WHY Ltd

1
Statement of P/L & OCI for the period ended 31 December 2020
R
Revenue Given 12 937 500 0,5
Cost of Sales Given - 8 212 500 0,5
Gross Profit 4 725 000
Other incomen (rent) Given 750 000 0,5
Fair value increase in investment property (8 100 000 – 7 500 000a) 600 000 1
Administration expenses W1 - 1 497 500 1P
Research & development expenses W2 - 1 222 500 1P
Operating profit 3 355 000
Finance costs (330 000^ +30 000a) - 360 000 1,5
Profit before tax 2 995 000
Income tax expense - 549 000 1
Profit for the period 2 446 000
Other comprehensive income - ^- 350 000 1p
Total comprehensive income 2 096 000

Workings
W1. Administration expenses
Salaries Given 675000 0,5
Depreciation of plant & equipment [(3 000 000 – 1200 000) / 6 (5 – 2 + 3)] 300000 1,5
Impairment on land 80 000 1p
Bad debts Given 94 500 0,5
Marketing 150 000 – 45 000 105 000 1
Other Non individually material 243 000 1
1 497 500

W2. Research & development expenses

Salaries Given 795 000 0,5
Impairment of patent [(1 650 000 – 165 000) – 1 395 000] 90 000 1
Repairs and maintenance Given 45 000 0,5
Rent Given 180 000 0,5
Other None individually material 112 500 1
1 222 500
Impairment loss - Land
CA 1 250 000
Land RA higher of VIU (R810) and FV (R750 ) 820 000 1
430 000 1

Deduction to revaluation surplus 350 000 1

Balance to be accounted for as impaiment 80 000 1
13

Total for SOCI 22

b) Statement of financial position 1 heading
WHY LIMITED
EXTRACT FROM STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2020

Non current Assets 11 815 000

Land 820 000 1p
Investment property (FV: given) 8 100 000 0,5
Plant & equipment (3 000 000^- (1200 000 + 300 000)a) 1 500 000 1,5
Intangible assets [(1 650 000 ^- ((165 000 + 90 000)]a) 1 395 000 1,5

Current assets 5 035 500

Inventories Given 3 337 500 0,5
Trade and other receivables (1 012 500+45 000) 1 057 500 1
Cash and cash equivalents Given 640 500 0,5
16 850 500

Non-current liabilities
Long term Borrowings (7 800 000 - 750 000) 7 050 000 1
Deferred Tax 526 680 1p

Current liabilities 2 509 000 1

Trade and other payables (1410 000+30 000) 1 440 000 1
Short term borrowings 750 000 0,5
Current tax payable: income tax (230 000^- 549 000^) 319 000 1

Total liabilities 9 559 000 11

Deferred tax Calc

Deferred tax
Temporary asset/
Carrying amount Tax base differences (liability)

31/12/2019 - 245 000 A (1)

Investment property 8 100 000 5 700 000 2 400 000 537 600 L (1) CGT rate 22,4%
Plant and equipment 1 500 000 600 000 900 000 252 000 L (1P) 28%
Land 820 000 900 000 - 80 000 - 17 920 A (1P) CGT rate 22,4%

31/12/2020 526 680 A (1P)

Plant and equipment

Tax base 3 000 000
allowances 2018,2019,2020 2 400 000
600 000 1
6 marks

Total Marks Available on Part A 45 limited to 40

^ half mark
a full mark
c) Statement of changes in equity 1 heading
WHY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020

Share capital Retained earnings Revaluation Total

Balance at 1 January 2020 3 000 000 ^ 2 035 500 ^ 350 000 a 5 385 500 2
Total comprehensive income 2 526 000 1C - 350 000 a 2 176 000 2
Dividends - 782 500 a - 782 500 1
Capitalisation issue 150 000 a - 150 000 a - 2
Balance at 31 December 2016 3 150 000 4 411 500 - 7 561 500
- Available Marks 8
WHY LIMITED (EXTRACT FROM) NOTES TO THE FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2020

Profit before tax

The profit before tax has been computed after taking into account the following
(income)/ expense items:
2020
R
Fair value gain - 600 000 1P
Depreciation W1 300 000 1P
Impairment patent 90 000 1P
Impairment land 80 000 1P
Employee benefits expense Given 1 470 000 1P
Penalty 270 000 1P
Rent income 750 000 1P
1 mark for Any valid expense limited to 6