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考试代写-BMAN21020
时间：2022-05-25
BMAN21020
Page 1 of 8
Original Duration 2 Hours 30 Minutes
THE UNIVERSITY OF MANCHESTER
FINANCIAL REPORTING AND ACCOUNTABILITY
4th June 2021, 11:00AM
Answer TWO questions in total:
Answer Question 1 from SECTION A (COMPULSORY)
and
Answer ONE question from SECTION B
___________________________________________________________________
You have 2 hours and 30 minutes to complete this examination.
You must type answers in Word.
You should type your workings, but it is permissible to include images of your
handwritten and/or excel workings. It is your responsibility to ensure that these
are of high quality, and appropriately located and integrated into a single word
document. However, it may save time to type your workings where necessary.
Answers must be typed using Times New Roman Font type, size 12 with
double spacing and only in black ink for clear visibility.
Each question shows a required word limit which includes calculations. You must
not exceed the specified word limit (+10% does not apply). Anything beyond the
word limit will not be marked. You can check your word count for each
question, as you type: highlight the words to your answer and the word count
should be displayed at the bottom left of the Word screen.
You will not be penalised for answers that are shorter than the limit; answers will
be given credit for being comprehensive, rather than for being a certain length.
As this is an open book exam, you should not directly quote from lecture
materials, internet sources or other material. Every answer must be written in
your own words to avoid plagiarism.
___________________________________________________________________
Electronic calculators may be used in accordance with the University regulations.
___________________________________________________________________
© The University of Manchester, 2021
PTO
BMAN21020
Page 2 of 8
SECTION A (COMPULSORY)
Answer ALL parts of Question 1
Maximum word count for Q1: 1,500 words
Question 1
Helena Products plc is a manufacturer of office furniture. In January 2019 the
company carried out a strategic review and decided to target as customers people
working from home. In order to achieve this strategy the company acquired a building
with a showroom and a warehouse and invested on new delivery vehicles. This
expansion has been financed by loans and the bank overdraft facility has been fully
utilised. Financial information concerning the business is given below.
Draft Income statement (extract) for the years
ended 30 November
2020 2019
£'000 £'000
Revenue 5,683 5,241
Cost of sales (4,376) (4,124)
Gross Profit 1,307 1,117
Operating expenses (786) (660)
Operating profit 521 457
Interest charges (41) (11)
Profit before taxation 480 446
Taxation (193) (179)
Profit for the year 288 267
Draft Statements of Financial Position
as at 30 November
2020 2019
£'000 £'000
Non-current assets
Property plant and equipment (net book value) 3,680 2,620
Premises (net book value) 2,029 1,188
5,709 3,808
Current assets
Inventories 2,710 1,193
Trade receivables 1,140 1,270
3,850 2,463
Total assets 9,559 6,271
Equity
Share capital (£1 nominal value) 1,000 1,000
Retained Earnings 4,134 3,907
5,134 4,907
Non-current liabilities
Borrowing ± loans 1,838 610
Current liabilities
Trade payables 1,122 578
Taxation 97 90
Short-term borrowing (all bank overdraft) 1,368 86
2,587 754
Total equity and liabilities 9,559 6,271
Question 1 continued overleaf
BMAN21020
Page 3 of 8
Question 1 continued
a) Calculate for Helena Products plc the following ratios for both 2019 and 2020
using the available information:
i. Operating profit margin
ii. Gross profit margin
iii. Net profit margin (after taxation)
iv. (Net) Asset Turnover ratio
v. Return on capital employed (ROCE)
vi. Current ratio
vii. Receivables Collection period (days)
viii. Stock turnover period (days)
ix. Gearing ratio (debt to capital employed)
(9 marks)
b) You are working as an investment advisor for a large pension fund which is
considering investing on Helena plc. +HOHQDSOF¶VSULFHSHUVKDUHZDV RQ
30 November 2020 and £1.29 on 30 November 2019. Using the ratios calculated
in part (a), and any other ratios or information you consider relevant, provide an
investment recommendation to your employer commenting on the performance
of the company and on the new strategy. In your answer you should also reflect
on the impact of COVID-RQWKHILUP¶VSHUIRUPDQFHLQDQGJRLQJIRUZDUG
(25 marks)
c) For the 2020 financial year, the CEO of Helena Products PLC received an annual
salary of £100,000. Her executive pay contract also includes an annual bonus
which can amount up to 200% of the salary (i.e., £200,000). The bonus becomes
payable based on a number of criteria, as described in the following table:
Desciption of Annual Bonus Plan for Financial year 2020
Performance
Measure Weighting
Minimum
Threshold
(20% of
award)
Target
(50%
of
award)
Stretch
(100%
of
award)
Performance
Achieved
Resulting
Level (%
or amount
of bonus
payable)
ROCE 50% 7.60% 8.40% 9.20%
Net Profit Margin 50% 3.95% 4.95% 5.95%
Complete the blanks in the above table for 2020. How much is the bonus that
the CEO will receive for her performance? Show your workings and use two
decimal points in your calculations. (8 marks)
d) On 1 December 2019 Helena Products issued a loan of £1.625 million spanning
a three-year term, with a coupon rate of interest of 2%. It received £1.3 million
(face value less a 20% discount). Finance charges of £32,500 (2% of the
£1.625m) are payable annually in arrears on 30 November, and the principal sum
of £1.625 million is repayable on 30 November 2022. The implicit interest rate
relating to this loan agreement is 10.0%. Helena Products has recorded the
£32,500 payment made on 30 November 2020 as interest in their draft income
statement for the year ended 30 November 2020.
Question 1 continued overleaf
BMAN21020
Page 4 of 8
Question 1 continued
Explain how the loan should have been accounted for according to IAS 32, and
calculate the impact of any correction on the net profit margin (ignoring tax).
(10 marks)
e) Define the Bonus Plan Hypothesis from Positive Accounting Theory. Briefly
describe and explain its predictions on the choices of accounting policies by firm
managers. Also, reflect on how the Bonus Plan Hypothesis could help us explain
the accounting treatment of the loan as descibed in part (d).
(8 marks)
(Total for Q1: 60 marks)
PTO
BMAN21020
Page 5 of 8
SECTION B
Answer ONE question
Maximum word count for Q2/Q3: 1,000 words
Question 2
a) Employee Benefits
On 30 April 2020, actuaries valued the defined benefit pension scheme of Bitz plc and
estimated that the scheme had assets of £30 million and obligations of £35 million
(using the valuation methods prescribed in IAS 19). The actuaries made assumptions
in their valuation that the plan assets would grow by 9% (their expected return) over
the coming year to 30 April 2021, and that the obligations were discounted using an
appropriate corporate bond rate of 6%. The actuaries estimated the current service
cost for the year would be £1.1 million and informed the company that pensions paid
to retired directors from the fund would be £1.6 million during the year, and the
company should contribute £2.3 million to the scheme.
At 30 April 2021, the actuaries revalued the pension fund and estimated the assets to
be worth £29 million, and the obligations of the fund to be £31.6 million.
Assume that contributions and benefits are paid on the last day of the year.
Prepare two summaries showing the movements on pension plan assets and pension
plan obligations in the year and use your summaries to calculate the net actuarial gain
or loss on the pension fund in the year. Explain why adjustments relating to actuarial
gains and losses are likely to arise. (18 marks)
b) Judgement in financial reporting
The accounting for a defined benefit pension scheme under IAS 19 involves the
application of judgement under conditions of uncertainty.
Describe two other examples where judgement is required in financial reporting and
whether you believe that the uncertainty relating to the judgement is justified in
providing the user of the financial statements with more useful information.
(6 marks)
Question 2 continued overleaf
BMAN21020
Page 6 of 8
Question 2 continued
c) Capital Maintenance
On 1 April 2020 Arc Ltd began trading in specialist equipment made with components
that are in short supply. Capital of £4,000 was introduced and used immediately to
purchase 10 units of inventory at a cost of £400 each. On 1 October 2020, 6 units of
the inventory was sold for £700 cash, when the replacement cost of each unit had
risen to £450. No further transactions took place, and by the year-end of 31 March
2021, the replacement cost per unit had risen to £500. Summarised financial
statements for the year ended 31 March 2021, based on the Historic cost convention
(and ignoring tax), are shown below:
Income Statement for the year ended 31 March 2021: £ £
Sales [6 units at £700 each] 4,200
Purchases [10 units at £400 each] 4,000
Closing stock [4 units at £400 each] (1,600)
Cost of sales: (2,400)
Profit 1,800
Statement of Financial Position at 31 March 2021 £
Stock 1,600
Cash 4,200
Capital Employed 5,800
Share Capital 4,000
Profit 1,800
5,800
The owners of Arc are keen to receive all distributable profits, however the directors
DUH FRQFHUQHG WKDW GRLQJ VRPD\ HURGH WKH FRPSDQ\¶V FDSLWDO JLYHQ LQFUHDVHV LQ
replacement cost throughout the year as summarised below:
Date:
Replacement
cost
1 April 2020 £400
1 October 2020 £450
31 March 2021 £500
Using the above information, prepare a summary income statement and statement of
financial position in line with current cost accounting (Replacement Cost) basis (CCA).
Explain to the directors why a distribution of £1,800 would not ensure capital is
PDLQWDLQHGLQ³SK\VLFDO´WHUPVDQGVXJJHVWDQDSSURSULDWHdividend to pay to maintain
capital under the current cost accounting. (16 marks)
(Total for Q2: 40 marks)
PTO
BMAN21020
Page 7 of 8
Question 3
a) Capital Reconstruction
Dunstable Ltd has a statement of financial position with significant retained losses and
no cash (it holds a bank overdraft of £66,000). Its net assets stand at £84,000 and are
represented by the following capital and reserves:
¶
Preference shares of £1 each fully paid 200
Ordinary shares of £1 each fully paid 100
Retained Earnings (216)
Net assets 84
Dunstable has succeeded in creating a new product that its directors anticipate will
yield profits of £50,000 each year for at least the next five years, although this will
require additional funds. The following capital restructuring scheme has been
approved and authorised by its creditors:
1. 40% of the ordinary shares are to be surrendered.
2. The preference shares are to be surrendered and cancelled and the holder of every
50 preference shares will pay Dunstable £30 cash, and will be issued:
One 7% loan note of £40 each, and
10 fully paid ordinary shares of £1 (redistributing the shares surrendered).
3. The freehold property is to be revalued upwards by £60,000.
4. The negative balance on retained earnings will be written off, and equipment will
be impaired by £4,000.
(i) Discuss the challenges that Dunstable would face in raising finance to fund its new
product given its current capital and reserves presentation. Explain how Dunstable
may be able to persuade both ordinary and preference shareholders ± and its
creditors ± to the restructuring scheme that is described above. (12 marks)
(ii) Prepare the journals that would account for each of the adjustments (1) to (4)
outlined above and present a T-account of the Capital Reduction and
Reorganisation (CR&R) account that should clear to zero as a result of the
adjustments. (12 marks)
b) Taxation
Wang plc is a pharmaceutical company. Due to the length of time the company has to
spend developing new medicines before they can be sold the company has accrued
significant losses and has calculated a total deferred tax asset of £2,400,000 in relation
to those losses for the year end 31 March 2021. On 1 April 2021, the company is due
to start selling the medicines and taxable profits are estimated at £480,000 for the year
ended 31 March 2022. However, due to competition in the market and other market
uncertainties no profits can be anticipated for the year ended 31 March 2023 and
beyond. The current tax rate is currently 20%.
Question 3 continued overleaf
BMAN21020
Page 8 of 8
Question 3 continued
For year ended 31 March 2021 discuss the requirements for a tax asset to be
recognised and calculate the amount to be included in the financial statements as a
deferred tax asset. State any assumptions made in coming to your calculation.
(8 marks)
c) External Audit
Discuss the stages that are involved in the external audit process, and whether you
believe that an external audit adds value to the users of the financial statements.
(8 marks)
(Total for Q3: 40 marks)
END OF EXAMINATION PAPER
Page 1 of 8
Original Duration 2 Hours 30 Minutes
THE UNIVERSITY OF MANCHESTER
FINANCIAL REPORTING AND ACCOUNTABILITY
4th June 2021, 11:00AM
Answer TWO questions in total:
Answer Question 1 from SECTION A (COMPULSORY)
and
Answer ONE question from SECTION B
___________________________________________________________________
You have 2 hours and 30 minutes to complete this examination.
You must type answers in Word.
You should type your workings, but it is permissible to include images of your
handwritten and/or excel workings. It is your responsibility to ensure that these
are of high quality, and appropriately located and integrated into a single word
document. However, it may save time to type your workings where necessary.
Answers must be typed using Times New Roman Font type, size 12 with
double spacing and only in black ink for clear visibility.
Each question shows a required word limit which includes calculations. You must
not exceed the specified word limit (+10% does not apply). Anything beyond the
word limit will not be marked. You can check your word count for each
question, as you type: highlight the words to your answer and the word count
should be displayed at the bottom left of the Word screen.
You will not be penalised for answers that are shorter than the limit; answers will
be given credit for being comprehensive, rather than for being a certain length.
As this is an open book exam, you should not directly quote from lecture
materials, internet sources or other material. Every answer must be written in
your own words to avoid plagiarism.
___________________________________________________________________
Electronic calculators may be used in accordance with the University regulations.
___________________________________________________________________
© The University of Manchester, 2021
PTO
BMAN21020
Page 2 of 8
SECTION A (COMPULSORY)
Answer ALL parts of Question 1
Maximum word count for Q1: 1,500 words
Question 1
Helena Products plc is a manufacturer of office furniture. In January 2019 the
company carried out a strategic review and decided to target as customers people
working from home. In order to achieve this strategy the company acquired a building
with a showroom and a warehouse and invested on new delivery vehicles. This
expansion has been financed by loans and the bank overdraft facility has been fully
utilised. Financial information concerning the business is given below.
Draft Income statement (extract) for the years
ended 30 November
2020 2019
£'000 £'000
Revenue 5,683 5,241
Cost of sales (4,376) (4,124)
Gross Profit 1,307 1,117
Operating expenses (786) (660)
Operating profit 521 457
Interest charges (41) (11)
Profit before taxation 480 446
Taxation (193) (179)
Profit for the year 288 267
Draft Statements of Financial Position
as at 30 November
2020 2019
£'000 £'000
Non-current assets
Property plant and equipment (net book value) 3,680 2,620
Premises (net book value) 2,029 1,188
5,709 3,808
Current assets
Inventories 2,710 1,193
Trade receivables 1,140 1,270
3,850 2,463
Total assets 9,559 6,271
Equity
Share capital (£1 nominal value) 1,000 1,000
Retained Earnings 4,134 3,907
5,134 4,907
Non-current liabilities
Borrowing ± loans 1,838 610
Current liabilities
Trade payables 1,122 578
Taxation 97 90
Short-term borrowing (all bank overdraft) 1,368 86
2,587 754
Total equity and liabilities 9,559 6,271
Question 1 continued overleaf
BMAN21020
Page 3 of 8
Question 1 continued
a) Calculate for Helena Products plc the following ratios for both 2019 and 2020
using the available information:
i. Operating profit margin
ii. Gross profit margin
iii. Net profit margin (after taxation)
iv. (Net) Asset Turnover ratio
v. Return on capital employed (ROCE)
vi. Current ratio
vii. Receivables Collection period (days)
viii. Stock turnover period (days)
ix. Gearing ratio (debt to capital employed)
(9 marks)
b) You are working as an investment advisor for a large pension fund which is
considering investing on Helena plc. +HOHQDSOF¶VSULFHSHUVKDUHZDV RQ
30 November 2020 and £1.29 on 30 November 2019. Using the ratios calculated
in part (a), and any other ratios or information you consider relevant, provide an
investment recommendation to your employer commenting on the performance
of the company and on the new strategy. In your answer you should also reflect
on the impact of COVID-RQWKHILUP¶VSHUIRUPDQFHLQDQGJRLQJIRUZDUG
(25 marks)
c) For the 2020 financial year, the CEO of Helena Products PLC received an annual
salary of £100,000. Her executive pay contract also includes an annual bonus
which can amount up to 200% of the salary (i.e., £200,000). The bonus becomes
payable based on a number of criteria, as described in the following table:
Desciption of Annual Bonus Plan for Financial year 2020
Performance
Measure Weighting
Minimum
Threshold
(20% of
award)
Target
(50%
of
award)
Stretch
(100%
of
award)
Performance
Achieved
Resulting
Level (%
or amount
of bonus
payable)
ROCE 50% 7.60% 8.40% 9.20%
Net Profit Margin 50% 3.95% 4.95% 5.95%
Complete the blanks in the above table for 2020. How much is the bonus that
the CEO will receive for her performance? Show your workings and use two
decimal points in your calculations. (8 marks)
d) On 1 December 2019 Helena Products issued a loan of £1.625 million spanning
a three-year term, with a coupon rate of interest of 2%. It received £1.3 million
(face value less a 20% discount). Finance charges of £32,500 (2% of the
£1.625m) are payable annually in arrears on 30 November, and the principal sum
of £1.625 million is repayable on 30 November 2022. The implicit interest rate
relating to this loan agreement is 10.0%. Helena Products has recorded the
£32,500 payment made on 30 November 2020 as interest in their draft income
statement for the year ended 30 November 2020.
Question 1 continued overleaf
BMAN21020
Page 4 of 8
Question 1 continued
Explain how the loan should have been accounted for according to IAS 32, and
calculate the impact of any correction on the net profit margin (ignoring tax).
(10 marks)
e) Define the Bonus Plan Hypothesis from Positive Accounting Theory. Briefly
describe and explain its predictions on the choices of accounting policies by firm
managers. Also, reflect on how the Bonus Plan Hypothesis could help us explain
the accounting treatment of the loan as descibed in part (d).
(8 marks)
(Total for Q1: 60 marks)
PTO
BMAN21020
Page 5 of 8
SECTION B
Answer ONE question
Maximum word count for Q2/Q3: 1,000 words
Question 2
a) Employee Benefits
On 30 April 2020, actuaries valued the defined benefit pension scheme of Bitz plc and
estimated that the scheme had assets of £30 million and obligations of £35 million
(using the valuation methods prescribed in IAS 19). The actuaries made assumptions
in their valuation that the plan assets would grow by 9% (their expected return) over
the coming year to 30 April 2021, and that the obligations were discounted using an
appropriate corporate bond rate of 6%. The actuaries estimated the current service
cost for the year would be £1.1 million and informed the company that pensions paid
to retired directors from the fund would be £1.6 million during the year, and the
company should contribute £2.3 million to the scheme.
At 30 April 2021, the actuaries revalued the pension fund and estimated the assets to
be worth £29 million, and the obligations of the fund to be £31.6 million.
Assume that contributions and benefits are paid on the last day of the year.
Prepare two summaries showing the movements on pension plan assets and pension
plan obligations in the year and use your summaries to calculate the net actuarial gain
or loss on the pension fund in the year. Explain why adjustments relating to actuarial
gains and losses are likely to arise. (18 marks)
b) Judgement in financial reporting
The accounting for a defined benefit pension scheme under IAS 19 involves the
application of judgement under conditions of uncertainty.
Describe two other examples where judgement is required in financial reporting and
whether you believe that the uncertainty relating to the judgement is justified in
providing the user of the financial statements with more useful information.
(6 marks)
Question 2 continued overleaf
BMAN21020
Page 6 of 8
Question 2 continued
c) Capital Maintenance
On 1 April 2020 Arc Ltd began trading in specialist equipment made with components
that are in short supply. Capital of £4,000 was introduced and used immediately to
purchase 10 units of inventory at a cost of £400 each. On 1 October 2020, 6 units of
the inventory was sold for £700 cash, when the replacement cost of each unit had
risen to £450. No further transactions took place, and by the year-end of 31 March
2021, the replacement cost per unit had risen to £500. Summarised financial
statements for the year ended 31 March 2021, based on the Historic cost convention
(and ignoring tax), are shown below:
Income Statement for the year ended 31 March 2021: £ £
Sales [6 units at £700 each] 4,200
Purchases [10 units at £400 each] 4,000
Closing stock [4 units at £400 each] (1,600)
Cost of sales: (2,400)
Profit 1,800
Statement of Financial Position at 31 March 2021 £
Stock 1,600
Cash 4,200
Capital Employed 5,800
Share Capital 4,000
Profit 1,800
5,800
The owners of Arc are keen to receive all distributable profits, however the directors
DUH FRQFHUQHG WKDW GRLQJ VRPD\ HURGH WKH FRPSDQ\¶V FDSLWDO JLYHQ LQFUHDVHV LQ
replacement cost throughout the year as summarised below:
Date:
Replacement
cost
1 April 2020 £400
1 October 2020 £450
31 March 2021 £500
Using the above information, prepare a summary income statement and statement of
financial position in line with current cost accounting (Replacement Cost) basis (CCA).
Explain to the directors why a distribution of £1,800 would not ensure capital is
PDLQWDLQHGLQ³SK\VLFDO´WHUPVDQGVXJJHVWDQDSSURSULDWHdividend to pay to maintain
capital under the current cost accounting. (16 marks)
(Total for Q2: 40 marks)
PTO
BMAN21020
Page 7 of 8
Question 3
a) Capital Reconstruction
Dunstable Ltd has a statement of financial position with significant retained losses and
no cash (it holds a bank overdraft of £66,000). Its net assets stand at £84,000 and are
represented by the following capital and reserves:
¶
Preference shares of £1 each fully paid 200
Ordinary shares of £1 each fully paid 100
Retained Earnings (216)
Net assets 84
Dunstable has succeeded in creating a new product that its directors anticipate will
yield profits of £50,000 each year for at least the next five years, although this will
require additional funds. The following capital restructuring scheme has been
approved and authorised by its creditors:
1. 40% of the ordinary shares are to be surrendered.
2. The preference shares are to be surrendered and cancelled and the holder of every
50 preference shares will pay Dunstable £30 cash, and will be issued:
One 7% loan note of £40 each, and
10 fully paid ordinary shares of £1 (redistributing the shares surrendered).
3. The freehold property is to be revalued upwards by £60,000.
4. The negative balance on retained earnings will be written off, and equipment will
be impaired by £4,000.
(i) Discuss the challenges that Dunstable would face in raising finance to fund its new
product given its current capital and reserves presentation. Explain how Dunstable
may be able to persuade both ordinary and preference shareholders ± and its
creditors ± to the restructuring scheme that is described above. (12 marks)
(ii) Prepare the journals that would account for each of the adjustments (1) to (4)
outlined above and present a T-account of the Capital Reduction and
Reorganisation (CR&R) account that should clear to zero as a result of the
adjustments. (12 marks)
b) Taxation
Wang plc is a pharmaceutical company. Due to the length of time the company has to
spend developing new medicines before they can be sold the company has accrued
significant losses and has calculated a total deferred tax asset of £2,400,000 in relation
to those losses for the year end 31 March 2021. On 1 April 2021, the company is due
to start selling the medicines and taxable profits are estimated at £480,000 for the year
ended 31 March 2022. However, due to competition in the market and other market
uncertainties no profits can be anticipated for the year ended 31 March 2023 and
beyond. The current tax rate is currently 20%.
Question 3 continued overleaf
BMAN21020
Page 8 of 8
Question 3 continued
For year ended 31 March 2021 discuss the requirements for a tax asset to be
recognised and calculate the amount to be included in the financial statements as a
deferred tax asset. State any assumptions made in coming to your calculation.
(8 marks)
c) External Audit
Discuss the stages that are involved in the external audit process, and whether you
believe that an external audit adds value to the users of the financial statements.
(8 marks)
(Total for Q3: 40 marks)
END OF EXAMINATION PAPER
