Karim LTD

Karim Ltd wholesales and distributes toys and models and provide
The following balances have been extracted from its books
Particulars CU'000
Ordinary shares 900
5% redeemable preference shares 100
Share premium account 965
Retained earnings at 1 January 2012 2200
Revenue 11799
Purchases 8835
Inventories at 1 January 2012 964
Staff costs-distribution 170
Staff costs-administration 252
Depreciation charge for the year
Freehold land and buildings 40
Distribution equipment 216
Other plant and equipment 260
General expenses 532
Interest receivable 51
Interest payable 45
Taxation-charge for the year 436
paid dividends
Ordinary shares-final regarding 2011 70
Ordinary shares-interim regarding 2012 40
5% redeemable preference shares-for 2012 5
Patent rights 100
Freehold land and buildings-cost 1600
Distribution equipment-cost 1200
Other plant and equipment-cost 1800
Accumulated depreciation at 31 December 2012
Freehold land and buildings 160
Distribution equipment 420
Other plant and equipment 320
Trade receivables 1400
Trade payables 750
Cash and cash equivalents 200
Tax liability 500
Additional information
(1)Included in revenue are involves totalling CU 130000 in relation to distribution services rendered
services provided .The overall outcome of the contract is uncertain and management believes tha
CU75000 will be reimburshed by this customer.(2)The patent was acquired during the year .Amortisa
at 31 December 2012 were valued at CU 1204000. (4)Costs not specifically attributable to one of t
costs and administrative expenses. (5)Inventories carried at CU946000 were purchased from Germen
the exchange rate was 1.55 to CU 1.At 31 December 2012 the exchange rate was 1.50 to CU1. (6)A fi
payable on 28 June 2013. (7)CU550000 cash was received during the year as a result of a rights iss
(8)On 1 June 2012 the company made the decision to sell its loss-making soft toy division as a resu
closure will be completed by 30 April 2013.The division's operations represent in 2012 10% of reve
expenses.No disclosure are necessary in the stat
 Requirement: Prepare Rakib Ltd's statement of profit or loss and statement of changes in equity fo
and movements schedules and notes in accordance with the requiremen
Answer
karim Ltd
Statement of profit or loss for the year ended 31 December 2012
Particulars CU'000
Revenue (W4) 10570
Cost of sales(W4) -7306
Gross profit 3264
Distribution costs(W4) -722
Administrative expenses(W4) -580
Profit from operations 1962
Finance cost(45+5) -50
Investment income 51
profit before tax 1963
Income tax expenses -436
Profit for the from continuing operations 1527
Discontinued operations
loss for the year from discontinued operations -340
Profit for the year 1187
Statement of changes in equity for the year ended 31 December 2012
Particulars Share capital Share premium
Balance at 1 January 2012 800
Changes in equity for 2012:
Issue of Share capital 100 965
Dividends
Total comprehensive income for the year
Balance at 31 December 2012 900 965
Statement of financial position as at 31 December 2012
Particulars CU'000 CU'000
Non-current assets
Property,plant and equipment(see note) 3700
Intangibles(see note) 75
3775
Current assets
Inventories 1204
Trade and other receivables (1400-55) 1345
Cash and cash equivalents 200
2749
Total assets 6524
Equity and Liabilities
Equity
Ordinary share capital 900
Share premium 965
Retained earnings 3277
Total equity 5142
Non-current liabilities
Preference share capital 100
Current liabilities
Trade and other payables(750+32) 782
taxation 500
Total equity and liabilities 6524
Notes:property plant and equipment
Particulars Freehold land buildings Distribution equipment
cost
At 1 January 2012 1600 1200
At 31 December 2012 1600 1200
Depreciation
At 1 January 2012 120 204
Charge for the year 40 216
At 31 December 2012 160 420
Carrying amount
At 31 December 2012 1440 780
At 1 January 2012 1480 996

Intangibles CU'000
Cost at 31 December 2012 100
Amortisation 25
Carrying amount at 31 December 2012 75
Workings
(1)Revenue
Particulars CU'000 CU'000
Per list of balances 11799
Adjustment regurding contract under dispute
Included in revenue 130
Cost recoverable -75
Adjustments to revenue and trade receivables -55
Total 11744
(2)Analysis of expenses
Particulars Cost of sales Distribution costs
Opening inventories 964
Purchases 8835
Staff costs 170
Depreciation
Land and Buildings 20
Distribution equipment 216
Other PPE 130
General expenses 266
Amortisation of patent
Foreign exchange loss
Closing inventories -1204
Total 8595 802
(3) Foreign exchange loss
Particulars CU'000
Payable at date of transacti 946
Payable at year end date (946*1.55/1.5) -978
Exchange loss at end of reporting period -32
(4)Continuing/discontinued analysis
Particulars Continuing operations Discontinued operations
Revenue (W1-90:10) 10570 1174
Cost of sales (W2-85:15) -7306 -1289
Gross profit 3264 -115
Distribution costs (W2-90:10) -722 -80
Administrative expenses (W2-80:20) -580 -145
Profit/loss from operations 1962 -340
Finance cost(45+5) -50
Investment income 51
Perofit/loss before tax 1963 -340
Income tax -436
Net profit/loss for the year 1527 -340
 Karim LTD
tes toys and models and provides distribution services to other organisations.
ave been extracted from its books of account as at 31 December 2012

n to distribution services rendered under a contract to a customer who is very unhappy with the quality of the
ain and management believes that of the CU 100000 costs incurred to date under the contract,probably only
cquired during the year .Amortisation of CU 25000 should be charged to administrative expenses. (3)Inventories
pecifically attributable to one of the profit or loss expense headings should be split 50:50 between distribution
000 were purchased from Germeny in Euros and payment is due on 2 March 2013.At the date of the transaction
ange rate was 1.50 to CU1. (6)A final ordinary share dividend for 2012 of CU 60000 was proposed in May 2013,
the year as a result of a rights issue of ordinary shares.The nominal value of the shares issued was CU100000.
making soft toy division as a result of severe compitition from the Far-East.The company is confident that the
ons represent in 2012 10% of revenue ,15% cost of sales ,10% of distribution costs and 10% of administrative
sclosure are necessary in the statement of financial position.
tatement of changes in equity for the year to 31 Decenber 2012,a statement of financial position at that date
accordance with the requirements of IFRS ,to the extent the information available .

ember 2012

ecember 2012
Retained earnings Total
2200 3000

350
-110 -110
1187
3277 4427
er 2012
Other plant and equipment Total

1800 4600
1800 4600

60 384
260 516
320 900

1480 3700
1740 4216

Administrative expenses

252

20

130
266
25
32

725
Total
11744
-8595
3149
-802
-725
1622
-50
51
1623
-436
1187
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