Reference no: EM131196469
ASSIGNMENT
(a) Extracts from CFQ's Statement of financial position at 31 March 2013, with comparatives appear below:
31 March 2013 31 March 2012
$million $million
Property, plant and equipment 635 645
Non-current asset investments at fair value 93 107
Deferred development expenditure 29 24
During the year to 31 March 2013, CFQ sold property, plant and equipment for $45m. It had originally cost $322m and had a carrying value of $60m at the date of disposal.
CFQ's statement of profit or loss for the year ended 31 March 2013 included:
depreciation of property, plant and equipment of $120m;
amortisation of deferred development expenditure of $8m;
revaluation loss on investments of $21m.
(b) Ace is a management accountant working as part of a small team that has been set up by ZY, mhis employer, to evaluate tenders submitted for contracts being awarded by ZY. He has just discovered that one of the other team members accepted large payments in exchange for information, from an entity at the time it was considering tendering. Ace suspects that this may have influenced the winning tender submitted by the entity.
Required:
Prepare the cash flows from the investing activities section of CFQ's statement of cash flows for the year ended 31 March 2013.
Required:
Explain the steps that Ace could follow to ensure that he adheres to CIMA's code of ethics for professional accountants.
On 1 January 2012 PS issued at par, 500,000 $1 5% cumulative preferred shares, redeemable at par in four years. The issue costs were $20,000.
PS has not issued preferred shares before and the managing director has asked you to explain how the preferred shares should be treated in the financial statements of PS.
(d) GH, an entity operating in Country X, purchased plant and equipment on 1 April 2011 for $260,000. GH claimed first year allowances and thereafter annual writing down allowances.
GH depreciates plant and equipment over 6 years, using the straight line method, assuming a 10% residual value.
Section B continues on the next page
TURN OVER
Required:
Explain with reasons, how PS should:
(i) classify the preferred shares in its financial statements for the year ended 31 December 2012, in accordance with IAS 32 Financial Instruments: Presentation;
(ii) account for the related costs in accordance with IAS 39 Financial Instruments:
Recognition and Measurement.
Required:
(i) Define the meaning of the tax base of an asset and its significance for deferred tax.
(ii) Calculate the amount of the deferred tax provision that GH should include in its statement of financial position as at 31 March 2013 in respect of this plant and equipment.
(e) MT's summarised statement of profit or loss for the year ended 31 March 2013 is as follows:
$
Gross profit 187,000
Administrative expenses (126,000)
Distribution costs (22,000)
39,000
Finance cost (2,000)
Profit before tax 37,000
Administrative expenses include donations to the local ruling political party of $5,000 and depreciation of property, plant and equipment of $39,000 (inclusive of depreciation of new purchases).
MT an entity operating in Country X made a tax loss for the year ended 31 March 2012. The loss carried forward at 31 March 2012 was $12,000.
At 31 March 2012 MT's tax written down value of its property, plant and equipment was $120,000. All of these assets qualified for the annual tax depreciation allowances. MT purchased property, plant and equipment during the year to 31 March 2013 for $30,000.
Required:
Calculate the amount of tax that MT is due to pay for the year ended 31 March 2013.