1. Single Company Accounts Highwood June 2011

2. Deferred tax  From question 27m x 25 % = 6750  Excluded from P&L 15000 x 25%= 3750*  Required 3000  Existing provision 2600  P&L charge 400  *Dr Reval Res Cr Def Tax

3. Loan Note  Convertible debt with equity and debt element 10% 24000.912184 24000.831992 324000.7524300 28476 Issue30000 Equity element1524 ‘Correct’ annual interest is therefore 10% x 28476= 2848. In P&L 2400 Dr 448 Finance Charge Cr Loan 448

4. Revenue339650 Cost of sales(207750) Distribution(27500) Administration(30700) Loan Interest(2400) Taxation Profit & Loss

5. Adjustments Property50000- 10000 Land25000 Plant and Equipment 74500- 24500 Inventory36000 Receivables47100 Financial Position- Assets

6. Bank11500 Payables24500 CY Tax800 Deferred Tax2600 Equity56000 Retained Earnings 1400 8% Loan Note30000 Financial Position- Liabilities

7. Revenue339650 Cost of sales(207750)(2500) + (10000) (2700)- 6000 (216950) Distribution(27500) Administration(30700)1300 (600)(30000) Loan Interest(2400)(448)(2848) Taxation800(19400)(400)(19000) Total43352 Profit & Loss

8. Adjustments Property50000- 1000010000- 250047500 Land25000500030000 Plant and Equipment 74500- 24500-1000040000 Inventory36000-2700+ 600039300 Receivables4710010000 -60056500 213300 Financial Position- Assets

9. Bank11500 Payables24500 Factor Loan8700 CY Tax 19400 Deferred Tax260041506750 Equity56000 Revaluation Reserve 15000- 375011250 Retained Earnings 14004335244752 8% Loan Note3000044830448 Financial Position- Liabilities

10. Share Capital OptionReval ResRet Earnings Op Bal56000007000 Loan Note1524 Dividend Paid (5600) Income1125043352 Total5600015241125044752 Changes in Equity

11. Rules based vs principles based  A rules based system sets out rules which must be followed. Those rules should cover all possible scenarios  In the real world it often is impossible for a set of standards to cover all scenarios  Principles based sets out principles or concepts and those principles are applied to scenarios  The criticism of principles based standards are that they allow personal interpretation so resulting in differing interpretations  IFRS are principle based standards though certain standards are treated as rules. The principles are set out in the Conceptual Framework