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Foxvord (Mar/Jun 18)

Below is the trial balance for Foxvord Co at 31 December 20X7:

                                                                                                                        $'000                                   $'000

Property – carrying amount 1 January 20X7 (note (iv))                    18,000

Ordinary shares $1 at 1 January 20X7 (note (iii))                                                                            20,000

Other components of equity (Share premium) at 1 January 20X7 (note (iii))                            3,000

Revaluation surplus at 1 January 20X7 (note (iv))                                                                                800

Retained earnings at 1 January 20X7                                                                                                   6,270

Draft profit for the year ended 31 December 20X7                                                                          2,250

4% Convertible loan notes (note (i))                                                                                                     8,000

Dividends paid                                                                                               3,620

Cash received from contract customer (note (ii))                                                                             1,400

Cost incurred on contract to date (note (ii))                                          1,900

Inventories (note (v))                                                                                   4,310

Trade receivables                                                                                         5,510

Cash                                                                                                               10,320

Current liabilities                                                                                                                                     1,840

                                                                                                                        43,660                                43,660

 The following notes are relevant:

1. On 1 January 20X7, Foxvord Co issued 80,000 $100 4% convertible loan notes. The loan notes can be converted to equity shares on 31 December 20X9 or redeemed at par on the same date. An equivalent loan without the conversion rights would have required interest of 6%. Interest is payable annually in arrears on 31 December each year. The annual payment has been included in finance costs for the year. The present value of $1 receivable at the end of each year, based on discount rates of 4% and 6%, are:

                                                           4%                                        6%

End of year 1                                    0.962                                   0.943

End of year 2                                    0.925                                   0.890

End of year 3                                    0.889                                   0.840

2. During the year, Foxvord Co entered into a contract to construct an asset for a customer, satisfying the performance obligation over time. The contract had a total price of $14million. The costs to date of $1·9million are included in the above trial balance. Costs to complete the contract are estimated at $7·1million. 
At 31 December 20X7, the contract is estimated to be 40% complete. To date, Foxvord Co has received $1·4million from the customer and this is shown in the above trial balance.

3. Foxvord Co made a 1 for 5 bonus issue on 31 December 20X7, which has not yet been recorded in the above trial balance. Foxvord Co intends to utilise the share premium as far as possible in recording the bonus issue

4. Foxvord Co's property had previously been revalued upwards, leading to the balance on the revaluation surplus at 1 January 20X7. The property had a remaining life of 25 years at 1 January 20X7. 
At 31 December 20X7, the property was valued at $16million.
No entries have yet been made to account for the current year's depreciation charge or the property valuation at 31 December 20X7. Foxvord Co does not make an annual transfer from the revaluation surplus in respect of excess depreciation.

5. It has been discovered that inventory totalling $0·39million had been omitted from the final inventory count in the above trial balance


A. Calculate the adjusted profit for Foxvord Co for the year ended 31 December 20X7
B. Prepare the statement of changes in equity for Foxvord Co for the year ended 31 December 20X7
C. Prepare the statement of financial position for Foxvord Co as at 31 December 20X7

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