Accumulated depreciation at 1 April 2012:
                    – buildings 
  20,000
                    – plant and equipment    24,500
Inventory at 31 March 2013  43,700  
Trade receivables  42,200  
Bank    6,800
Deferred tax (note (iv))    6,200
Trade payables    35,100
Revenue (note (i))       550,000
Cost of sales     411,500  
Distribution costs  21,500  
Administrative expenses  30,900  
Dividends paid  20,000  
Bank interest  700  
Current tax (note (iv))    1,200
  ––––––– –––––––
  725,000 725,000
  ––––––– –––––––

 

The following notes are relevant: 

  1. Revenue includes the sale of $10 million of maturing inventory made to Xpede on 1 October 2012. The cost of the goods at the date of sale was $7 million and Atlas has an option to repurchase these goods at any time within three years of the sale at a price of $10 million plus accrued interest from the date of sale at 10% per annum. At 31 March 2013 the option had not been exercised, but it is highly likely that it will be before the date it lapses. 
  2. Non-current assets: On 1 October 2012, Atlas terminated the production of one of its product lines. From this date, the plant used to manufacture the product has been actively marketed at an advertised price of $4.2 million which is considered realistic. It is included in the trial balance at a cost of $9 million with accumulated depreciation (at 1 April 2012) of $5 million. 

On 1 April 2012, the directors of Atlas decided that the financial statements would show an improved position if the land and buildings were revalued to market value. At that date, an independent valuer valued the land at $12 million and the buildings at $35 million and these valuations were accepted by the directors. The remaining life of the buildings at that date was 14 years. Atlas does not make a transfer to retained earnings for excess depreciation. Ignore deferred tax on the revaluation surplus. 

 Plant and equipment is depreciated at 20% per annum using the reducing balance method and time apportioned as appropriate. 

 All depreciation is charged to cost of sales, but none has yet been charged on any non-current asset for the year ended 31 March 2013. 

  1. At 31 March 2013, a provision is required for directors’ bonuses equal to 1% of revenue for the year. 
  2. Atlas estimates that an income tax provision of $27.2 million is required for the year ended 31 March 2013 and at that date the liability to deferred tax is $9.4 million. The movement on deferred tax should be taken to profit or loss. The balance on current tax in the trial balance represents the under/over provision of the tax liability for the year ended 31 March 2012. 
  3. On 1 July 2012, Atlas made and recorded a fully subscribed rights issue of 1 for 4 at $1.20 each. Immediately before this issue, the stock market value of Atlas’s shares was $2 each. 

Requirements:

  1. Prepare the statement of profit or loss and other comprehensive income for Atlas for the year ended 31 March 2013  (8 marks)
  2. Prepare the statement of financial position of Atlas as at 31 March 2013.                                                                       (10 marks)
  3. Calculate the basic earnings per share for Atlas for the year ended 31 March 2013.                                                      (2 marks)
Marks: 20

Answers submitted

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Francis Satia's picture
Francis Satia
10/13/2020 - 18:22

9808
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Francis Satia
10/13/2020 - 18:02

9804
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Francis Satia
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9802
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Francis Satia's picture
Francis Satia
10/13/2020 - 17:58

9800
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Francis Satia
10/13/2020 - 18:04

9798
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Kamrul Hasan's picture
Kamrul Hasan
09/06/2020 - 21:18

9646
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Kamrul Hasan's picture
Kamrul Hasan
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9498
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Kamrul Hasan
08/22/2020 - 11:11

9482
20
Sajjad Hosen Pavel's picture
Sajjad Hosen Pavel
02/02/2020 - 08:09

8454
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Rumpa Haque Sharkar
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7560
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Hassan Kanok Kanok
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7554
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Md Kamrul Islam
10/12/2019 - 17:53

7552
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Md. Tariful Mursalin Rifat's picture
Md. Tariful Mur...
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7550
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Rumpa Haque Sharkar
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7556
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Syed Tapu
10/12/2019 - 17:49

2503
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Md Fazlul Hoque Tauhid's picture
Md Fazlul Hoque...
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Tanzeer UL Alaam's picture
Tanzeer UL Alaam
05/22/2019 - 23:18

2497
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