FN247 P1 Q Jan2011 Final Questions

Topics: 2009, Balance sheet, Generally Accepted Accounting Principles Pages: 8 (1370 words) Published: April 15, 2015
NORTHUMBRIA UNIVERSITY
NEWCASTLE BUSINESS SCHOOL
FN0247 Corporate and Group Accounting – Level 5
Paper 1

January 2011

Time allowed:
2 Hours-plus 10
minutes reading time

Instructions:
This is a CLOSED BOOK examination
Four questions set
Answer any three questions
All questions carry EQUAL MARKS
Total marks possible: 75

Page 1 of 8

Question 1

1(a)

Company X has a year end of 30 November.
The company’s share capital consisted of £1,000,000 of 25p shares. The market value of these shares was £1.10 on 31 May 2010. On 1 June 2010, the company made a 1 for 4 rights issue at 60p per share.

The profits attributable to ordinary shareholders were:

Year to 30 November 2010
Year to 30 November 2009

£
500,000
440,000

Required:
Calculate the original and revised EPS for 2009.
Calculate the basic EPS for 2010.
(14 Marks)
1(b)

Company Y has a year end of 31 December.
The company’s share capital consisted of 1,000,000 shares. It had 500,000 10% £1 preference shares which could be converted into ordinary shares at one ordinary share for ten preference shares. The company also had £250,000 10% convertible loan stock. These could be converted by 2016 into 500 shares for each £1,000 of loan stock. The tax rate was 30%

The profit after tax for the year ended 31 December 2009 was £5,000,000. Required:
Calculate the basic and diluted EPS for 2009.
(11 marks)

[TOTAL MARKS=25]

Page 2 of 8

Question 2

2

The following information relates to Houser Ltd.
31 March 2010
31 March 2009
£000
£000
£000
£000
Non-current assets:
Tangible assets
Current assets:
Inventories
Trade receivables
Bank

28,500

18,750
6,750
-

Current liabilities:
Trade payables
Bank overdraft
Tax
Non-current liabilities:
Loan
Deferred tax

25,500

7,050
3,950
- (11,000)

17,200
1,800

(19,000)

35,250

6,900
3,000
300

10,200

6,300
4,900 (11,200)

8,000
1,200

(9,200)

24,000

25,050

18,000
6,000

16,000
9,050

24,000

25,050

31 March 2010
£000
83,000
(65,700)
17,300
(18,000)
(2,000)
(2,700)
700
(2,000)

31 March 2009
£000
60,000
(37,500)
22,500
(9,000)
(1,200)
12,300
(3,000)
9,300

Equity:
Ordinary shares
Retained earnings

Summarised income statements:

Turnover
Cost of sales
Gross profit
Operating expenses
Finance costs
Profit / (loss) before taxation
Taxation relief / (expense)
Profit / (loss) for year

[QUESTION CONTINUES ON NEXT PAGE]

Page 3 of 8

[QUESTION 2 – CONTINUED]
The following additional information is available:
Tangible assets are made up of:

Land and property
Plant and machinery
Motor vehicles

31 March 2010
£000
9,000
11,770
7,730
28,500

31 March 2009
£000
10,000
17,250
8,000
35,250

Depreciation charge for the year consisted of:
£000
Land and property
1,000
Plant and machinery
3,450
Motor vehicles
2,850
7,300
During the year, the only asset disposal was from plant and machinery. This plant had a net book value of £6,100 and proceeds were £5,500.

Required:
a) Prepare a cash flow statement for Houser Ltd for the year ended 31 March 2010.
(20 marks)
b) Discuss the validity of extending the bank overdraft by a further £3,500,000. (5 marks)

[TOTAL MARKS=25]

Page 4 of 8

Question 3

3(a)

The IASB’s Framework for the preparation and Presentation of Financial Statements determines that there are four qualitative characteristics which make financial information useful to the various users of financial statements.

Required:
List and describe any TWO of the four qualitative characteristics stated in the IASB Framework and explain how each contributes to the usefulness of financial information.
(6 Marks)

3(b)

The following events or transactions relate to Lithium PLC, a company which runs a hotel chain, and occurred during the year ended 31 October 2010: (i) Lithium PLC has maintained an accounting policy of expensing the finance...
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