Financial Statements Analysis

The assignment presents a sample set of financial statements consisting of a balance sheet and a statement of changes in equity. It outlines various accounts such as current and non-current liabilities, share capital, reserves, and retained earnings. Furthermore, it includes notes explaining specific transactions and calculations related to the dividend, reserve transfer, and profit for the period. The purpose of this assignment is likely to assess understanding of financial statement preparation and analysis.

Running Head: Corporate Accounting and Reporting
Corporate Accounting and
Reporting

Corporate Accounting and Reporting 2
QUESTION 1
Sam Ltd equity Amount
Share capital 150000
Reserves 10000
retained earnings 30000
Dividend 6000
Goodwill 5000
Purchase consideration 130000
Carrying
amount
Fair
value
Plant(Cost) 94000 96000
Land 80000 95000
Inventory 20000 26000
At 1 July 2013
Net fair value of Identifiable
assets and liabilities off Sam
Ltd = ($15000+$10000+$30000) (equity)
+ $2000*(1-30%)(plant)
+ $15000*(1-30%)(land)
+ $6000*(1-30%)(inventory)
+ $6000*(1-30%)(data base)
- $9000(1-30%)(damages payable)
- $5000(Goodwill)
Net Fair Value = 199000
Consideration Paid = $130000-$6000(Dividend receivable)
= 124000
Capital reserve = 75000
Recorded goodwill = 5000
Transfer to capital Reserve = 70000

Corporate Accounting and Reporting 3
A. Worksheet entries as at 30 June 2017
1. Business Combination valuation entries Dr Cr
Accumulated depreciation Dr 26000
Plant Cr 24000
Deferred Tax liability Cr 600
Business combination valuation Reserve Cr 1400
Depreciation Expense Dr 200
Retained Earnings (01/07/16) Dr 600
Accumulated Depreciation Cr 800
(1/10 x $2000p.a for 4 years)
Deferred Tax Liability Dr 240
Income Tax Expense Cr 60
Retained Earnings Cr 180
Amortisation Expense- Database Dr 1500
Retained earnings (01/07/16) Dr 3150
Income Tax Expense Cr 450
Transfer from Business Cr 4200
Combination Valuation Reserve
Transfer from Business combination Valuation
Reserve Dr 7000
Income Tax expense Dr 3000
Damage Expense Cr 7500
Gain Cr 2500
Actual impairment losses- Goodwill Dr 7000
Business Combination Valuation Reserve Dr 2400
Goodwill Cr 9400
2. Pre-Acquisition Entries
At 01/07/2013
Retained Earnings (01/07/2013) Dr 30000
Share Capital Dr 150000
Reserve Dr 10000
Business Combination Valuation Reserve Cr 66000
Shares in Sam ltd 124000
Dividend payable Dr 6000
Dividend receivable Cr 6000

Corporate Accounting and Reporting 4
At 30/06/2017, the entry on the acquisition date is effected by:
o The sale of inventory in previous period
o Payment of dividend that is $6000 in previous period
o Sale of land in previous period
o Transfer from reserve $ 3000- in prior period
o Transfer from reserve $2000- in current period
o Settlement of court case in current period
o De-recognition of Database in current period
Retained Earnings (01/07/2016)* Dr 47700
Share Capital Dr 150000
Reserves Dr 2000
Business valuation Combination Reserve Cr 75700
Shares in Sam Ltd Cr 124000
Transfer from Reserve Dr 2000
Reserve Cr 2000
Business Combination Valuation Reserve Dr 7000
Transfer from Business Combination Valuation
Reserve Cr 7000
Transfer from Business Combination Valuation Reserve Dr 4200
Business Combination Valuation Reserve Cr 4200
* Retained earnings= 30000 + $4200(BVCR Inventory) + $10500(BVCR Land) +
$3000(transfer to reserve

Corporate Accounting and Reporting 5
Question 2
Statement of Financial Position
(As at 30 June 2016)
Particulars
Note
s Amount ($) Amount ($)
01-Jul-15 30-Jun-16
Assets
Current
Accounts receivable 600000
Other Debtors 50000
Inventories 520000
Current 1170000
Non-Current
Plant and Equipment(After Depreciation) 800000
Land 600000
Building(After depreciation) 900000
Goodwill 300000
Long-term Investment 460000
Non-Current 3060000
Total Assets 4230000
Liabilities
Current
Accounts payable 400000
Income Tax Payable 249000
Dividend payable 1 256000
Non- Current
Allowance for impairment of Receivables 2 60000
Bank Overdraft 200000
Net Assets 3065000
Equity
Share Capital 3 2400000
General Reserve 4 260000 290000
Retained earnings 5 80000 375000
Total Equity 3065000

Corporate Accounting and Reporting 6
Notes:
1. Dividend 8c per share and no. of shares 3200000.
2. Contingent liability of $ 60000
3. 3200000 shares
4. 30000 transferred from previous year
5. 581000 Profit
- 256000 Dividend
- 30000 Reserve
+ 80000 previous year profits.
= 375000

Corporate Accounting and Reporting 7
Statement of
Changes in Equity
(Amount
in $)
Share
Capital
General
Reserve
Other
Components
Retained
Earnings
Total
Equity
Balance at 01-July-
2015 2400000 2600000 80000 2740000
Profit for period 581000 581000
Dividend -256000 -256000
Issue of Share Capital 0
Transfer to Reserve 30000 -30000 0
Balance at 30 June 2400000 290000 375000 3065000