Crail plc has the following matters outstanding before finalising its published financial…

Crail plc has the following matters outstanding before finalising its published financial statements for the year ended 30 April 2002.

(1) The company sold its European business operations, excluding the fixed assets, on 10 April 2002 at a profit of £500 000. The turnover and operating profit for the year ended 30 April 2002 relating to the European business amounted to £5 million and £100000 respectively. The disposal of the fixed assets of the European business occurred on 10 May 2002 when a profit of £150 000 was realised. The European operations had been acquired in June 2001 as part of the acquisition of an unincorporated business.

(2) The company changed its accounting policy for research and development expenditure from capitalisation of development expenditure under SSAP 13, Accounting for research and development, to writing off all expenditure as incurred. As at 30 April 2002 the company had £400 000 of development expenditure capitalised with movements from 30 April 2001 being:

(3) The company revalued its land and buildings on 1 May 2001 to £5 million (land element – £1 million). The land and buildings were bought for £3 million (land element – £400 000) on 1 July 1997; the buildings had a total useful economic life of 50 years and there has been no change to this following the revaluation. It is company policy to: – charge a full year’s depreciation in the year of acquisition/revaluation; – transfer the realised element of the revaluation reserve to realised profits annually.

The revaluation has not yet been accounted for but depreciation has been charged in the year ended 30 April 2002 based on historic cost.

(4) The company intends to pay an ordinary dividend of 10% of profits legally distributable.

(5) The company had a total turnover of £25 million and total operating profit of £1 million for the year ended 30 April 2002 before any adjustments for the above items. The company had opening balances of:

(6) The taxation charge for the year ended 30 April 2002 is £350 000. No changes to this are required as a result of the above adjustments.


Prepare the following disclosures for the financial statements of Crail plc for the year ended 30 April 2002:

Profit and loss account (relevant extracts only)

Statement of total recognised gains and losses

Note of historical cost profits and losses

Reconciliation of movement in shareholders’ funds

Movement on reserves disclosure note.

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