HARRY CASE:

Harry plc’s trial balance at 30 June 20X7 was as follows:

£000 £000
Freehold premises 2,400,000
Plant and machinery 1,800,000 540,000
Furniture and fittings 620,000 360,000
Inventory at 30 June 20X7 1,468,000
Sales 6,465,000
Administrative expenses 476,000
Ordinary shares of £1 each 4,500,000
Trade investments 365,000
Revaluation reserve 600,000
Development cost 415,000
Share premium 500,000
Personal ledger balances 947,000 566,000
Cost of goods sold 4,165,000
Distribution costs 669,000
Overprovision for tax 26,000
Dividend received 80,000
Interim dividend paid 200,000
Retained earnings 488,000
Staff salary (including £125,000 to directors) 468,000
Directors’ fees 96,000
Audit fees and expenses 86,000
Disposal of warehouse 225,000
Cash and bank balances 175,000
TOTAL 14,350,000 14,350,000
The following information is available:
1/ Freehold premises acquired for £1.8 million were revalued in 20X4, recognising a gain of £600,000.
These include a warehouse, which cost £120,000, was revalued at £150,000 and was sold in June
20X7 for £225,000. Harry does not depreciate freehold premises.
2/Harry wishes to report plant and machinery at open market value which is estimated to be £1,960,000 on 1 July 20X6.
3/ Company policy is to depreciate its assets on the straight-line method at annual rates as follows:
Plant and machinery 10% (All move to COS)
Furniture and fittings 5% (All move to Admin expenses)
4/ Until this year the company’s policy has been to capitalise development costs, to the extent permitted
by relevant accounting standards. The company must now write off the development costs, including
£124,000 incurred in the year, as the project no longer meets the capitalisation criteria.
5/ During the year the company has issued one million shares of £1 at £1.20 each.
6/ Included within administrative expenses are the following:
# Staff salary
# Directors’ fees
# Audit fees and expenses
7/ Income tax for the year is estimated at £122,000.
8/ Directors propose a final dividend of 4p per share declared and an obligation, but not paid at the year-end.
Required:
In respect of the year ended 30 June 20X7:
(a) The statement of comprehensive income.
(b) The statement of financial position as at 30 June 20X7.
(c) The statement of movement of property, plant and equipment.

OTHER COMPREHENSIVE INCOME AND REVALUATION MODEL

Statement of comprehensive income
YEAR 1
Revenue 6,465,000
Cost of sales - 4,361,000
Gross profit 2,104,000
Other income 155,000
Distribution costs - 669,000
Admin expenses - 1,157,000
Other expenses - 415,000
Profit before tax 18,000
Finance cost -
Income tax expense - 96,000
Profit for the year - 78,000
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on property revaluation 700,000
Items that may be reclassified subsequently
Exchange differences on translating foreign to profit or loss:
operations
Other comprehensive income for the year
TOTAL COMPREHENSIVE INCOME FOR THE Y 622,000
 1 it was
cash 225,000
disposal of warehouse 225,000
it should be
cash 225,000
ppe 150,000
gain on disposal 75,000
correct
disposal of warehouse 225,000
ppe 150,000
gain on disposal 75,000
transfer revaluation surplus to re when disposal assets
revaluation surplus 30,000
re 30,000
2 ca of asset = 1800-540 1,260
fv of asset 1,260
a. Net of ad to cost
ad - p&m 540,000
p&m 540,000
b. Revaluation step
ppe - p&m 700,000
gain on revaluation (oci) 700,000
gain on revaluation (oci) 700,000
revaluation surplus 700,000
3 cos 196,000
acc dep - p&m 196,000
admin exp 31,000
of £600,000. acc dep - f&f 31,000
4 development costs 124,000
allowance for tr 124,000
o be £1,960,000 on 1 July 20X6. 5 cash 1,200,000
share cap 1,000,000
share pre 200,000
6
xtent permitted 7 income tax exp 122,000
ts, including income tax pay 122,000
8 accrual 180,000
dividend pay 180,000

paid at the year-end.

TION MODEL
Statement of changes in equity
Share capital Share premium Retained earnings
Opening balance year 1
Share issued (bonus) 4,500,000 500,000 488,000
TCI year 1:
Profit for the year - 78,000
Dividends paid - 380,000

OCI
Realisation 30,000

Closing balance year 1 4,500,000 500,000 60,000

 statement of movement of ppe
ppe freehold premises
opening balance 2,400,000
addition 0
disposal (150,000)
revaluation
ending balance 2,250,000
accumulated depreciation
opening balance
revaluation
pl charges
ending balance 0
net book value 2,250,000
 Statement of financial position
Revaluation surplus YEAR 1
Equity
600,000 Share capital 4,500,000
Retained earnings 60,000
Revaluation surplus 1,270,000
Share premium 500,000
Liabilities:
700,000 Loan stock -
- 30,000 Accruals 180,000
TP 566,000
1,270,000 Tax payables 122,000
Bank overdraft -
Total E and L 7,198,000
Assets
NCA:
Land (Freehold premises) 2,250,000
Furnitures & Fittings, NBV 229,000
Plant and machinery, NBV 1,764,000
Trade investments 365,000

CA:
Inventories 1,468,000
Trade receivables, net
realisable value 947,000
Cash at bank 175,000
Total assets 7,198,000
atement of movement of ppe
plant & machinery furniture & fittings total
1,800,000 620,000 4,820,000
0 0 0
(150,000)
160,000 160,000
1,960,000 620,000 4,830,000
0
540,000 360,000 900,000
(540,000) (540,000)
196,000 31,000 227,000
196,000 391,000 587,000
1,764,000 229,000 4,243,000
f financial position