SOLUTION MANUAL FOR FINANCIAL
ACCOUNTING AND REPORTING 21ST EDITION BY
BARRY ELLIOTT JAMIE ELLIOTT NEWEST
EDITION 2026
, Contents
Chapters Pages
1. Accounting and reporting on a cash flow basis 4
2. Accounting and reporting on an accrual accounting basis 9
3. Preparation of financial statements 15
4. Annual report: additional financial statements 40
5. Statements of cash flows 59
6. Income and asset value measurement: an economist’s approach 73
7. Accounting for price-level changes 87
8. Revenue recognition 110
10. Concepts – evolution of a global conceptual framework 128
11. Ethical behaviour and implications for accountants 131
12. Share capital, distributable profits and reduction of capital 136
13. Liabilities 148
14. Financial instruments 157
15. Employee benefits 179
16. Taxation in company accounts 198
17. Property, plant and equipment (ppe) 206
18. Leasing 225
19. R&d; goodwill; intangible assets and brands 239
20. Inventories 255
21. Construction contracts 268
22. Accounting for groups at the date of acquisition 283
23. Preparation of consolidated statements of financial position after the date
of acquisition 300
24. Preparation of consolidated statements of comprehensive income, changes in
equity and cash flows 307
25. Accounting for associates and joint ventures 330
26. Accounting for the effects of changes in foreign exchange rates
under ias 21 351
27. Earnings per share 360
28. Review of financial ratio analysis 376
29. Analytical analysis – selective use of ratios 401
31. Corporate governance 432
32. Sustainability – environmental and social reporting 441
3
© Pearson Education Limited 2012
, C hapter 1
Accounting and reporting on a cash flow basis
Question 1 – jane parker
(i) Cash budget (£000)
Jan Feb Mar Apr May June Total
Initial capital 150.00 82.50 232.50
Customers 60.00 75.00 135.00
Total receipts 150.00 82.50 60.00 75.00 367.50
Machinery 30.00 30.00
Motor vehicles 24.00 24.00
Premises 75.00 75.00
Drawings 1.20 1.20 1.20 1.20 1.20 1.20 7.20
Suppliers 30.00 48.00 60.00 60.00 60.00 258.00
Rates 1.20 1.20
Wages 2.25 2.25 2.25 2.25 2.25 2.25 13.50
General expenses 0.75 0.75 0.75 0.75 0.75 3.75
Insurance — — — — — 2.10 2.10
Total payments 132.45 35.40 52.20 64.20 64.20 66.30 414.75
Net cash flow 17.55 (35.40) (52.20) 18.30 (4.20) 8.70
Balance b/f — 17.55 (17.85) (70.05) (51.75) (55.95)
Balance c/f 17.55 (17.85) (70.05) (51.75) (55.95) (47.25) (47.25)
(ii) Statement of cash flows (£000)
Realised operating cash flows for the period ended 30 june 20x1
Receipts from customers 135.00
Payments:
Suppliers 258.00
Rates 1.20
Wages 13.50
General expenses 3.75
Insurance 2.10
278.55
(143.55)
4
© Pearson Education Limited 2012
, Barry Elliott and Jamie Elliott, Financial Accounting and Reporting, 15th edition, Instructor’s Manual
For information only
Statement of financial position as at 30 june 20x1
£000
Cap ital – int rod uced 232.50
– withdrawn (7.20)
Net operating cash flows: realised (143.55)
Unrealised (7.80)
73.95
Premises (nrv) 75.00
Vehicles (nrv) 19.20
Machinery (nrv) 27.00
Net cash balance (47.25)
73.95
(iii) Further information regarding jane parker
• Nature of business linked to parker’s business background, technical ability, special skills,
know-how, existing/terminated business involvement, contacts, associates and related
parties.
• Type of business unit to be used, and rationale for its selection.
• Sources of long- and short-term capital.
• Products’ life cycle and cash flow projections over product life cycle.
• Initial investment in fixed assets and their terminal value at the end of the life cycle.
• Parker’s attitude to risk, and how this affects the choice of discount rate and payback period.
5
© Pearson Education Limited 2012
ACCOUNTING AND REPORTING 21ST EDITION BY
BARRY ELLIOTT JAMIE ELLIOTT NEWEST
EDITION 2026
, Contents
Chapters Pages
1. Accounting and reporting on a cash flow basis 4
2. Accounting and reporting on an accrual accounting basis 9
3. Preparation of financial statements 15
4. Annual report: additional financial statements 40
5. Statements of cash flows 59
6. Income and asset value measurement: an economist’s approach 73
7. Accounting for price-level changes 87
8. Revenue recognition 110
10. Concepts – evolution of a global conceptual framework 128
11. Ethical behaviour and implications for accountants 131
12. Share capital, distributable profits and reduction of capital 136
13. Liabilities 148
14. Financial instruments 157
15. Employee benefits 179
16. Taxation in company accounts 198
17. Property, plant and equipment (ppe) 206
18. Leasing 225
19. R&d; goodwill; intangible assets and brands 239
20. Inventories 255
21. Construction contracts 268
22. Accounting for groups at the date of acquisition 283
23. Preparation of consolidated statements of financial position after the date
of acquisition 300
24. Preparation of consolidated statements of comprehensive income, changes in
equity and cash flows 307
25. Accounting for associates and joint ventures 330
26. Accounting for the effects of changes in foreign exchange rates
under ias 21 351
27. Earnings per share 360
28. Review of financial ratio analysis 376
29. Analytical analysis – selective use of ratios 401
31. Corporate governance 432
32. Sustainability – environmental and social reporting 441
3
© Pearson Education Limited 2012
, C hapter 1
Accounting and reporting on a cash flow basis
Question 1 – jane parker
(i) Cash budget (£000)
Jan Feb Mar Apr May June Total
Initial capital 150.00 82.50 232.50
Customers 60.00 75.00 135.00
Total receipts 150.00 82.50 60.00 75.00 367.50
Machinery 30.00 30.00
Motor vehicles 24.00 24.00
Premises 75.00 75.00
Drawings 1.20 1.20 1.20 1.20 1.20 1.20 7.20
Suppliers 30.00 48.00 60.00 60.00 60.00 258.00
Rates 1.20 1.20
Wages 2.25 2.25 2.25 2.25 2.25 2.25 13.50
General expenses 0.75 0.75 0.75 0.75 0.75 3.75
Insurance — — — — — 2.10 2.10
Total payments 132.45 35.40 52.20 64.20 64.20 66.30 414.75
Net cash flow 17.55 (35.40) (52.20) 18.30 (4.20) 8.70
Balance b/f — 17.55 (17.85) (70.05) (51.75) (55.95)
Balance c/f 17.55 (17.85) (70.05) (51.75) (55.95) (47.25) (47.25)
(ii) Statement of cash flows (£000)
Realised operating cash flows for the period ended 30 june 20x1
Receipts from customers 135.00
Payments:
Suppliers 258.00
Rates 1.20
Wages 13.50
General expenses 3.75
Insurance 2.10
278.55
(143.55)
4
© Pearson Education Limited 2012
, Barry Elliott and Jamie Elliott, Financial Accounting and Reporting, 15th edition, Instructor’s Manual
For information only
Statement of financial position as at 30 june 20x1
£000
Cap ital – int rod uced 232.50
– withdrawn (7.20)
Net operating cash flows: realised (143.55)
Unrealised (7.80)
73.95
Premises (nrv) 75.00
Vehicles (nrv) 19.20
Machinery (nrv) 27.00
Net cash balance (47.25)
73.95
(iii) Further information regarding jane parker
• Nature of business linked to parker’s business background, technical ability, special skills,
know-how, existing/terminated business involvement, contacts, associates and related
parties.
• Type of business unit to be used, and rationale for its selection.
• Sources of long- and short-term capital.
• Products’ life cycle and cash flow projections over product life cycle.
• Initial investment in fixed assets and their terminal value at the end of the life cycle.
• Parker’s attitude to risk, and how this affects the choice of discount rate and payback period.
5
© Pearson Education Limited 2012
