SOCF II HMWK Q

Q1

The statements of financial position of Flow Ltd for the years ended 31 December 20X5 and
20X6 were as follows:
20X5 20X6
$ $ $ $

Non-current assets
Tangible assets
PPE at cost 1,743,750 1,983,750
Accumulated depreciation 551,250 1,192,500 619,125 1,364,625
Current assets
Inventor y 101,250 85,500
Trade receivables 252,000 274,500
1,545,750 1,724,625

Capital and reserves

Common shares of A1 each 900,000 1,350,000
Share premium 30,000
Retained earnings 387,000 176,625
Current liabilities
Trade payables 183,750 159,750
Bank overdraft 75,000 8,250
1,545,750 1,724,625

Note that during the year ended 31 December 20X6:

1 Equipment that had cost $25,500 and with a net book value of $9,375 was sold for $6,225.
2 The company paid a dividend of $45,000.
3 A bonus issue was made at the beginning of the year of 1 bonus share for every 3 shares.
4 A new issue of 150,000 shares was made on 1 July 20X6 at a price of $1.20 for each 1
share.
5 A dividend of $60,000 was declared but no entries had been made in the books of the
company.

Required:

Prepare a statement of cash flows for the year ended 31 December 20X6 that complies with
IAS 7.
Q2

Shown below are the summarised final accounts of Martel plc for the last two financial years:
Statements of financial position as at 31 December
20X1 20X0
$000 $000 $000 $000

Non-current assets
Tangible
Land and buildings 1,464 1,098
Plant and machinery 520 194
Motor vehicles 140 62
2,124 1,354
Current assets
Inventor y 504 330
Trade receivables 264 132
Government securities 40 —
Bank — 22
808 484
Current liabilities
Trade payables 266 220
Taxation 120 50
Proposed dividend 72 40
Bank overdraft 184
642 310
Net current assets 166 174
Total assets less current liabilities 2,290 1,528
Non-current liabilities
9% debentures (432) (350)
1,858 1,178

20X1 20X0
$000 $000 $000 $000

Capital and reserves

Ordinary shares of $1 each fully paid 900 800
Share premium account 120 70
Revaluation reserve 360 —
General reserve 100 50
Retained earnings 378 258
958 378
1,858 1,178
Summarised statement of comprehensive income for the year ending 31 December

20X1 20X0
$000 $000 $000 $000

Operating profit 479 215

Interest paid (52) (30)
Profit before taxation 427 185
Tax (149) (65)
Profit after taxation 278 120

Additional information:

1 The movement in non-current assets during the year ended 31 December 20X1 was as
follows:
Land and Motor
buildings Plant, etc. vehicles
$000 $000 $000
Cost at 1 January 20X1 3,309 470 231
Revaluation 360 — —
Additions 81 470 163
Disposals — (60) —
Cost at 31 December 20X1 3,750 880 394
Depreciation at 1 January 20X1 2,211 276 169
Disposals — (48) —
Added for year 75 132 85
Depreciation at 31 December 20X1 2,286 360 254

The plant and machinery disposed of during the year was sold for $20,000.

2 During 20X1, a rights issue was made of one new ordinary share for every eight held at a
price of $1.50.

3 A dividend of $36,000 (20X0 $30,000) was paid in 20X1. A dividend of $72,000 (20X0
$40,000) was proposed for 20X1. A transfer of $50,000 was made to the general reserve.

Required:

(a) Prepare a statement of cash flows for the year ended 31 December 20X1, in accordance
with
IAS 7.

(b) Prepare a report on the liquidity position of Martel plc for a shareholder who is concerned
about the lack of liquid resources in the company.