Financial and Corporate Reporting

This document provides information on financial and corporate reporting. It covers topics such as depreciation, research and development expenses, revaluation of assets, and more. It includes examples of a statement of comprehensive income and a statement of financial position.

FINANCIAL AND
CORPORATE REPORTING

Table of Contents
MAIN BODY..................................................................................................................................3
PART A...........................................................................................................................................3
PART B...........................................................................................................................................3
Statement of comprehensive income for the year ended 31st march 2001..................................3
Statement of Financial Position as at 31st march 2001................................................................4
Statement of changes in equity....................................................................................................5
REFERENCES................................................................................................................................1

MAIN BODY
PART A
As per AS-6 “Depreciation” states that all the assets of the company except land and
goodwill must be recorded at the written value after deducting depreciation and from next year
of purchase depreciation is charged on the written down value of the assets. In this case, it is
recommended to Lima to charge depreciation on the written down value of the assets rather than
on the cost value of the assets and also record the assets on written value rather than cost value in
the balance sheet (Baukmann, 2018). As per the International Financial Reporting Framework, it
is recommended to all the industry except software industry to do not capitalize the research and
development cost in the balance sheet. It is recorded as expenses in the profit and loss account.
So it is recommended to Lima, the owner of restaurant company to record the research and
development expense in P&L rather than capitalizing it. As per IAS 16 (Villani, 2019) all the
assets must be revalued by taking into consideration its revaluation from time to time in order to
incorporate changes in value due to depreciation and impairment or damages. Under IAS – 37,
for contingent liabilities and provisions; here there are contingency of occurrence of legal claims
due past event, that is allergic reaction, so for this Lima needs to pay some compensatory amount
which nothing but the arisen of obligatory event, here she needs to provide for amount that she
will be rationally going to pay in order to settle this legal action.
PART B
Statement of comprehensive income for the year ended 31st march 2001
Particulars Amounts($000)
Revenue 1800
Less Cost of sales:
Opening inventory 200
Add Purchases 500
Less Closing inventory -280
Add Apportioned depreciation 22.5 -442.5

Gross Profit 1357.5
Add Other income
Accrued Income from investments 10
Less Expenses:
Administrative expense + Apportioned depreciation (150+9)
Less: prepaid insurance
159
-110
49
Interest paid 10
Distribution cost + Apportioned depreciation (300+13.5) 313.5
Accrued expenses 75 447.5
Income before tax 910
Less Income tax 150
Net income 760
Statement of Financial Position as at 31st march 2001
Particulars Amounts($000)
ASSETS:
Non-current assets
Land 150
Building (at cost) 150
Less Accumulated depreciation (50+15) -65 85
Plant and machinery (at cost) 200
Less Accumulated depreciation (80+30) -110 90

Current assets
Accrued income from investment 10
Trade receivable 824
Prepaid expenses 110
Closing inventory 280
Cash and cash equivalent -
Total 1549
Equity and Liabilities
Equity
Share capital 200
Retained earnings (100+760-9) 851 1051
Non-current Liabilities
10% Loan 80
Current Liabilities
Trade payables 100
Accrued expenses 75
Income tax payable 150
Bank overdraft 8
Suspense account 85
1549
Statement of changes in equity
Particulars Share capital Retained earnings Total
B/d 1 April 2000 200 100 300

Net income for the
year
760 760
Dividend paid on
share capital
(9) (9)
C/f on March 2001 200 851 1051

REFERENCES
Books and journals
Baukmann, D., 2018. International accounting standards: IAS und HGB im Konzernabschluß.
Walter de Gruyter GmbH & Co KG.
Villani, A., 2019. The evolution of international accounting standards IAS/IFRS for financial
instruments.
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