logo

Key Problems in Statement of Financial Position - Desklib

9 Pages1550 Words181 Views
   

Added on  2020-04-07

Key Problems in Statement of Financial Position - Desklib

   Added on 2020-04-07

ShareRelated Documents
Solution -1MEMORANDUMDate: 9th September, 2017To: JenniferFrom: Chief Accountant Subject:Problems with the statement of financial positionStatement of financial position is an important statement and is required to be preparedwith due care. However, the statement of financial position prepared by you contains manyflaws. The following are the key problems with the statement of financial position:a.Your financials fails to meet the current and non-current bifurcation. As per AASB101, para 51 “An entity shall present current and non-current assets, and currentand non-current liabilities, as separate classifications on the face of its balancesheet.” So, all the assets and liabilities should be monitored minutely to checkwhether they are current or non-current, if they are current then they should bereflected under the heading of current assets/ current liabilities or if they are non-current then they should be reflected under the heading of non-current assets/ non-current liabilities. For better understanding, please review the redrafted financialstatement.b.Even your financials are not prepared in the format prescribed by the standard andfails to meet the presentation criteria. As per AASB 101, the balance sheet should bestructured with the following line items:a.property, plant and equipment;b.investment property;c.intangible assets;d.financial assets (excluding amounts shown under (e), (h) and (i));e.investments accounted for using the equity method;f.biological assets;g.inventories;h.trade and other receivables;i.cash and cash equivalents;j.the total of assets classified as held for sale and assets included in disposal groups classified asheld for sale in accordance with AASB 5 Non-current Assets Held for Sale and DiscontinuedOperations;k.trade and other payables;l.provisions;m.financial liabilities (excluding amounts shown under (k) and (l));n.liabilities and assets for current tax, as defined in AASB 112 Income Taxes;o.deferred tax liabilities and deferred tax assets, as defined in AASB 112;p.liabilities included in disposal groups classified as held for sale in accordance with AASB 5;q.minority interest, presented within equity; andr.issued share capital and reserves attributable to owners of the parent (AASB 101, par. 54).”
Key Problems in Statement of Financial Position - Desklib_1
c.Further, some grouping issues are also evident in the statement of financial position.Some of them are listed below:a.Classification of ordinary share capital liabilities instead of shareholder’sequity b.Classification of accumulated depreciation - property, plant and equipmentunder liabilities instead assets.c.Intangible assets should be disclosed separately whereas it is clubbed withproperty, plant and equipment.Enclosures:1.Revised Statement of Financial Position
Key Problems in Statement of Financial Position - Desklib_2
WESLEY LTD.STATEMENT OF FINANCIAL POSITIONFor the year ended on 30 June, 2017 (Amount in $) ParticularsAs at 30 June, 2017Current assets Cash and cash equivalents4,000 Trade and other receivables160,000 Inventories36,000 Other assets10,000Total current assets210,000Non-current assets Property, plant and equipment610,000 Investment Property114,000 Intangible assets94,000 Other assets36,000Total non-current assets854,000 Total assets - (a)1,064,000Current liabilities Trade and other payables110,000 Short term borrowings62,000 Current tax liabilities8,000 Provisions40,000 Financial liabilities100,000Total current liabilities320,000Non-current liabilities Financial liabilities500,000Total non-current liabilities500,000Total liabilities - (b)820,000Net assets (a-b)244,000Equity Ordinary share capital 200,000 Reserves24,000 Retained earnings20,000Total equity244,000
Key Problems in Statement of Financial Position - Desklib_3

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
The Statement of Financial Position | Study
|10
|1620
|119

The Memorandum Assignment Help
|10
|1565
|33

Key problems with the statement of financial position
|9
|1536
|203

Financial Analysis & Business Valuation | Assignment - AYN505
|10
|1247
|88

External Reporting of Wesley Ltd | Assignment
|8
|1057
|254

Corporate Accounting Introduction and Significance
|16
|768
|15