Financial Statements Analysis Example

This assignment provides an example of analyzing a company's financial statements. The example includes both the income statement and the balance sheet, showcasing key figures such as operating expenses, profit margins, assets, liabilities, and equity. This analysis can be helpful for understanding how to interpret and use financial statements to assess a company's performance and financial health.

Running head: ADVANCED CORPORATE REPORTING
Advanced Corporate Reporting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ADVANCED CORPORATE REPORTING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Part A:........................................................................................................................2
Answer to Part B:.........................................................................................................................6
Answer to Part C:.........................................................................................................................7
Answer to Question 2:.....................................................................................................................7
Answer to Part 1:.........................................................................................................................7
Answer to Part 2:.......................................................................................................................14
Answer to Part 3:.......................................................................................................................18
Bibliographies:...............................................................................................................................21

2ADVANCED CORPORATE REPORTING
Answer to Question 1:
Answer to Part A:
Current tax worksheet
for the year ended 30 June 2017
Particulars Amount (in $) Amount (in $)
Operating profit before income tax 3,500,000
Add:
Goodwill impairment loss 200,000
Doubtful debts expense 45,000
Depreciation expense- plant and
equipment 160,000
Long service leave expense 105,000
Entertainment expense 75,000
Warranty expense 50,000
Amortisation expense- Research and
development 12,000 647,000
4,147,000

3ADVANCED CORPORATE REPORTING
Deduct:
Bad debts written off 65,000
Long service leave paid 90,000
Tax depreciation- plant and
machinery 200,000
Warranty expense paid 150,000 550,000
Research and development paid 3,597,000
Taxable income
Current tax liability @30% 1,079,100
Items Statement of
Financial Position ($)
Tax
bases
($)
Deducti
ble
Tempo
rary
Differe
nces ($)
Taxab
le
Temp
orary
Differ
ences
($)
Tax
expe
nse
($)
Curren
t tax
payabl
e ($)
Assets:
Cash

4ADVANCED CORPORATE REPORTING
2,50,000 -
Inventory
3,50,000 -
Accounts Receivable
(Net) 7,40,000
3
,50,000
3,
90,00
0
Plant and Equipment
(Net) 4,80,000
6
,00,000
1
,20,000
Research and
Development Cost 1,08,000 -
Goodwill
6,00,000 -
25,28,000
Liabilities:
Payables
7,80,000 -
Provision for Long
Service Leave 1,15,000 -
Provision for
Warranty Expense 80,000 -
Loan
11,00,000 -

5ADVANCED CORPORATE REPORTING
20,75,000
Net Assets
4,53,000
Temporary
Differences at end of
period
1
,20,000
3,
90,00
0
Less: Prior end
balance 49,500 -
Movement for the
period 70,500
3,
90,00
0
Tax effect at 30%
10,79,100
Tax taxable income
*30%
10,7
9,100
Income tax
adjustments
10,
79,100
Workings:
Calculation of depreciation expense- Plant and equipment:
Purchase of plant and equipment $ 800,000
Depreciation rate 20%

6ADVANCED CORPORATE REPORTING
Depreciation expense $ 160,000
Calculation of amortisation of research and development
expense:
Research and development costs $ 120,000
Estimated life in years 5
Amortisation for the current year 0.5
Amortisation rate 20%
Amortisation expense $ 12,000
Calculation of tax depreciation- Plant and equipment:
Purchase of plant and equipment $ 800,000
Depreciation rate 25%
Tax depreciation expense $ 200,000
Answer to Part B:
Journal entry:
Date Particulars
Debit Credit
Amount (in $) Amount (in $)
30/06/201
7 Income Tax Expense Account…………Dr 1,079,100
To Current Tax Liability Account 1,07

7ADVANCED CORPORATE REPORTING
9,100
Answer to Part C:
Journal entries:
Date Particulars
Debit Credit
Amount (in $) Amount (in $)
30/06/2017 Income Tax Expense Account…………Dr 10,79,100
To Current Tax Liability Account 10,79,100
30/06/2017 Income Tax Expense Account…………Dr 17,625
Deferred Tax Asset Account……Dr 79,875
To Deferred Tax Liability Account 97,500
Answer to Question 2:
Answer to Part 1:
Date Particulars Amount Amount
1 Business Combination
Entries:
1.a Non-Current Assets A/c. Dr. $800,000
To, Deferred Tax Liability $240,000

8ADVANCED CORPORATE REPORTING
A/c.
To, Business Combination
Valuation Reserve A/c.
$560,000
1.b Operating Expense A/c. 80000
Retained Profit (1/7/16)
A/c.
320000
Non-Current Assets A/c. 400000
1.c Deferred Tax Liability
A/c.
120000
Income Tax Expenses A/c. 24000
Retained Profits (1/7/16)
A/c.
96000
1.d Revaluation Surplus A/c. $1,150,000
Goodwill A/c. $1,150,000
2 Pre-Acquisition Entries on 1 July 2012:
Share Capital A/c. $4,800,000
General Reserve A/c. $2,400,000
Retained Profit A/c. $2,400,000
Goodwill A/c. $3,320,000
Business Combination $920,000

9ADVANCED CORPORATE REPORTING
Valuation Reserve A/c.
Investment A/c. $12,000,00
0
3 Pre-Acquisition Entries on 30 June 2017:
Share Capital A/c. $4,800,000
General Reserve A/c. $2,560,000
Retained Profit (1/7/2016)
A/c.
$4,439,648
Revaluation Surplus A/c. $448,000
Goodwill A/c. $3,320,000
Business Combination
Valuation Reserve A/c.
$3,567,648
Investment A/c. $12,000,00
0
4 NCI Share of Equity on 1/7/2012:
Share Capital A/c. $1,200,000
General Reserve A/c. $640,000
Retained Profit A/c. $1,109,912
Revaluation Surplus A/c $112,000
Business Combination
Valuation Reserve A/c.
$891,912

10ADVANCED CORPORATE REPORTING
NCI A/c. $2,170,000
5 Dividend Paid:
5.a Other Income A/c. 640000
Interim Dividend Paid
A/c.
640000
5.b NCI A/c. 160000
Interim Dividend Paid
A/c.
160000
7 Dividend Declared:
7.a Other Income A/c. 960000
Proposed Final Dividend
A/c.
960000
7.b Liabilities A/c. 960000
Current Assets A/c. 960000
7.c NCI A/c. 240000
Proposed Final Dividend
A/c.
240000
8 Profit on Opening Stock:

11ADVANCED CORPORATE REPORTING
8.a Reatined Profit (1/7/16)
A/c.
513800
Income Tax Expenses A/c. 220200
Cost of Goods Sold A/c. 734000
8.b NCI Share of Profit A/c. 102760
Retained Profit (1/7/16)
A/c.
102760
9 Sales of Inventory in Current Period:
9.a Sales A/c. $25,000,00
0
Cost of Goods Sold A/c. $24,319,50
0
Current Assets A/c. $680,500
9.b Deferred Tax Assets A/c. $204,150
Income Tax Expenses A/c. $204,150
10 Sale of Machinery:
10.a Retained Profit (1/7/16)
A/c.
315000
Deferred Tax Assets A/c. 135000

12ADVANCED CORPORATE REPORTING
Non-Current Assets A/c. 450000
10.b NCI A/c. 63000
Retained Profit (1/7/16)
A/c.
63000
10.c Non-Current Assets A/c. 45000
Retained Profit (1/7/16)
A/c.
30000
Operating Expense A/c. 15000
10.d Income Tax Expenses A/c. 4500
Retained Profit (1/7/16)
A/c.
9000
Deferred Tax Assets A/c. 13500
10.e NCI Share of Profit A/c. 4200
Retained Profit (1/7/16)
A/c.
8400
NCI A/c. 12600
11 Loan & Interest on Loan:
11.a Other Income A/c. 150000
Operating Expense A/c. 150000

13ADVANCED CORPORATE REPORTING
11.b NCI Share of Profit A/c. 37500
Operating Expense A/c. 37500
11.c Liabilities A/c. $2,500,000
Investments A/c. $2,500,000

14ADVANCED CORPORATE REPORTING
Answer to Part 2:
Adjustments NCI
Particulars Green
Bay
Blue
Star
Debit Credit Group Debi
t
Credi
t
Parent
Sales $125,00
0,000
$75,000
,000
9.a $25,00
0,000
$175,00
0,000
$175,00
0,000
Cost of Goods
Sold
($80,00
0,000)
($69,00
0,000)
($25,05
3,500)
8.a,9.a ($123,94
6,500)
($123,94
6,500)
Gross Profit $45,000
,000
$6,000,
000
$51,053,
500
$51,053,
500
Other Income $5,000,
000
$3,000,
000
5.a,7.a,11.a $1,750,
000
$6,250,0
00
$6,250,0
00
Operating
Expenses
($4,000,
000)
($2,600,
000)
1.b ($80,0
00)
($202,5
00)
10.c,11.a,
11.b
($6,477,
500)
($6,477,
500)
Operating
profit before
income tax
$46,000
,000
$6,400,
000
$50,826,
000
$50,826,
000