The coursework forms 25% of the marks for the assessment of this module and comprises of an individual test based on the case study ‘Agrico plc’ set out in this document. The 1 hour 30 minutes test takes place on Monday 16th March 2020 at 6 pm in the room allocated to you on your timetable. It is your responsibility to check the time and room.
· The coursework test is based on the accounting issues which arise from the scenario set out in the advance information in this document and which are set out in Exhibit 2.
· You may prepare for the test in study groups or on your own.
· You must bring this copy of the advance information to the coursework test.
· You may make your own handwritten notes on this document and bring it into the test.
The charge related to equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date they are granted, using an appropriate valuation model selected according to the terms and conditions of the grant. Judgement is applied in determining the most appropriate valuation model and in determining the inputs to the model. Judgements are also applied in relation to estimations of the number of options, which are expected to vest, by reference to historic leaver rates, and expected outcomes under relevant performance conditions.
Your manager, a non-executive director of Agrico plc, is attending the Agrico board meeting next week (using Skype). She has asked you to prepare a report for her in which you complete the following:
a)Using the advance information and the additional information provided above, for each transaction 1 and 2, set out and explain the appropriate financial reporting treatment. Include the journal entries required to correct the financial statements and an explanation of why the Agrico Board justifications of the original financial reporting treatments were incorrect.
b)Prepare a revised statement of profit or loss and statement of financial position for the year ended 31 December 2019, which reflects your recommended adjustments from part a). (A worksheet has been provided to assist you in this task see pages 5 and 6).
c)Calculate the revised ROCE and interest cover ratio for Agrico plc at the year ended 31 December 2019 and explain the impact of your adjustments on these ratios and the lending relationship with Griedie bank.