Section 1 – Presentation of financial statements (10 MARKS)
The adjusted trial balance of Snapper Ltd as at 30 June 2018 is as follows:
Administration expenses 689,000
Advertising expenses 109,000
Bank loan 216,000
Carrying amount of plant and machinery sold 23,000
Cost of sales 3,421,000
Sales commission expense 45,000
Deposits at call 132,000
Dividends received 43,000
Deferred tax asset 212,000
Ordinary shares, fully paid 3,960,000
General reserve 724,000
Accounts receivable 1,334,000
Asset revaluation reserve 346,000
Accumulated impairment loss – goodwill 180,000
Accumulated depreciation -
Plant & machinery 206,000
Fixtures & fittings 47,000
Retained profits – 1/7/17 800,000
Mortgage loan (secured over land – due 30/9/22) 239,000
Accounts payable 486,000
Current tax liabilities 268,000
GST payable 8,000
Provision for long service leave (only 40% is currently eligible) 265,000
Deferred tax liability 175,000
Allowance for doubtful debts 77,000
Provision for annual leave 62,000
Freehold land (at fair value) 1,724,000
Buildings (at fair value) 900,000
Listed investments – at cost (long-term) 559,000
Plant & machinery - at cost 684,000
Preference shares, fully paid 200,000
Income tax expense 367,000
Final dividend payable 165,000
Fixtures & fittings - at cost 118,000
Cash at bank 483,000
Sales revenue 6,124,000
Share options 19,000
7% debentures (secured over inventories – due 30/4/19) 120,000
Proceeds on sale of plant and machinery 36,000
Sales returns 20,000
Freight outwards 38,000
Other selling expense 590,000
Other expenses (include interest expense of $87,000) 165,000
Underwriting commission and other share issue costs 44,000
Interest received 43,000
Transfer to general reserve 80,000
Interim dividend paid - ord 135,000
Final dividend declared – ord 135,000
Final dividend declared - pref 30,000 -
i) Administration expenses include the following auditor’s remuneration:
- audit & review of financial reports $49,000
- accounting advice $33,000
- related practice of auditor for legal advice $18,000
ii) Inventories, $2,000,000, comprise of:
Raw material – at cost $76,000
Work in progress – at cost 789,000
Finished goods – at cost 1,115,000
Finished goods – at net realisable value 20,000
Inventories are valued at the lower of cost (using the weighted average basis) and estimated net realisable value.
iii) Contributed equity as at 1 July 2017 consisted of:
1,800,000 ordinary issued at $1 each, fully paid $ 1,800,000
100,000 15 % preference shares issued at $2.00 each 200,000
400,000 share options issued at 50c each, fully pay 200,000
Each option entitles the holder to acquire one ordinary share at a price of $1.00 per share, exercisable by 1 April 2018. Any options not exercised by this date will lapse.
iv) On 1 July 2017, 800,000 ordinary shares were privately placed at $1.95 each. Shares issue costs for the issue amounted to $9,000.
v) On 2 July 2017, 38,000 share options were issued at a price of 50c per option. Each option allows the holder to subscribe for one preference share at an exercise price of 80c per share on 1 September 2019.
vi) The bank loan is payable in annual instalments of $36,000 due 1 May each year.
vii) On 30 June 2018, freehold land and buildings were revalued to its fair value by the directors based on an independent valuation received from S E Brown. The carrying amounts of land and buildings before the revaluation were $1,494,000 and $750,000 respectively.
viii) Listed investments are classified as investments in equity instruments.
ix) An amount of $80,000 was transferred to general reserve from retained earnings.
x) The company tax rate is 30%
xi) Accounting policies adopted are consistent with those of the previous year.
a) Prepare a statement of profit or loss and other comprehensive income for Snapper Ltd for the year ended 30 June 2018 according to the requirements of AASB 101. Use the function of expense (or cost of sales) method. Show all workings.
b) Prepare a statement of financial position for Snapper Ltd as at 30 June 2018 to comply with AASB 101. Use the current and non-current presentation format. Show all workings.
c) Prepare a statement of changes in equity for Snapper Ltd for the year ended 30 June 2018 according to the requirements of AASB 101. Show the dividends per share on the statement. Show all workings.
RUBRICS FOR ASSESSMENT Short analysis of a CSR related case
(0-3) Meets expectations
(3-5) Meets expectations (CR) (5-7) Exceeds expectations (D)
(7-8) Exceeds expectations (HD)
Solution to question 1
The student has failed to provide a clear outline of part 1’s requirements The student has provided an outline of part 1’s requirements and has addressed the question. The student has provided a clear outline of part 1’s requirements. The student has provided a clear outline of part 1’s requirements and has addressed the requirements, supported by quality references. The student has provided a clear outline of part 1’s requirements and has a better understanding of the case.