Financial Statement Disclosures

This document provides detailed information about financial statement disclosures including profit and loss statement, statement of comprehensive income, statement of change in equity, and statement of financial position. It also explains the accounting entries and adjustments for events occurring after the reporting period.

Contents
Answer 1:...............................................................................................................................................2
Answer 2 Part 1.....................................................................................................................................8
Answer 2 Part 2.....................................................................................................................................9
Answer 2 Part3......................................................................................................................................9
Answer 2 Part 4...................................................................................................................................10
Answer 3:.............................................................................................................................................11
Answer 4:.............................................................................................................................................13

Financial Statement Disclosures
Answer 1:
One Beauty Ltd
Statement of Profit and Loss for the year ended 30 June 2019
Particulars Note Amount
($)
Amount
($)
NET REVENUE 11,06,000
Cost of Sales 5,24,000
Gross Profit 5,82,000
OPERATING (EXPENSES) INCOME
Selling and distribution 1 2,25,200
Administrative 2 2,73,800
Other operating expenses (income), net 3 (30,000)
4,69,000
INCOME FROM OPERATIONS BEFORE FINANCIAL INCOME
(EXPENSES)
1,13,000
Financial income 4 8,000
Financial expenses 5 21,000
INCOME BEFORE INCOME TAX 1,00,000
Income tax 39,000
NET INCOME 61,000
STATEMENTS OF COMPREHENSIVE INCOME for the year ended
30 June 2019

NET INCOME 61,000
Other comprehensive income to be reclassified to profit or loss
in subsequent periods:
Gain on Foreign currency translation 18,000
Tax on Gain on Foreign currency translation (3,000)
Other Comprehensive Income 15,000
Total comprehensive Income 76,000
Notes:
1 Selling and distribution
Depreciation – motor vehicles 40,800
Doubtful debts expense 11,000
Rental expense 11,900
Salaries 93,500
Selling expense 68,000
2,25,200
2 Administrative
Amortization expense - patent 30,000
Depreciation – motor vehicles 27,200
Office expense 85,000
Rental expense 5,100
Salaries 93,500
Miscellaneous expense 28,000
Impairment loss – goodwill 5,000
2,73,800

3 Other operating (expenses) income, net
Gains from sales of motor vehicles 10,000
Proceeds from insurance claims 20,000
30,000
Working Notes:
A Working Allocation of
Common Expenses
Allocation Amount Allocation Basis
Particulars As per
TB
Administrativ
e
Selling
and
distributio
n
Administrativ
e
Selling
and
distributio
n
Amortization expense
- patent
30,000 30,000 - 100% 0%
Depreciation – motor
vehicles
68,000 27,200 40,800 40% 60%
Doubtful debts
expense
11,000 - 11,000 0% 100%
Office expense 85,000 85,000 - 100% 0%
Rental expense 17,000 5,100 11,900 30% 70%
Salaries 1,87,000 93,500 93,500 50% 50%
Selling expense 68,000 - 68,000 0% 100%
Miscellaneous
expense
28,000 28,000 - 100% 0%
B Patent (cost) 2,20,000
Accumulated
amortization – patent
20,000
Ammortisation in PL 18,000

Life assumed 147
Monthly
Ammortisation
1,500
Time elapsed (A) 13
Actual Life remaining
until 31 Dec 2025
from 30 June 2019 (B)
78
Total Life (A+B) 91
Ammortisation till date 32,117
Round off 32,000
Already Ammortised 2,000
Ammortisation in
current year PL
30,000
One Beauty Ltd
Statement of change in Equity as of 30 June
2019

Particulars Equity Share
Capital
Retained
Earnings
Currency Translation
reserve
Opening Balance as on 01 July
2018
4,00,000 52,000 10,000
Interim Dividend Paid - (16,000) -
Profit for the year - 61,000 -
Foreign currency Translation
Gain
- - 15,000
Closing balance as on 30 June
2019
4,00,000 97,000 25,000
Working Notes:
A Retained earnings at 16
December 2018
36,000
Add: Interim Dividend Paid 16,000
Retained earnings at 01 July
2018
52,000
One Beauty Ltd
Statement of Financial Position as on 30 June 2019
ASSETS Note Amount ($)
Non-current Assets
Property, Plant & Equipment 6 2,69,000
Intangible Assets 7 2,63,000
Deferred tax assets 18,000
Current Assets
Cash & Cash Equivalent 8 1,34,000

Inventories 92,000
Accounts receivable (Net) 9 1,07,000
Total Assets 8,83,000
EQUITY AND LIABILITIES
EQUITY
Equity Capital 4,00,000
Retained Earnings 97,000
Other Reserves 25,000
Total Equity 5,22,000
LIABILITIES
Non-current liabilities
Bank loan 1,75,000
Deferred tax liabilities 22,000
Current liabilities
Accounts payable 1,14,000
Current tax liabilities 37,000
Bank overdraft 13,000
Total Liabilities 3,61,000
Total Equity and Liabilities 8,83,000
Notes:
6 Property, Plant & Equipment
Motor vehicles 4,72,000

Accumulated depreciation – motor vehicles (2,03,000) 2,69,000
7 Intangible Assets
Patent (cost) 2,20,000
Accumulated amortization – patent (32,000)
Goodwill 1,00,000
Accumulated impairment losses – goodwill (25,000) 2,63,000
8 Cash & Cash Equivalent
Cash on hand 4,000
Bank deposits 1,30,000 1,34,000
9 Accounts receivable (Net)
Accounts receivable 1,18,000
Allowance for doubtful debts (11,000) 1,07,000
Answer 2 Part 1
During the year end, a contingent liability was recognised in the books of the company in terms of
AASB 137 with respect to law suit filed against the company by a client who has suffered severe skin
damage post using the product. Post the balance sheet date, the contingent liability crystallised and
resulted in actual outflow of resources for the company.
Since the said even took place between the balance sheet date and the balance sheet finalisation
date, the said events qualifies for event occurring after the end of the reporting period. Further, the
said event conditions existed on the date of balance sheet i.e. 30 June, 2019. Accordingly, the event
qualifies for adjustment. Accordingly, the journal entries to be made has been detailed here-in-
under:
The existing journal entry with respect to event:
No entry, only a contingency has been recognised.
Adjustment Entry
Profit and Loss A/c…Dr $500,000

To Suit for Damage sA/c $500,000
In terms of AASB 110, Adjusting events after the reporting period requires adjustment in the
financial statement for events existing on the balance sheet date.
Also, in terms of AASB 108, the said change in estimate shall have prospective effect on the balance
sheet.
Answer 2 Part 2
Post the balance sheet date, there has been change in accounting estimate regarding the life of plant
and machinery from 15 years to 20 years with a nil residual value. Also, the accounting entries have
been made in the books of the company considering 15 years of useful life.
The accounting entry made in the books of the company has been detailed here-in-below:
Depreciation A/c..Dr 200,000
To Accumulated Depreciation A/c.. 200,000
Since the said even took place between the balance sheet date and the balance sheet finalisation
date, the said events qualifies for event occurring after the end of the reporting period. Further, the
said event conditions existed on the date of balance sheet i.e. 30 June, 2019. Accordingly, the even
qualifies for adjustment. Accordingly, the journal entries to be made has been detailed here-in-
under:
Accumulated Depreciation A/c..Dr $66,667
To Depreciation A/c. $66,667
(2,00,000- 2,000,000/15)
Accordingly, the excess depreciation recognised in the books needs to be reversed
In terms of AASB 110, Adjusting events after the reporting period requires adjustment in the
financial statement for events existing on the balance sheet date.
Also, in terms of AASB 108, the said change in estimate shall have prospective effect on the balance
sheet.
Answer 2 Part3
In the present case, there has been accounting error made in the books of company whereby an
asset acquisition has been treated as an expense in the books of the company and accordingly
deducted from Profit and Loss Account. The relevant journal entry made in the books of the
company for the year ended June, 2018 is presented here-in-under:
Repairs A/c..Dr $80,000
To Bank A/c $80,000
Profit and Loss A/c.. Dr $80,000

To Repairs A/c. $80,000
The rectification entry to be made in the books of company
2018
Asset A/c..Dr $80,000
To Repairs A/c $80,000
Depreciation A/c..Dr $8,000
To Accumulated Depreciation A/c $8,000
(80000*20%/2)
Profit and Loss A/c.. Dr $8,000
To Depreciation A/c. $8,000
Repairs A/c..Dr $80,000
To Profit and Loss A/c $80,000
2019
Depreciation A/c..Dr $16,000
To Accumulated Depreciation A/c $16,000
(80000*20%)
Profit and Loss A/c.. Dr $16,000
To Depreciation A/c. $16,000
In terms of AASB 108, there shall be a retrospective change in the accounts of the company for an
accounting error made in the books of the company for previous year. Accordingly, the current
situation shall call for a retrospective adjustment event in the books of company.
Answer 2 Part 4
In the present case, the company has recognised provision in its books of account for $ 25,000
considering the financial position of the company. Post the balance sheet date, the debtor MyBeauty
Ltd. became insolvent and no proceeds could be recovered from liquidator. The Journal entry made
at the end of the year ‘
Provision for Doubtful debts A/c..Dr $25,000

To Profit and Loss A/c. $25,000
Further, Since the said even took place between the balance sheet date and the balance sheet
finalisation date, the said events qualifies for event occurring after the end of the reporting period.
Also, the said event conditions existed on the date of balance sheet i.e. 30 June, 2019. Accordingly,
the event qualifies for adjustment. Accordingly, the journal entries to be made has been detailed
here-in-under:
Bad debt A/C.. Dr $75,000
To Accounts Receivable A/c $75,000
And
Profit and Loss A/c..Dr $75,000
To Bad debt A/c. $75,000
And
Profit and Loss A/c..Dr $25,000
To Provision for Doubtful debts A/c $25,000
In terms of AASB 110, Adjusting events after the reporting period requires adjustment in the
financial statement for events existing on the balance sheet date.
Also, in terms of AASB 108, the said change in estimate shall have prospective effect on the balance
sheet.
Answer 3:
In the books of Refresh Limited
Journal Entries
$ $
Date Particulars Dr Cr
31-07-2018 Bank A/c..Dr 15000000
To Share Application A/c 15000000
(Being application money received)
10-08-2018 Share Application A/c..Dr 15000000
To Share Capital A/c 12500000
To Share Allotment A/c 2500000
(Being Share prorata isued)
12-08-2018 Underwriting Commission Ac..Dr 17000
To Bank A/c 17000
(Being underwriting Commission
Paid)
10-09-2018 Bank A/c..Dr 2500000

To Share Allotment A/c 2500000
(Being allotment money received)
10-09-2018 Share Allotment A/c..Dr 2500000
To Share Capital A/c 2500000
(Being share alloted)
01-02-2019 Bank A/c..Dr 2490000
To Share call A/c 2490000
(Being call money received)
01-02-2019 Share Call A/c..Dr 2490000
To Share Capital A/c 2490000
(Being share fully paid up)
20-03-2019 Share Capital A/c 70000
To Share Forfeiture A/c 70000
(Being Share forfeited)
05-04-2019 Bank A/c..Dr 68000
Share Forfeiture A/c 12000
To Share Capital A/c 80000
(Being Forfeited shares issued)
05-04-2019 Share reissue Cost A/c..dr 5000
To Bank A/c..Dr 5000
(Being cost incurred for share
reissue)
12-04-2019 Share Forfeiture A/c...Dr 58000
To Share reissue cost A/c. 5000
To Bank A/c 53000
(Being Balance paid to defaulters)
Answer 4:
In the books of Nutrifresh Limited
Journal Entries
$ $
Date Particulars Dr Cr
01-07- Plant A/c (A)…..Dr 80000

2017 0
Plant A/c (B)…..Dr
60000
0
To Bank A/c
140000
0
(being Machine installed)
30-06-
2018 Depreciation A/c..Dr
19200
0
To Accumulated Depreciation A/c 192000
(Being Depreciation Charged)
Plant A
Value of Asset= 800000
Salvage Value= 80000
Life= 10 years
Depreciation = (Value- Salvage)/Life
72000
Plant B
Value of Asset= 600000
Salvage Value= 0
Life= 5 years
Depreciation = (Value- Salvage)/Life
120000
30-06-
2018 Profit and Loss A/c
19200
0
To Depreciation A/c 192000
(being Depreciation transferred)
30-06-
2018 Accumulated Depreciation A/c..Dr 32000
To Revaluation Reserve A/c 32000
(For Plant A)
30-06-
2018 Revaluation Reserve A/c..Dr 32000
Profit and Loss A/c..Dr 48000
To Plant B A/c 80000
(Being Asset Recognised at Fair Value)
(480000-400000)
30-06-
2019 Depreciation A/c..Dr
18500
0

To Accumulated Depreciation A/c 185000
(Being Depreciation Charged)
Plant A
Value of Asset= 760000
Salvage Value= 80000
Life= 8 years
Depreciation = (Value- Salvage)/Life
85000
Plant B
Value of Asset= 400000
Salvage Value= 0
Life= 4 years
Depreciation = (Value- Salvage)/Life
100000
30-06-
2019 Profit and Loss A/c
18500
0
To Depreciation A/c 185000
(being Depreciation transferred)
30-06-
2018 Accumulated Depreciation A/c..Dr 20000
To Revaluation Reserve A/c 20000
(For Plant B)
(3000000-3200000)
30-06-
2018 Revaluation Reserve A/c..Dr 75000
Profit and Loss A/c..Dr 75000
To Plant B A/c
(Being Asset Recognised at Fair Value)
(760000-85000-60000)
Note: Considering a singe Revaluation Reserve and no product specific
reserves.