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    Illustration 2 ACCT 301 STD 2024 - 051044

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    kelkumaa

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    Illustration 2 ACCT 301 STD 2024 - 051044

    Uploaded by

    kelkumaa
    1 views2 pages

    Original Title

    Illustration 2 ACCT 301 Std 2024_051044

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    1 views2 pages

    Illustration 2 ACCT 301 STD 2024 - 051044

    Uploaded by

    kelkumaa

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Illustration 2

    The following trial balance relate to Ade-smart Nig Plc at 30th September, 2023
    N’000 N’000
    Leasehold property at valuation (1/10/2022 Note 1) 150,000
    Plant and Equipment at cost (Note 1) 229,800
    Plant and Equipment accumulated depreciation 73,800
    Capitalised Development Expenditure (1/10/2022 Note 2) 60,000

    Development Exp. Accumulated depreciation 18,000


    Inventory at 30/9/2023 60,000
    Trade receivables 129,300
    Bank 3,900
    Trade payables and provisions (Note 3) 71,400
    Revenue (Note 1) 900,000
    Cost of sales 612,000
    Distribution cost 174,000
    Administrative Expenses (Note 3) 66,600
    Preference dividend paid 2,400
    Interest on bank borrowing 600
    Equity dividend paid 18,000
    Research and development cost (Note 2) 25,800
    Equity share of 25k each 150,000
    8% redeemable preference share of N1 each (Note 4) 60,000
    Retained earnings at 1/10/2022 73,500
    Deferred tax (Note 5) 17,400
    Leasehold property revaluation reserve 30,000
    1,398,000 1,398,000

    The following notes are relevant:

    i. The leasehold property has a remaining life of 20years as at 1/10/2023. The


    company’s policy is to revalue its properties at each year’s end and at 30/9/2023 it
    was valued at N129 million. Ignore deferred tax on the revaluation.
    ii. On first October 10, 2022 an item of plant was disposed of for N7.5 million cash.
    The proceeds has been treated as sales revenue by Ade-smart Nig Plc. The plant is
    still included in the above trial balance figure at its cost of N48 million and
    accumulated depreciation of N12million (to the date of disposal). All plants are
    depreciated at 20% per annum using the reducing balance method. Depreciation
    and amortization of all non-currents is charged to cost of sales.
    iii. In addition to the capitalized development expenditure of N60 million, further
    research and development cost were incurred on a new project which commence
    on 1/10/2022. The research stage of the new project lasted until 31 st December,
    2022 and incurred N4.2 million of cost. From that date, the project incurred
    development cost of N2.4 million per month. On 1st April, 2022 the directors
    became confident that the project would be successful and generate a profit well
    in excess of cost. The project is still in development at 30 th September, 2023.
    Capitalised development expenditure is amortized at 20% per annum using the
    straight-line method. All expensed research and development is charged to cost of
    sales.
    iv. Ade-smart Nig PLc is been sued by a customer for N42 million for breach of
    contract over a cancelled order. Ade-smart Nig Plc has obtained legal opinion that
    there is a 20% chance that it will loss the case. Accordingly, Hot-Spot Nig Plc has
    provided N1.2 million (N6 miiliom × 20%) included in administrative expenses in
    respect of the claim. These have not been provided for as the legal action will not
    go to court until next year.
    v. The preference shares were issued on 1st April, 2023 at per. They are redeemable
    at a large premium which gives them an effective finance cost of 12% per annum.
    vi. The directors have estimated the provision for income tax for the year ended 30 th
    September, 2023 at N34.2 million. The required deferred tax provision at 30th
    September, 2023 is N18 million.

    Required:

    a. Prepare a Statement of Comprehensive Income for the Year Ended 30 th September,


    2023.
    b. Prepare a Statement of Changes in Equity for the year ended 30th September, 2023.
    c. Prepare a Statement of Financial Position as at 30th September, 2023.
    Note
    Notes to the financial statements are not required.

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