Case Financial statement for public limited companies

,Contents
Task 1 – Scenario 1......................................................................................................................................3
P1 Outline the accounting concepts listed in learning aim A1.................................................................3
P2 Calculate adjustments relating to the additional information provided in scenario 1........................3
P3 Prepare Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 st 2020
and statement of financial position as of 31 December 2020 for Better-way Co....................................6
M1 Discuss and assess the accounting concepts outlined in P1. Qualitative characteristics of financial
statements and international accounting standards used IAS 2, IAS 10, 1AS16,1A537, and IAS 38)
relating to the Information given in notes while preparing financial statements for a better way
company................................................................................................................................................10
M1 (i) Discuss and assess the accounting concepts outlined in P1........................................................10
M1 (ii) Discuss and assess the Qualitative characteristics of financial statements prepared by Better-
way Company........................................................................................................................................12
MI (iii) Discuss and assess the International Accounting Standards in the accounts of Betterway
Company................................................................................................................................................13
D1 Identify the different stakeholders and the significance of financial statements to each stakeholder
of a company in the cement industry....................................................................................................14
Conclusion:............................................................................................................................................16
Learning Aim C:..........................................................................................................................................17
P6 Describe the main purpose of shareholder's ratios..........................................................................17
P7 Calculate the shareholder ratios for Betterway company (similar ratios of a competitor are
provided in scenario 1)..........................................................................................................................17
M3 Discuss the merits and limitations of ratio analysis for a limited company.....................................18
M4 Analyse the results of ratios calculated for Betterway company in P7 compared to competitors.. 19
D3 Evaluate the financial position of Betterway company for current and potential shareholders, using
shareholder ratio analysis......................................................................................................................20
Conclusion:............................................................................................................................................22
Task 2 – Scenario 2...................................................................................................................................22
P4 Explain the purpose of the statement of cash flows for a limited company.....................................22
P5 completes the Mireska statement of cash flows using the information provided in scenario 2.......23
M2 analyse the changes in the financial position of Mireska using the statement of cash flows..........24
D2 evaluate the financial position of Mireska for current stakeholders, using the statement of cash
flows......................................................................................................................................................25
Conclusion:............................................................................................................................................25
Bibliography...............................................................................................................................................26

, Task 1 – Scenario 1

P1 Outline the accounting concepts listed in learning aim A1

1. No GAAP supports a Revaluation of Fixed Assets. Rather Historical Cost Principle
suggests that all assets must be shown on the Balance sheet on their historical cost
values. However, depreciation of fixed assets is charged under the Prudence and
Matching Principle of Accounting
2. As per Prudence Principle, inventory should be valued at a lower Cost
and Net Realizable
3. Outstanding Finance costs are dealt with under the Matching / Accrual
Principle
4. Tax Provisions are created under the Prudence Principle of Accounting
5. Dividends are dealt with under Accrual Principle.
6. Provision for doubtful debts is created under the Prudence Principle of Accounting
7. Prepaid Expenses are dealt with under the Matching / Accrual Principle

P2 Calculate adjustments relating to the additional information provided in scenario
1

Adjustment 1

Land And Building

Land $20M
Building $60M
Total Cost $80M

Revaluation shows the new value at $79,00,000

Land $25M
Building $54M ÷ 18 years =$3000,000 per year depreciation
Total Cost $79M
CGS Admin Exp
60% 40%
$18,00,000 $12,00,000