1. The financial statements of Coronation plc for the year ended 30 September are as follows:

Statement of Financial Position as at 30 September

	20X8	20X7
Assets
Non-current assets
Property, plant and equipment	3,566,500	3,299,400
Current assets
Inventory	1,680,220	1,188,400
Trade and other receivables	543,600	556,700
Bank	_101,780	3,450
	2,325,600	1,748,550
Total assets	5,892,100	5,047,950
Equity and Liabilities
Equity
Ordinary share capital (1 shares)	1,210,000	1,000,000
Share premium	740,000	540,000
Revaluation surplus	512,000	435,000
Retained earnings	1,567,500	1,443,200
	4,029,500	3,418,200
Non-current liabilities
Borrowings	723,500	567,800
Current liabilities
Trade and other payables	644,100	630,950
Accruals	220,000	185,000
Income tax payable	275,000	246,000
Total Equity and Liabilities	5,892,100	5,047,950

Statement of Profit or Loss for the year ended 30 September 20X8

Profit from operations 729,800

Finance costs 121,000

Investment income 24,500

Profit before tax 633,300

Income tax expense 255,000

Profit for the year 378,300

Statement of Changes in Equity for the year ended 30 September 20X8 (extract)

Retained earnings

Balance as at 1 October 20X7 1,443,200

Dividends (270,000)

Bonus issue (40,000)

Total comprehensive income for the year 378,300

Transfer from revaluation surplus 56,000

Balance as at 30 September 20X8 1,567,500

Additional information:

(i) The Statement of Profit or Loss for the year included the following charges:

Loss on sale of plant 25,600

Depreciation 665,600

The carrying amount of the plant sold at the date of sale was 576,700

(ii) Trade and other receivables include accrued interest of 7,500 (20X7: 6,000).

(iii) During the year Coronation plc made a 1 for 25 bonus issue of ordinary shares out of retained earnings, followed by an issue of ordinary shares for cash.

(iv) All revaluations relate to property, plant and equipment.

Required:

Prepare a cash flow statement for the year ended 30 September 20X8 using the indirect method illustrated in IAS 7. Prepare a note reconciling profit before tax to cash flows from operations for the year ended 30 September 20X8

2.

(i) What arguments have been proposed in favour of reducing the extent of the regulation of financial reporting (or for having no regulation at all)?

(ii) What arguments have been proposed in favour of the regulation of financial reporting?