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Financial Statements


Problem # 1 (Marks 7+7+3=17) The Trial Balance of XYZ Ltd at 30 June 2012 as follows: Ordinary Share Capital (1 500 000 shares) General Reserve (1/7/10) Retained Earnings (1/7/11) Revaluation Reserve (1/7/10) Mortgage Loan Bank Loan Accounts Payable Provision for Employee benefits(long-term) Deferred Tax Liability Allowance for Doubtful Debts Accumulated Depreciation-Plant Accumulated Depreciation-Office Furniture Accumulated Depreciation-Buildings Land (at cost) Factory Building (at cost) Available-for-sale financial assets Accounts Receivable Plant (at cost) Inventory Office Furniture (at cost) Goodwill Cash at Bank Employee benefitexpense Sales Proceeds from sale of plant available-for-sale financial assets Carrying amount of available-for-sale financial assets sold Raw materials and consumables used Changes in inventories of F. Goods & work in progress Other expenses (excluding depreciation but including interest exp $31 000 on bank loan and mortgage) Total Additional Information: a)      Depreciation is to be provided for: Plant Office Furniture Buildings b)      The estimated total tax expense relating to profit or loss items only for 2011 is $400,000, consisting of $300 000 for the current liability and $100 000 as a deferred tax liability c)       Final dividends of 4c per share were declared by directors d)      Directors decided to transfer $20 000 from retained earnings to general reserve. e)      Following expert advice, the directors decided on 30 June 2011 to revalue the land and factory buildings to reflect current fair values. Consequently, directors placed a value of $600 000 on land and $700,000 on the buildings. f)       An increase in fair value of $15,000 for available-for-sale financial assets on hand at 30 June 2011 is yet to be recognized. g)      The revaluation reserve balance at 1 July 2010 includes $14 000 (net of deferred tax) resulting from an increase in the fair value of available-for-sale financial assets. Of this amount $3,500 relates to the available-for-sale financial assets sold during the year. h)      Company Tax rate is 30%. Required: Based on the above information, Prepare & analyse the following statements in accordance to the requirements of AASB 101: I. A comprehensive income statement for XYZ ltd for the year ended 30 June 2012 II. A statement of financial position for XYZ ltd as at 30 June 2012 III. A statement of changes in equity for XYZ ltd for the year ended 30 June 2012. Problem # 2 (Marks 4+4=8) a)      A ltd is a catering company specialising in providing catering services to remote area mine sites. Its main theatre of operations is Australia but during the current year the company acquired significant long-term contracts in Pakistan and Nigeria. AASB 114 Segment Reporting requires entities to disclose material geographical segment information but A ltd has failed to comply with this requirement Required: Discuss whether the non-disclosure of information about operations in Pakistan and Nigeria would be material. b)      The statement of financial position of W ltd as at 30 June 2011 includes an asset ‘Debenture money receivable $500,000 and a liability ‘Debenture $500 000’. Note 12 to the accounts reveals that the issue of the debentures to a private investor was approved by the board of directors on 28 June 2011 but the debenture issue did not take place until July 2011. Required: Comment on the accounting treatment of the debenture issue in accordance with the requirements of the AASB 110.