The Memorandum Assignment Help

Solution -1
MEMORANDUM
To Jennifer,
This memorandum is prepared in reference to the statement of financial position sent. The following are
the key problems with the statement of financial position:
a. Absence of classification in current and non-current – The presented statement of financial
position fails to provide the assets classification between current and non-current in accordance
with AASB 101. As per AASB 101, any assets or liability which is receivable or payable within
the company’s normal operating cycle or 12 months from the balance sheet date should be
classified as current and all other assets as non-current. The relevant text of para 51 of AASB 101
states that:
“An entity shall present current and non-current assets, and current and non-current liabilities,
as separate classifications on the face of its balance sheet.”
b. Non/ improper grouping of items – AS per generally accepted principles and format of financial
position prescribed by AASB 101, the assets and liabilities should be properly grouped and
presented. The balance sheet or statement of financial position should firstly give disclosures
regarding current assets then non-current assets and then moving towards current liability and
then to non-current liabilities and lastly shareholder’s equity should be presented. In your
financial position following grouping are incorrect:
a. Ordinary share capital is classified under liabilities instead of shareholder’s equity
b. Accumulated depreciation - property, plant and equipment is classified under liabilities
instead of deducting from property, plant and equipment.
c. Intangible assets are clubbed with property, plant and equipment whereas it should be
disclosed separately.
d. Loan taken for investment property should be disclosed under liabilities instead of
deducting from assets.
c. Format of financial statement – Further, the format used for preparation of statement of financial
position is not in accordance with the format prescribed by AASB 101. AASB 101 prohibits

using t. account format for preparation of financial position. The corrected statement of financial
position is attached herewith for your review and understanding.
d. Proper bifurcation and details- The presented statement of financial position fails to bifurcate the
assets and liabilities. For example, provisions needs to be further bifurcated to provision for tax
liabilities and other provisions. Similarly, the bifurcation of other items wherever possible is
required.
Enclosures:
1. Revised Statement of Financial Position

WESLEY LTD.
STATEMENT OF FINANCIAL POSITION
For the year ended on 30 June, 2017
Particulars Amount as on
30 June, 2017
Current assets
Cash and cash equivalents 4,000
Trade and other receivables 160,000
Inventories 36,000
Other assets 10,000
Total current assets 210,000
Non-current assets
Property, plant and equipment 610,000
Investment Property 114,000
Intangible assets 94,000
Other assets 36,000
Total non-current assets 854,000
Total assets 1,064,000
Current liabilities
Trade and other payables 110,000
Short term borrowings 62,000
Current tax liabilities 8,000
Provisions 40,000
Financial liabilities 100,000
Total current liabilities 320,000
Non-current liabilities
Financial liabilities 500,000
Total non-current liabilities 500,000
Total liabilities 820,000