The balance sheets at 31 March 2010 and 2009 for Costello plc are shown below:

2010 2009
$000 $000 $000 $000
Non-current (fixed) assets (Note 1) 8 080 5 330

Current assets
Inventories (stock) 948 920
Trade and other receivables (debtors) 542 522
Cash and cash equivalents (bank) - 580
1 490 2 022
Current liabilities
Trade and other payables (creditors) 453 234
Tax 168 306
Cash and cash equivalents (bank) 87 -
708 540
Net current assets 782 1 482
Total assets less current liabilities 8 862 6 812

Non-current liabilities
7% debentures (Note 2) (360) (500)
Net assets 8 502 6 312

Equity
Ordinary shares of $1 each fully paid (Note 3) 3 000 2 000
Share premium account 1000 -
Retained earnings 4 502 4 312
8 502 6 312

The following information is available for the year ended 31 March 2010:

$000
Profit from operations (operating profit) 393
Finance costs (interest paid) 30
363
Tax 168
195
Dividends paid 5
Retained profit for the year 190
Note 1

Non-current (fixed) assets

2010 2009
$000 $000
Land
Cost 2 550 2 550
Additions 450 -
Revaluation 500 -
Book value 3 500 2 550

There were no disposals of land during the year.

Buildings
Cost 1 530 1 530
Additions 1 350
Accumulated depreciation (900) (430)
1 980 1 100

There were no disposals of buildings during the year.

Plant and machinery

Cost 1 600 1 600
Additions 620 -
Disposals (130) -
Accumulated depreciation (810) (400)
Net book value 1 280 1 200

During the year plant and machinery which had originally cost $130
000 was sold for $6000. The depreciation charged on this plant and
machinery was $98 000.

Vehicles
Cost 900 900
Additions 1 270 -
Disposals (200)
Accumulated depreciation (650) (420)
Net book value 1 320 480

During the year vehicles which had originally cost $200 000 were sold
at a profit of $7000. The sales proceeds were $37 000.

Note 2

$140 000 debentures were redeemed on 30 September 2009.

Note 3
In May 2009 a bonus issue of 1 new ordinary share for every 4 held was made. It is company policy
to maintain reserves in their most flexible form. A rights issue of 1 ordinary share for every 5 held at
a premium of $2 each was made in February 2010.

REQUIRED

a. Prepare a statement to show the reconciliation of profit from operations (operating profit)
to net cash flow from operating activities for the year ended 31 March 2010. [13]
b. Prepare a statement of cash flows (cash flow statement) for the year ended 31 March 2010
in good form. [16]
c. Calculate the net debt of Costello plc at both 31 March 2009 and 31 March 2010.Prepare a
reconciliation showing the movement between the two figures. [7]
d. State two reasons why a business might prepare a statement of cash flows (cash flow
statement). [4] - [Total: 40] [O/N 2010 P41 Q2]
The statement of financial position (balance sheet) of Whane plc showed the following:

At 30 April 2011 At 30 April 2010

Intangible non-current assets $000 $000 $000 $000
Patents 125 150
Tangible non-current assets 3 430 3 173
3 555 3 323
Current assets
Inventory 124 106
Trade receivables 78 82
Cash and cash equivalents 58 -
260 188
Current liabilities
Trade payables 63 56
Taxation 28 24
Interest 4 14
Cash and cash equivalents - 42
95 136
Net current assets 165 52
Total assets less current liabilities 3 720 3 375
Non-current liabilities
10% debentures 2028 300 -
3 420 3 375
Equity
Ordinary shares of $1 each 2 000 1 000
Share premium 250 1 000
Revaluation reserve - 250
Retained earnings 1 170 1 125
3 420 3 375

Further information was available as follows:

i. The income statement for the year ended 30 April 2011 showed interest payable of $32 000
and taxation of $28 000. Dividends paid during the year amounted to $30 000.
ii. A bonus issue was made during the year which doubled the number of ordinary shares in
issue. An issue of debentures also took place.
iii. At 30 April tangible non-current assets comprised:
2011 2010
$000 $000
Land at valuation 1 600 1 600
Buildings
Cost 1 200 1 200
Accumulated depreciation 168 144
1 032 1 056
Plant and equipment
Cost 1 125 729
Accumulated depreciation 327 212
798 517
 During the year plant which had cost $92 000 was sold for $20 000. Depreciation of $75 000
had been provided on the plant.

iv. There were no acquisitions or disposals of patents during the year.

REQUIRED

a. Calculate, for the year ended 30 April 2011,

i. the profit for the year attributable to equity holders [3]
ii. the profit from operations [4]
b. Prepare a statement of cash flows for the year ended 30 April 2011 [25]
c. Explain the difference between a rights issue and a bonus issue. [4]
d. Identify the reserves the directors selected to make the bonus issue. [2]
e. Explain a reason for their selection. [2] - [Total: 40] - [M/J 2011 P42]
Smilbo Smaggins plc has been manufacturing cutlery for many years. It provided the following
financial statements:

Statements of financial position at 30 April

2012 2011
$ $ $ $
Non-current assets
Plant and machinery 82 500 64 900
Office equipment 34 519 38 355
117 019 103 255
Current assets
Inventories 18 758 16 521
Trade receivables 17 623 12 517
Cash and cash equivalents 27 754 64 135 6 459 35 497
Total assets 181 154 138 752

Current liabilities
Trade payables 22 758 18 654
Taxation 5 350 28 108 4 200 22 854

Non-current liabilities
4% Debentures 2020 30 000 50 000

Net assets 123 046 65 898

Equity
Ordinary share capital 60 000 40 000
Share premium 18 000 8 000
Retained earnings 45 046 17 898
123 046 65 898

Income statement for the year ended 30 April 2012

$
Revenue 396 672
Cost of sales 259 329
Gross profit 137 343
Distribution costs 32 357
Administrative expenses 70 438
Profit from operations 34 548
Finance costs 1 600
Profit before taxation 32 948
Taxation 5 800
Profit attributable to equity holders 27 148

Additional information:

i. The debentures were redeemed at par.

ii. Plant and machinery costing $27 500 was sold during the year for $10 000. It had been
depreciated by $19 600.
iii. Additional machinery was purchased at a cost of $35 000. There is no depreciation charge in
the year of acquisition.
iv. There were no acquisitions or disposals of office equipment during the year.

REQUIRED

a. Prepare a statement to show the net cash flow from operating activities. [16]
b. Prepare a statement of cash flows for the year ended 30 April 2012 in accordance with IAS 7.
[13]

Additional information:

i. For the year ended 30 April 2011 the trade receivables turnover was 20 days and the
trade payables turnover was 25 days.
ii. All sales and purchases are made on credit.

REQUIRED

c. Calculate both the trade receivables turnover and trade payables turnover for the year
ended 30 April 2012. [5]
d. Comment on the change in the trade receivables turnover. [3]
e. Comment on the change in the trade payables turnover. [3] - [Total: 40] - [M/J 2012 P43]
Manchi plc are preparing their budgets for the forthcoming year ending 30 September 2014. They
provide the following information.

Statements of Financial Position at 30 September

2013 2014
(actual) (budgeted)
$000 $000
Assets
Non-current assets
Property plant and equipment 3 050 3 190
Goodwill 400 450
Investments 300 240
3 750 3 880
Current assets
Inventories 750 790
Trade and other receivables 460 425
Cash and cash equivalents 210 574
1 420 1 789

Total assets 5 170 5 669

Equity
Ordinary shares 1 200 1 400
Non-redeemable preference shares 500 500
Revaluation reserve 300 400
Retained earnings 930 834
2 930 3 134
Liabilities
Non-current liabilities
7% debentures 1 000 1 300

Current liabilities
Trade and other payables 960 1 075
Current tax liabilities 280 160
Total liabilities 2 240 2 535

Total equity and liabilities 5 170 5 669

Budgeted Statement of Changes in Equity For Year Ending 30 September 2014

$000
Retained earnings at 1 October 2013 930
Budgeted profit for year 214
1 144
Dividends payable (110)
Transfer to share capital (bonus issue) (200)
Retained earnings at 30 September 2014 834
Additional information

i. The tax charge for the year ending 30 September 2014 has been budgeted as $160 000.
ii. Income from investments is budgeted at $40 000.
iii. Manchi plc issued additional 7% debentures on 1 October 2013. Interest for the year
will be paid on all the issued debentures on 30 September 2014.
iv. A bonus issue of 1 new ordinary share for every 6 held is budgeted for 1 April 2014.
v. The following note was extracted from the financial statements at 30 September 2013.

Non-current assets Cost Depreciation NBV

$000 $000 $000
Property plant and equipment
Land 1 500 - 1 500
Buildings 800 250 550
Plant and equipment 1 500 600 900
Motor vehicles 150 50 100
3 950 900 3 050

vi. The land is expected to increase in value by $100 000 during the year.
vii. Budgeted capital expenditure for the year on buildings is $80 000; plant and equipment
$280000; motor vehicles $30 000 and goodwill $50 000.
viii. Budgeted depreciation for the year on buildings is $50 000; plant and equipment
$255000 and motor vehicles $25000.
ix. Plant and equipment with an original cost of $35 000 and depreciation of $15 000 is
budgeted to be disposed of for proceeds of $10 000.
x. An impairment review has shown that the carrying value of the investments should be
$240000 at 30 September 2014.

REQUIRED

a. Calculate the companys budgeted profit from operations for the year ending 30 September
2014. [5]
b. Prepare a budgeted statement of cash flows for the year ending 30 September 2014 in
accordance with IAS 7. [25]
c. Prepare the property, plant and equipment section of the non-current assets note to the
budgeted statement of financial position at 30 September 2014. [10] - [Total: 40] [O/N 2013
P41]