Soriano Plc Designs Finance Assingment Help With Solution

Soriano Plc Designs Finance Assingment Help With Solution



  1. Financial statements from a trial balance suitable for publication

Soriano Plc designs management and accounting software for small and medium-sized companies. The trial balance of the company in respect of its financial year ended 31st December 2013 is as follows:


£m   £m
Cash & cash equivalents         59    
Cost of sales 109    
Dividends 95    
Revenue   1,832
Finance expenses 17    
Finance income   4
Intangible assets: Class A 2,038    
Intangible assets: Class B 216    
Inventories 5    
Liabilities   770
Other reserves – 1st Jan 2013     79
Property, plant & equipment 145    
Revaluation reserve – 1st Jan 2013     30
Retained earnings – 1st Jan 2013     639
Share capital – 1st Jan 2013   13
Share premium account – 1 Jan 2013   487
Special reserve   155
Selling & administrative expenses 1,050  
Trade & other receivables 275  
4,009   4,009


The following information is relevant and relates to matters not yet fully dealt with when the above trial balance was extracted

  1. IAS 36 Impairment of Assets

In accordance with the Standard, the Company reviewed its non-current assets for impairment. Apart from class A intangible assets mentioned in note 2, the Company does not consider that any of its non-current assets are impaired.

  1. Intangible assets – class A

Class A intangible assets are carried by the company under the revaluation model. The Company considered that in the current year, these had impaired by £38m. Three years ago, the Company had revalued Class A Intangibles upwards by £30m.
Question 1 continued on page 2…


Question 1 continued…

  1. Intangible assets – class B


Class B – intangible non-current assets relate to computer software and technology acquired by the Company.


Cost      Amortization

£m                £m

At 1st January 2013                      380             (174)

Addition                                            10

At 31st December 2013 at cost
The Company amortizes such intangible assets on a straight line basis on cost, over its useful economic life. It is estimated that that the computer software and technology brought forward at the start of the financial year had a balance of ten economic years. The addition was made on 1st July 2013 and is estimated to have an economic life of five years.

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Related Services

  1. Property, plant and equipment

Land &                           Motor

Total        Buildings  Equipment  Vehicles

£m             £m                £m             £m

At 1st January 2013:

Cost                                                   303            100               145              58

Depreciation provision                  (158)            (10)            (105)            (43)

Net book values at 1st Jan 2013:  145               90                 40              15


Applicable depreciation rates are as follows

  • Equipment: 25% p.a. on net book values
  • Motor vehicles: 40% p.a. on net book values


The Company’s land and buildings were professionally valued during the financial year. The appointed chartered surveyors were of the opinion that the property values could be up-lifted by £10m. The directors agreed to reflect this increased value in the financial statements. The depreciation charge for the year in respect of land and buildings is £2m.


  1. Sale of operations in Taiwan

At the beginning of the Company’s financial year, agreement was concluded on the sale of its software operation in Taiwan. The net proceeds were £39m and included under total revenues. (Ignore taxation)
Question 1 continued on page 3…

Question 1 continued…

  1. Termination of non-core business

On 30th July 2013, the company finalized the cessation of its games software operations. Financial information in respect of this operation included in the above trial balance is as follows:

  • Revenues – £100m
  • Cost of sales – £60m
  • Selling and administrative expenses – £55m, including cessation costs of £5m.


  1. Lease termination


In respect of the cessation of operations mentioned in Note 6 above, the Company vacated a building that was surplus to requirements. This office was rented under an operating lease and still had a year to run. This lease is non-cancellable and cannot be sub-let. The annual rental charge for this building is £2m.


  1. Software defect


The Company sells a project planning software program. In some operating systems, it was discovered that this software may cause the user’s computer to ‘freeze’. A new version of this software is in the process of development and when tested, will be available for free to all customers who bought the earlier version. The Company estimates that if minor support is required for all customers who purchased the faulty software, the cost to it would be £10m. If major support is required, the cost to it would be £40m. The Company estimates that 85% of its customers will not be affected by this software glitch, 5% would require major support and 10%, minor support.

  1. Liabilities


This is made up as follows:


Current tax liabilities                                           (16)

Deferred tax liabilities (Long-term)                    41

Borrowings                                                            19

Borrowings (Long-term)                                    461

Retirement benefit obligations (Long-term)     12

Trade and other payables                                 253


Trial balance                                                       770

Question 1 continued on page 4…

Question 1 continued

  1. Taxation

Provision is to be made for current tax liabilities of £78m. The debit balance of £16m included in liabilities (Note 9) is an over-payment of the 2012 liabilities.


  1. Deferred income


Revenue includes software licenses granted by the Company. In respect of the current financial year, £393m of such software license income expiring in the next financial accounting period has not been adjusted from revenue.

  1. Dividends



2012 Final dividends paid                                            55

2013 Interim dividends paid                                         40

2013 Proposed final dividends                                   40

(For approval at AGM on 10th January 2014)




Prepare in a format suitable for publication, in so far as the available information permits, and in accordance with all relevant International Accounting Standards:

  • The Statement of Comprehensive Income of Soriano Plc for year ended 31st December 2013


(b)     The Statement of Changes in Equity of Soriano Plc for the year ended 31st De(c)     The Statement of Financial Position of Soriano Plc as at 31st December 2013


Product Code :Fin262

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