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7154AFE-Financial Reporting

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Questions:

1.Preparation of statement of profit and loss and other comprehensive income; statement of changes in equity and statement of financial position

A summarised general ledger for Park Ltd is presented below for the year ended 31 December 2017.

 

DR

CR

Sale of goods

 

4  469 000

Interest Income

 

6 000

Cost of sales

2 987 000

 

Distribution expenses

86 000

 

Sales and marketing expenses

820 000

 

Administration expenses

252 000

 

Interest expense

44 000

 

Other borrowing expenses

4 000

 

Income tax expense

85 000

 

Cash at hand

4 000

 

Deposits, at call

100 000

 

Trade debtors

450 000

 

Allowance for doubtful debts

 

14 000

Other debtors

93 000

 

Raw Materials Inventory

188 000

 

Finished Goods Inventory

714 000

 

Listed investments

225 000

 

Investment in Associates

 

 

Land and Buildings

257 000

 

Accumulated depreciation – buildings

 

36 000

Plant and equipment

1 260 000

 

Accumulated depreciation – plant and equipment

 

564 000

Patents

48 000

 

Accumulated amortization of patent

 

3 000

Goodwill

870 000

 

Bank loans

 

66 000

Other loans

 

570 000

Trade creditors

 

510 000

Provision for employee benefits

 

93 000

Warranty provision

 

37 000

Current tax payable

 

25 000

Deferred tax liability

 

135 000

Retained earnings, 1 January 2016

 

326 000

Dividends paid

150 000

 

Land revaluation surplus

 

50 000

Investments revaluation surplus

 

42 000

Share Capital

 

1 691 000

 

$8 637 000

$8 637 000

Additional information

  1. Shares were issued during 2017 for $120 000.
  2. Share capital was $1 541 000 at 31 December 2016.
  3. Of the $150 000 dividend, $30 000 was reinvested as part of a dividend reinvestment plan.
  4. The balances of the Land Revaluation Surplus and the Investment Revaluation Surplus at 31 December 2016 were $15 000 credit and $35 000 credit, respectively.
  5. The following revaluations were recognized during the year ended 31 December 2017: Land revalued upward by $50 000 (related income tax $15 000) and investments were revalued upward by $10 000 (related income tax $3 000).
  6. The investments are held as part of a long-term investment strategy.
  7. $30 000 of bank loans is repayable within 1 year.
  8. $110 000 of other loans is repayable within 1 year.
  9. The provision for employee benefits includes $62 000 payable within 1 year.
  10. The warranty provision is in respect of a 12 month warranty given on certain goods sold.
  11. Park Ltd uses the single statement format of profit and loss and other comprehensive income and classifies expenses by function within the statement.

Required

  1. Prepare the statement of profit and loss and other comprehensive income; statement of changes in equity and statement of financial position for Park Ltd for the year ended 31 December 2017 in accordance with IAS 1, using statement captions that a listed company is likely to use.  
  2. Show IAS 1 references as margin notes in your statements.
  3. Include as notes any explanations needed to justify items included in financial statements.  Place these after the financial statements.
  4. Students are permitted to use a spreadsheet tool such as excel.
  5. Comparative figures are not required.

2.Preparation of a Statement of Cash flows

A summarized comparative statement of financial position for Copper Inc. is presented below, together with a statement of profit and loss and other comprehensive income for the year ended 31 December 2017.

 

31 Dec 2016

$

31 Dec 2017

$

Cash

45 000

35 000

Trade receivables

69 000

105 000

Allowance for doubtful debts

(3 000)

(6 000)

Inventory

45 000

67 000

Property, plant and equipment

 

 

Investments

53 000

60 000

Plant

187 000

225 000

Accumulated depreciation - plant

(35 000)

(53 000)

 

$361 000

$433 000

 

 

 

 

 

 

Accounts payable

65 000

75 000

Accrued interest

5 000

7 000

Current tax payable

15 000

18 000

Deferred Tax

30 000

37 000

Borrowings

80 000

100 000

Share Capital

100 000

100 000

Investment Revaluation Reserve

2 000

7 000

Retained Earnings

64 000

89 000

 

$361 000

$433 000


Statement of Profit and Loss and Other Comprehensive Income

For the year ended 31 December 2017

Sales

$1 035 000

Cost of sales

(774 000)

Gross profit

261 000

Distribution expenses

(76 000)

Administrative expenses

(96 000)

Interest expense

(7 000)

Profit before tax

82 000

Income tax expense

(24 000)

Profit for the year

58 000

Other comprehensive income

 

Gain on revaluation of investments (net of tax)

5 000

Total comprehensive income

$ 63 000

Additional information

  1. The movement in the allowance for doubtful debts for the year comprises:

Balance at 31 December 2016

$   3 000

Charge for the year

5 000

Bad debts written off

(2 000)

Balance at 31 December 2017

6 000


1.The investments are measured at fair value, with gains and losses recognized in other comprehensive income, and accumulated in the investment revaluation reserve
 
2.There were no disposals of plant during the year.
 
3.A dividend of $33 000 was paid during the year.
 
4.There were no acquisitions or disposals of investments during the year.
 
5.Copper Inc. classifies interest as an operating expense.

Required:

  1. Using the direct method of presenting cashflows from operating activities, prepare a statement of cash flow for the year ended 31 December 2017 in accordance with IAS 1 and IAS 7.
  2. Prepare the operating activities section of the statement of cashflows using the indirect method of presentation
  3. Show IAS 7 references as margin notes in your statements.
  4. Include as notes any explanations needed to justify items included in financial statements.  Place these after the financial statements.
  5. Students are permitted to use a spreadsheet tool such as excel.
  6. Comparative figures are not required.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help (2020) Financial Reporting [Online]. Available from: https://myassignmenthelp.com/free-samples/7154afe-financial-reporting/financial-position-for-park-ltd.html
[Accessed 05 August 2021].

My Assignment Help. 'Financial Reporting' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/7154afe-financial-reporting/financial-position-for-park-ltd.html> accessed 05 August 2021.

My Assignment Help. Financial Reporting [Internet]. My Assignment Help. 2020 [cited 05 August 2021]. Available from: https://myassignmenthelp.com/free-samples/7154afe-financial-reporting/financial-position-for-park-ltd.html.


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