Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Exercise 1 The 2008 Balance Sheet of the Light Company is reported in the following table (expressed in thousand euro). Non current assets 23.500 Equity Property, Plant and Equipment 14.000 Issued capital Investment property 4.500 Share premium accounts Intangible assets with indefinite useful life - Revaluation Reserve Intangible assets with definite useful life 5.000 Other reserves Holdings - Retained earnings Other Financial activities - Net Income/Loss Current assets 35.000 Non current liabilities Debt in issue Receivables and others 6.000 Debt to bank Inventories 3.000 Other non current financial liabilities Risk and charges Work in progress on ordination Funds to personnel Current Liabilities Current financial activities 1.000 Debt in issue Cash and cash equivalent 25.000 Debt to bank Discontinued operations 5.000 Debt to suppliers Other financial current liabilities Tax debt Other current liabilities Liabilities related to discontinued operations TOTAL ASSETS 63.500 TOTAL LIABILITIES 31.000 20.000 1.500 1.000 3.000 1.500 4.000 18.000 12.000 2.500 3.500 14.500 10.000 4.250 250 63.500 By reading the Notes to the Financial Statement, we know that: A) B) C) D) E) F) G) H) I) The Share capital is composed by 400.000 ordinary shares; The Light Company uses the fair value model; Depreciation is calculated according to the linear model; The item Property, Plant and Equipment refers to: ‒ Production plant bought at the beginning of January 2007 (01/01/2007) with a value of 12.000 k€ with a useful life of 6 years ‒ Storehouse with a residual useful life (2009 is included) equal to 5 years; The item Intangible assets with definite useful life refers to a brand bought the 01/01/2006. It residual useful life at the end of 2008 is 2 years; The item Investment properties refers to some apartments bought by the company; The Revaluation Reserve refers to the production plant that had been revaluated (1.000 k€) at the end of 2008 (31/12/2008); The item Debt to Bank in current liabilities refers to a debt of 10.000 k€, started at the beginning of July (01/07/2008) and it will last 15 months. The interest rate is equal to 5% and borrowing costs will be paid at the end of the debt. The related cost (accrual accounting principle) is accounted in the item Other current financial liabilities. The item Debt to Bank in non current liabilities have an annual interest rate of 10% and the related payment is postponed every 4 months (30/04 of every year). The 20% of this debts will end in 2010. J) Discontinued operations refers to a plant that could not be used any more. The plant will be ceded at the beginning of January 2009 and it is paid by cash (4.500k€); K) The Light signed an agreement with the Cleaning For You (CFY) to receive cleaning services. The agreement is signed at the beginning of September 2008 and it will last 2 years. The Cleaning For You wants to receive in advance the annual payment of 1.800 k€. Cost related to 2009 (accrual accounting principle) is accounted in the item Receivables and others. L) The Light pays its suppliers every 3 months M) Commercial receivables are collected every 4 months. During 2009, the following events occurred: 1. Distribution of the 60% related to 2008 net income as dividends; 2. Sell of finished goods, realizing a revenue of 42.000 k€. The company is used to store the 5% of the allowed credit; 3. Purchase of raw material for a total amount of 6.000 k€; 4. The company paid liquidation for a total amount of 1.500 k€; 5. Shareholders paid of 800 k€ related to a capital increase in 2008. The amount paid in 2008 is 600 k€; 6. At the beginning of January 2009, the company bought a plant (useful life of 5 years). The value of the plant is 5.000 k€ and it has been paid by cash. To buy the plant, the company asked for a debt to bank. The bank will last 3 years and it is equal to 2.400 k€. The debt will start the 01/03/2009. The annual interest rate is equal to 10% and the borrowing costs are paid following the accrual accounting principle; 7. Cost to personnel are equal to 5.000 k€ and the 30% of this amount is stored in Funds to personnel; 8. At the end of 2009, the company sold the storehouse for a total price of 3.500 k€. The buyer’s company paid by cash the 80% of the price, while the remaining 20% will be paid in 2010; 9. The company receives the payment of 3.000 k€ for a service provided to another company. The 50% of the payment is postponed in 2010; 10. Inventories of finished goods, at the end of the 2009, increase of a value equal to 1.500 k€, while that of raw materials decrease of 500 k€. We also know that: a) The value of investment properties increases its value (500 k€): b) The value of current financial assets decreases (250 k€); c) A loss of value of 700 k€ for the item Intangible assets with indefinite useful life Please account for the events and provide the Balance Sheet and the Income Statement of the 2009. Exercise 2 The 2010 Star Balance Sheet is reported in the following table (expressed in thousand euro). Non current assets Property, Plant and Equipment Investment property Intangible assets with indefinite useful life Intangible assets with definite useful life Holdings Other Financial activities Current assets 47.500 34.000 1.500 12.000 43.000 Receivables and others 10.000 Inventories 3.000 Work in progress on ordination - Current financial activities - Cash and cash equivalent Discontinued operations TOTAL ASSETS 30.000 4.252 94.752 Equity Issued capital Share premium accounts Revaluation Reserve Other reserves Retained earnings Net Income/Loss Non current liabilities Debt in issue Debt to bank Other non current financial liabilities Risk and charges Funds to personnel Current Liabilities Debt in issue Debt to bank Debt to suppliers Other current financial liabilities Tax debt Other current liabilities Liabilities related to discontinued operations TOTAL LIABILITIES 57.000 40.000 2.500 2.000 4.500 3.000 5.000 17.500 10.000 2.500 5.000 20.252 12.600 7.400 252 0 94.752 By reading the Notes to the Financial Statement, we know that: A) The Share capital is composed by 100.000 ordinary shares B) The item Property, Plant and Equipment refers to: ‒ A production plant bought in January 2009 (01/01/2009) (value 24.000 k€, useful life 6 years) ‒ A storehouse with a residual useful life (at the end of the 2010) of 3 years C) The item Intangible assets with definite useful life refers to a brand bought in January 2009 (01/01/2009) with useful life of 5 years D) The Star Company uses the fair value model E) Depreciation is calculated according to the linear model; F) The revaluation Reserve is related to a previous revaluation of the storehouse G) The item Current debt to bank refers to a debts started the 01/10/2010 that will last 12 months. The payment of borrowing costs is post-poned at the end of the debt. The annual interest rate is 8%. Cost related to 2010 is accounted in the item Other current financial liabilities H) The item Non current debt to bank refers to a debts started in October 2008 (01/10/2008). Annual interest rate is 10%. The payment of borrowing costs is post-poned. The payment of borrowing costs is due every 4 months. The 50% of this debts will end during 2012. I) Average time for suppliers’ payment is 2 months J) The Star signed an agreement with the Moon Company to receive transport services. According to the agreement, The Star must pay in advance of an annual fee (2.400 k€). Cost related to 2011 are accounted in the item Receivable and others. The agreement will last 3 years and it was signed the 01/10/2010. K) Average time to collect Commercial receivables was 2 months in 2010 and it becomes 3 months in 2011. During the 2011, the Star Company: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) Distributed the 40% of 2010 net income; It ended a buy-back activity through which it bought back 30.000 shares at a price of 500 €/share Purchase of raw material for a total amount of 7.500 k€; Sell of finished goods, realizing a revenue of 42.000 k€. The company is used to store the 6% of the allowed credit; Collection of dividends from a controlled company for a total collection of 800 k€ Sell of the a production plant accounted in the item Discontinued operations generating a capital gain of 500 k€; Cost to personnel are equal to 9.000 k€ and the 30% of this amount is stored in Funds to personnel; In December 2011 the company sold the storehouse at a price of 15.000 k€. The 60% of the price is immediately collected, while the remaining part will be paid in 2012 It paid the consultancy service to the Cask company (2.500 k€). The 40% of the payment is postponed in 2012 Total taxes are equal to 3.000 k€. 1.000 k€ are paid in 2011 and the remaining part will be paid in 2012 Inventories of finished goods, at the end of the 2009, increase of a value equal to 1.000 k€, while that of raw materials decrease of 500 k€. We also know that: i) ii) The impairment test (at the beginning of the 2011) on the production plant identifies a loss of value equal to 400 k€ i) The impairment test (at the end of the 2011) on the Item Intangible assets with indefinite useful life identifies a loss of value equal to 500 k€ Please account for the events and provide the 2011 Balance Sheet and Income Statement.