Notes and Disclosure

This document provides notes on disclosure and financial restatement for Superstore Ltd., Funland Ltd., Splash Ltd., Firefly Ltd., and Flash Ltd. It covers topics such as provisions, recognition of held provisions, tax rate adjustments, reclassification of items, asset acquisition, revaluations, disposals, and impairment tests.

Running Head: NOTES AND DISCLOSURE
NOTES ON DISCLOSURE
NAME OF STUDENT
NAME OF UNIVERSITY

2
NOTES AND FINANCIAL RESTATEMENT
1.Superstore Ltd.
i. Recognition of and changes to provisions. According to (AASB137 2010), provisions
should be reviewed the end of an accounting period. If there is a need to change the level of
provisions, then the appropriate adjustments. The two entries will be in the balance sheet and
the other in income statement. In this case the 2018 provisions have been reviewed to an
amount of 34 400 which is higher than what in the books of 19 000. We will pass the entries
for difference which will reduce income and increase the provisioning amount in the balance
sheet. We will also update the disclosures on the change in the rate of provision for
warranties to reflect the current exposures.
Workings.
Provisions brought forward. 30 June 2018 19 000,00
Sales for the year 430 000,00
Rate of provisioning 8%
Provisioning amount (Rate of provisioning X
sales) 34 400,00
Provisions to be added (34,400-19000) 15 400,00
Journal entry
DR Warranty costs 15 400,00
CR Warranty provisions
Notes disclosure
Note 1. The warranty costs for the year 2018 were adjusted from 5% for year 2017 to 8 % to
reflect the increasing rate of returns on goods on warranties.

3
NOTES AND FINANCIAL RESTATEMENT
ii. Recognition of and changes to the level of held provisions. According to (AASB137
2010), provisions should be reviewed at the end of the accounting period and adjusted to
reflect the fair exposure. In this case the in 2018 books we will write off the receivable and
any provisions that had been taken. The effect is to reduce income and assets as we will
reverse the receivable.
Assessed bad debt as at 30 June 2018 240 000,00
less Recognised bad debt 40 000,00
=Shortfall in bad debt recognition 200 000,00
Journal Entries
DR Bad debt written off 200 000,00
Cr Debtors 200 000,00
DR Provision for doubtful debts 40 000,00
Cr Debtors 40 000,00
Notes disclosure
Note 2. During the close of the year we have assessed that two debtors who owe us 240,000
have been put on administration and the receivable is deemed as irrecoverable. The
receivable has been fully written off.
iii.
This will be through a note disclosure and adjustment on the 2018 draft financials. This
decrease in tax rate will lead to a lower tax payable amount.
Notes disclosure

4
NOTES AND FINANCIAL RESTATEMENT
Note 3. The tax rate for the year 2018 has been adjusted from 30% in 2017 to 28%. The
recalculation of this reduced tax rate has given rise to a deferred tax asset.
iv.
Reclassification of items relating to prior years. According to (AAS37 2010), this
reclassification will have an impact on the 2017 balance sheet and income statement. The two
items will be restated, and a tax refund claim will arise which will be deemed to be tax
receivable in the current period.
The net book value of the asset was 21,000.00 as at 30 June 2018.
Journal entries.
DR Retained earnings 2017 21 000,00
CR Asset 2017 21 000,00
DR Tax Payable 2018 6 300,00
CR Tax receivable income 2018 6 300,00
Note 4. The tax receivable arose due to a restatement of the 2017 financial where an invoice
was posted as an asset instead of as repairs. The receivable has arisen due to the restatement.
2.Funland Ltd.
Authorised issue
Date Preference shares Ordinary shares
31/03/2019 1 000 000,00 2 000 000,00
Pricing 2
Pricing 4,00
On allotment 1,50
On call 0,50

5
NOTES AND FINANCIAL RESTATEMENT
On Application
Shares allocated on prorate basis.
Date Preference shares
Ordinary
shares
15/04/2019
800
000,00
2 200
000,00
Amount (Shares x Pricing)
1 600
000,00
8 800
000,00
Over/under subscription
(Authorised shares less applied
shares
200
000,00 - 200 000,00
Number of oversubscribed shares to
be transferred to reserves
800
000,00
Journal Entries
Dr Bank
10 400
000,00
Cr Share Capital (Applied shares X
price)
9 600
000,00
Cr Reserves
800
000,00
Allotment -All was paid
Date Preference shares
Ordinary
shares
15/05/2019 2 000 000,00
Amount (Shares x Pricing of
allotment) - 3 000 000,00
Amount utilised from application 800 000,00
Actual Amount received on
allotment (Allotment amount less
reserved amounts) 2 200 000,00
Journal Entries
Dr Bank 2 200 000,00
Dr Reserves 800 000,00
Cr Share Capital 3 000 000,00

6
NOTES AND FINANCIAL RESTATEMENT
Call -All was paid
Date Preference shares
Ordinary
shares
15/09/2019 1 960 000,00
Amount (Shares x Pricing of call) - 980 000,00
Journal Entries
Dr Bank 980 000,00
Cr Share Capital 980 000,00
Forfeiture
Shares that did not honour the call 40 000,00
Amount (Shares x Price already
paid) 220 000,00
Sale of forfeiture
Unit Sale price of forfeited shares 5,60
Proceeds from forfeited shares (sale
price X forfeited shares 224 000,00
Date 30/September 2019
Journal entries
DR Bank 224 000,00
Cr Forfeiture account 224 000,00
Costs of forfeiture and reissue
Journal entries
DR Forfeiture account 7 000,00
CR Bank 7 000,00
Refund
Sales of forfeited shares 224 000,00
less; Forfeiture costs 7 000,00
Refund amount 217 000,00
Journal entries
DR Forfeiture account 217 000,00
CR Bank 217 000,00

7
NOTES AND FINANCIAL RESTATEMENT
The shares are allocated pro rata and the reissue costs have been charged to the refund
balances payable back to the forfeited shares (accounting - simplified.com 2017).
3. Splash Ltd.
Workings for allowable expenses (AASB 112)
Splash Ltd, for the year ended 30
June 2018
Balance sheet
amounts Adjusted Amount Comment
Interest receivable 2017 1 900,00
Less interest receivable 2018 1 000,00 900,00 Add to income
Provision for annual leave 2017 21 400,00
less Provision for annual leave
2018 11 000,00 10 400,00 Allowable expense
Doubtful debts expense 2017 13 200,00 13 200,00 Add back to operating profit
Depreciation – plant =390000/6 -
straight line 65 000,00 Allowable expense
motor vehicles =150000/8 -straight
line 18 750,00 Allowable expense
Insurance expense 2017 6 000,00
Insurance expense 2018 4 000,00 2 000,00 Allowable expense
Impairment loss – goodwill (not tax
deductible) 23 000,00 Add back
Warranty expense 2017 33 100,00
Warranty expense 2018 14 600,00 18 500,00 Allowable expense
Entertainment expense (not tax
deductible) 37 400,00 Add back
Calculation for income tax
Accounting Profit 714 000,00
Add back (non-allowable
expenses)
Interest revenue 15 000,00
Annual leave expense 11 000,00

8
NOTES AND FINANCIAL RESTATEMENT
Doubtful expense 13 200,00
Depreciation-Plant 22 800,00
Depreciation-Motor 47 850,00
Insurance expense 30 000,00
Impairments loss-goodwill 23 000,00
Warranty expense 14 000,00
Entertainment 37 400,00
Total 214 250,00
less (non-allowable income)
Interest revenue 15 000,00
Total 15 000,00
Less allowable expenses
Annual leave 10 400,00
Depreciation-Plant 65 000,00
Depreciation-Motor 18 750,00
Insurance expense 2 000,00
Warranty expense 18 500,00
114 650,00
Add back allowable income
Interest revenue 900,00
900,00
Taxable income 799 500,00
Tax @30% 239 850,00
Net income 559 650,00
Accumulated Deferred tax liability is tax payable (239 850) + (11 250)
=241 100,00
Journal entries
Journal Entry Amount
Dr Tax Expense 239 850,00
Cr Differed Tax Liability 239 850,00
4, Firefly Ltd

9
NOTES AND FINANCIAL RESTATEMENT
Calculation of asset acquisition, revaluations and disposals (AASB 136)
Firefly Ltd
Date 1/7/2016
Cost 800 000,00
Useful life in years 5
Residual value 40 000,00
Journal entries
DR Equipment 800 000,00
Cr Bank 800 000,00
Straight line depreciation per year
(Cost less residual value divide by useful
life) 152 000,00
Journal entry
Dr Depreciation expense 152 000,00
Cr Equipment 152 000,00
Revaluation date 1/7/2017
Revaluation Amount 610 000,00
Book value of the asset is Cost less one-year
depreciation (800000-152000) 648 000,00
Revaluation amount less book value - 38 000,00
The revaluation has resulted in a loss
Journal entry for the revaluation
Dr Revaluation loss 38 000,00
Cr Equipment 38 000,00
Revised residual value 50 000,00
Revised useful life 6
Straight line depreciation per year
(Revalued Cost less revised residual value
divide by revised useful life) 93 333,33
Journal entry
Dr Depreciation expense 93 333,33
Cr Equipment 93 333,33
Estimation of fair value
Date 30/6/2019

10
NOTES AND FINANCIAL RESTATEMENT
Calculation of book value from 1/7/2017 to
30/6/2019
Years depreciated 2
Annual depreciation 93 333,33
Accumulated depreciation (Annual
depreciation X 2) 186 666,67
Net book value as at 30/6/2019(Revalued
cost less accumulated depreciation 423 333,33
Estimated fair value 550 000,00
Loss on estimated value (Estimated value
less NBV) 126 666,67
Journal entry to recognise fair value
DR Equipment 126 666,67
Cr Revaluation gain 126 666,67
Price asset was disposed 490 000,00
Disposal date 31/12/2019
So, there is further depreciation of six
months and assuming the residual value and
estimated life does not change.
Depreciation calculation for six months
Estimated fair value less residual cost/useful
life prorated for six months 41 666,67
Accumulated depreciation for 2 and 1/2
years 228 333,33
Net book value 321 666,67
Gain or loss on disposal (Disposal less
NBV) 168 333,33
Journal entries
Dr Bank 490 000,00
Cr Equipment 321 666,67
Cr Gain on sale 168 333,33
5, Flash ltd. Impairment tests
Fair value and carrying amount analysis

11
NOTES AND FINANCIAL RESTATEMENT
Item Book value Fair VALE
Book value less
fair value
Cash 143 000,00 143 000,00 -
Plant and equipment 750 000,00 750 000,00 -
Less: accumulated
depreciation -250 000,00 -306 000,00 - 56 000,00
Land 300 000,00 270 000,00 - 30 000,00
Inventory 220 000,00 220 000,00 -
Accounts receivable 163 000,00 163 000,00 -
Patent 90 000,00 85 000,00 - 5 000,00
Goodwill 30 000,00 90 000,00 60 000,00
Carrying amount of
cash generating unit 1 446 000,00 - 31 000,00
Journal Entries
DR depreciation expense 6 000,00
Cr Accumulated
depreciation
Dr Revaluation loss 30 000,00
Cr Land 30 000,00
Dr Revaluation loss 5 000,00
Cr Patent
Dr Good will 60 000,00
Cr Reserves 60 000,00
A review of the impairment test (AASB136 2007), the net effect of the impairment against
the carrying balances is loss of 31 000. The resultant difference of the division carrying
amount and recoverable amount is a positive 30 000. The net effect then is not material for
this case.

12
NOTES AND FINANCIAL RESTATEMENT
References
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Australia Accounting Standards Body. (2016). Property, Plant and Equipment. Retrieved
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04_COMPjun16_01-17.pdf
Australia Accounting Standards Body. (2015). AASB Standard Presentation of Financial
Statements Federal Register of Legislative Instruments F2015L01626. Retrieved from
https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf
Australia Accounting Standards Board. (2012). Compiled AASB Standard. Retrieved from
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04_COMPsep11_07-12.pdf
Australia Accounting Standards Body. (2010). Compiled AASB Standard - RDR Early
Application Only AASB 136. Retrieved from
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04_ERDRjun10_07-09.pdf
Averkamp, H. (2019). AccountingCoach. Retrieved May 11, 2019, from
AccountingCoach.com website:
https://www.accountingcoach.com/bookkeeping/explanation/10
Bragg, S. (2018). The revaluation models. Retrieved from
https://www.accountingtools.com/articles/the-revaluation-model.html
Impairment of Assets. (2007). Retrieved

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NOTES AND FINANCIAL RESTATEMENT
From https://www.aasb.gov.au/admin/file/content105/c9/AASB136_07-
04_COMPapr07_07-07.pdf
Provisions, Contingent Liabilities and Contingent Assets. (2010). Retrieved
from https://www.aasb.gov.au/admin/file/content105/c9/AASB137_07-
04_COMPoct10_01-11.pdf