1. Company profit and loss account Same approach as before except we need to consider the following: –Directors’ remuneration, audit fees, interest on debentures –Corporation tax –Dividends - preference and ordinary dividends –Transfers to reserves What are the accounting entries?

2. Company balance sheet Same approach as before but note: –current liabilities include liabilities for corporation tax, accrual for outstanding debenture interest and outstanding dividends –capital and retained profits are shown under separate headings comprising the nominal value of share capital and the reserves –Reserves can take many forms

3. Fixed asset note Where only the NBV of the fixed assets is shown on the face of the balance sheet, the note should show the breakdown between cost and accumulated depreciation. It should also show cost of acquisitions and disposals, revaluations, depreciation charge for the period and the accumulated depreciation on disposals. Refer to Thomas, Chapter 27, Example 27.2

4. Note on movements in reserves This note explains the movements on accounts such as the share premium account, revaluation accounts and the profit and loss account. Refer to Thomas, Chapter 27, Example 27.2 (Oasis Limited) for a comprehensive example of required formats of and notes to final company accounts incorporating requirements of legislation and accounting standards.

5. Background to STRGL Accruals concept - gains may be booked when they have been earned However it is not appropriate to book gains as income in the profit and loss account until such time as they have been ‘realised’ Gains are realised when sufficient certainty exists as to (i) the amount and (ii) likelihood of receipt in the form of cash or equivalent Basis of treating profit and loss account reserve as a revenue reserve What about gains made during the financial period that may be unrealised?

6. Background to STRGL Revaluation of an asset may result in a gain i.e. increase in value of building The increase in value remains unrealised until such time as the building is sold => this gain should not be reflected in the profit and loss account Increase in value reflected in a revaluation reserve. Unrealised gain => capital reserve Prior to FRS 3, no single financial statement showed the total gains for the period comprising realised and unrealised gains - objective of STRGL