N1609 Advanced Financial Accounting

1. Check all the main ‘complete set of financial statements’ of Sainsburys in the link above, compare with the IAS1 requirements, and identify the following:

How the frequency of reporting has been complied and stated?
 
2) How the information on Statement of financial position has been presented in accordance with IAS1? Are there variations of the line items and why?

3) Where the items described in IAS1 para. 79 have been disclosed, in the statement of financial position, in the statement of changes in equity, or in the notes? Give one example.

4) How the information on Statement of profit or loss and other comprehensive income has been presented in accordance with IAS1? What have been reported in the other comprehensive income section? Are there variations of the title and line items?

5) How the information on the statement of changes in equity has been presented in accordance with IAS1? Are there variations of the line items?

6)  Where has the amount of dividends recognised as distributions to owners during the period been reported, in the statement of changes in equity or in the notes?

7) What is the ‘minimum comparative information’ requirement in IAS1 and how Sainsbury’s have complied with it?

Required: 
For each of these assets: 

(a) Compute the tax base of the asset and determine whether a temporary difference exists with respect to it. If so, state whether this is a taxable temporary difference or a deductible temporary difference. 

(b) Assuming a tax rate of 19%, calculate the amount of the deferred tax liability or asset which should be shown in the statement of financial position in relation to the asset.

On 1 January 2019, a company issues £200,000 of 7% loan stock at its face value. Interest on this loan stock is payable on 31 December each year. The stock is due for redemption at its face value on 31 December 2022 but may be converted into ordinary shares on that date instead.

Required:

Calculate the fair value of the liability component and the equity component of this loan stock, assuming a discounting rate of 9% per annum (which is the rate of interest that would be expected on comparable loan stocks without the conversion option).