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sofp 2005 2004
NCA 2350 1990
Investment 150 310
goodwill 100 150CA
stock 825 858
debtor 1000 903
other debtor 11 20
cash 76 –CL
bank overdraft – 47
creditors 725 653
dividend payable 70 60
tax payable 240 260
3467 3211Share capital 1700 1600
share premium 57 21
revaluation 200 –
p/loss 1300 990addtional information:
a)there was no acq of dispose of goodwill during the year. The company has written off the goodwill to p/loss
b) the company acquired additional nca on 30 june 2005 for total cost of 150,000 of which 50000 was included in total creditors and balance was paid in cash. Depreciation charged for the year equals to Rm45,000
c) Investment with a book value at 30 june 2004 of Rm37000 suffered a fall in value during the year and are shown in the draft balance sheet for 30 june 2005 at a value of Rm14000. There was no purchase of investment during the year. The fall in value has not been adjusted in the above profit/loss
d) the 10% debenture was redeemed during the year. The terms of the redemption were RM25 in cash plus RM10 8% debenture issued at par for every RM30 of 10% debentures held. The premium on redemption are to be debited in the profit/loss
e) dividend income is received net. Current tax rate is 40%
f) other creditors for 2005 included accrued interest of RM5000
g) provision for doubtful debt in the amount of Rm12000 are included in the operating expenses
This is the full questioncan help for point b,c,d where maybe I just now did not give enough information
Will it have any changes in that u answered for me regards to point b and c?
and how to treat the point d as well
ThanksMy previous response suggested that there was not enough information, so I guessed some points like I guessed that some of the investments had been sold and that there are even more additions to TNCA as well as the 150,000 ‘unusual’ addition
No change there then. There is still a lot missing that would have to rely on guesswork and assumptions
My previous responses to both b) and c) have not changed
Point d) is interesting! You tell me that you have given me the full question …
… the statement of financial position for 2005 does not balance by an amount of 210
… the statement of financial position for 2004 does not balance by an amount of 600
… there is no sign of any 10% debentures in 2004 and
… there is no sign of any 8% debentures in 2005
Taking these 4 obvious omissions / errors into account, I have to assume that you chose not to tell me about the non-current liability in 2004 “10% Debentures 600” nor about the “8% Debentures 200” in 2005
There also appears to be a misprint in your figures in that, even with the two debenture assumptions, the statement of financial position is still out of balance in 2005 by 10
Working on the debenture assumptions, we had a balance of 10% debentures in 2004 and these were redeemed
The redemption involved, for every 30 10% debentures, a payment of cash of 25 and the issue of 10 8% debentures
600 / 30 = 20 so we pay 20 x 25 cash = 500 cash outflow and we issue new bits of paper 20 x 10 = 200 new debentures
That’s a total of 700 value laid out and therefore a premium on the redemption of the 600 10% debentures of 100
In financing activities we have a cash outflow of (500)
In non-cash adjustments to the profit before interest and taxation we have the add-back of 100 premium on redemption
One more assumption, if I may.
I assume that this is a question set to you by your tutor, probably at Sunway College, for your homework
Now, if I’m correct, let me say that I am not here to do your homework! I shall willingly help in any particular problem area that you may have but I expect you to:
– have made an effort with your homework
– have discovered that it’s not correct (for example it doesn’t balance to the change in cash and cash equivalents in the question) and
– set out your attempt at an answer
If you will do that for me in future, I shall endeavour to identify where you are going wrong
Do we understand each other?
OK
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