Financial Report Preparation: ATO Regulations and GST Elements

This report focuses on the preparation of financial reports for Accounting Without Tears Ltd., outlining key aspects of financial analysis, including ATO regulations and GST elements applicable to Australian businesses. It details the preparation of asset registers and depreciation schedules for motor vehicles, office chairs, and photocopiers, using the straight-line depreciation method. The report includes journal entries for various transactions, such as the purchase of assets and depreciation expenses. Furthermore, the report calculates the depreciation of an asset sold during the year and prepares relevant journal entries, including the transfer of gain to the profit and loss account. It also presents a perpetual profit and loss statement and an adjusted trial balance, offering a comprehensive overview of the company's financial activities and performance. The report concludes by emphasizing the importance of depreciation in assessing the value of assets.

Running Head: PREPARE FINANCIAL REPORTS
PREPARE FINANCIAL REPORTS

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PREPARE FINANCIAL REPORTS
Table of Contents
Introduction.....................................................................................................................................................................3
Listing of key provisions of the ATO regulations..........................................................................................................3
6 elements of GST regulations applicable for any Australian business..........................................................................3
Task 2..............................................................................................................................................................................4
Activity 1........................................................................................................................................................................4
Activity 2........................................................................................................................................................................8
Task 3..............................................................................................................................................................................9
Activity 1........................................................................................................................................................................9
Preparation of Journal entries.......................................................................................................................................10
Conclusion....................................................................................................................................................................13
References.....................................................................................................................................................................14

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PREPARE FINANCIAL REPORTS
Introduction
Preparation of the financial reports is essential for the company for assessing the financial
stability of the business. It is expected to give meaningful insights into the net cash flow for the
company and about the performance of the business indicators.
This financial report is based on the identification of the flow of credit and incurred debt by the
company. The preparation of the general ledger is for the motor vehicle of the company
Accounting Without Tears Ltd. with an overview of the expenses incurred.
Listing of key provisions of the ATO regulations
● Tax returns need to lodge by the tax agents each year
● Full returns can be claimed on having franking credits
● The Tax File number (TFN) is applicable for the foreign visitors on having valid
passports and relevant travel documents (Ato.gov.au, 2019).
● The registered tax agents are allowed to charge fees on lodging of tax returns.
● For the tax agents, it is necessary to be associated with the board of Tax Practitioners
(TPB).
6 elements of GST regulations applicable for any Australian business
Filling for GST is necessary under the following conditions;
● The turnover of the business is greater than $ 75000.
● Providing limousine travel or taxi provided in the exchange for the fare to passengers
regardless of the turnover
● Claiming of tax credits for fuel

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PREPARE FINANCIAL REPORTS
● A merchant of digital products or imported services
● A distributor of electronic hardware
● Operating for more than 12 months
These are the six key regulations that must be followed by an Australian business
(Business.gov.au, 2019).
Task 2
Activity 1
Asset Register Card
Descr
iption
Estimated
residual 42500
WDV
2019
Asset
ID
Depreciatio
n method Straight line 36975
Locat
ion
Depreciatio
n rate 12.5%
Suppl
ier
Estimated
useful life 4Years

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PREPARE FINANCIAL REPORTS
Depre
ciation
Date Details
Original
capital cost
Additional
capital cost
total
capital
cost annual
accum
ulated
Written-
down
value
1-Jan
Purchase of
motor vehicle 42500 Nil 42500 5525 5525 36975
Asset Register Card
Descr
iption
Estimated
residual 62500
WDV
2019
Asset
ID
Depreciatio
n method Straight line

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PREPARE FINANCIAL REPORTS
Locat
ion
Depreciatio
n rate 12.5%
Suppl
ier
Estimated
useful life 4Years
Depre
ciation
Date Details
Original
capital cost
Additional
capital cost
total
capital
cost annual
accum
ulated
Written-
down
value
1-Jan
Purchase of
motor vehicle 62500 Nil 62500 6250 5525 56250
Table 1: For motor vehicles
(Source: Created by Researcher)
Asset Register Card
Descript Estimated residual 725

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PREPARE FINANCIAL REPORTS
ion
Asset
ID
Depreciation
method Straight line
Locatio
n Depreciation rate 12.00
Supplier
Estimated useful
life
Year
Depreciation
base
Remaining life of
machine
Depreciation
fraction
Depreciation
expenses
Book
value
1 725 3 90.00 635 635
Table 2: For Office chair
(Source: Created by Researcher)
Asset Register Card
Descript
ion Estimated residual 7500

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PREPARE FINANCIAL REPORTS
Asset
ID
Depreciation
method Straight line
Locatio
n Depreciation rate 12%
Supplier
Estimated useful
life 4 Years
Year
Depreciation
base
The remaining life
of the machine
Depreciation
fraction
Depreciation
expenses
Book
value
1 7500 3 900.00 6600 6600
Table 3: For Photo copier
(Source: Created by Researcher)
Depreciation Schedule
purchase
date cost
li
f
e
Depreciation
method
salvage
value
current/yr
depreciation
Acc.
Dep
written
down value
1-Jan $42, 4 Straight line 42496 42496 42496 42496

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PREPARE FINANCIAL REPORTS
500
1-Jan
$65,
250 4 Straight line 635 635 635 635
1-Jan $750 4 Straight line 6600 6600 6600 6600
1-Mar
$7,5
00 4 Straight line 56250 56250 56250 56250
June
2018 2400 4 Straight line 2400 2400 2400 2400
Table 4: Depreciation schedule
(Source: Created by Researcher)
Activity 2
DAT
E
DETAILS FOLI
O
DEBI
T
CREDI
T
BAL
31/11 Motor vehicle A/c 42500 42500
To Insurance A/c 42500

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PREPARE FINANCIAL REPORTS
DAT
E
DETAILS FOLI
O
DEBI
T
CREDI
T
BAL
31/11 Motor Vehicle 65250 65250
To Wages A/c 65250
DAT
E
DETAILS FOLI
O
DEBI
T
CREDI
T
BAL
31/11 3 chairs A/c 750 750
M chairs 750
DAT
E
DETAILS FOLI
O
DEBI
T
CREDI
T
BAL
31/11 HP Color A/c 7500 7500

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PREPARE FINANCIAL REPORTS
To rent 7500
DAT
E
DETAILS FOLI
O
DEBI
T
CREDI
T
BAL
31/11 HP Computer A/c 2400 880
To cash 2400
Table 5: Depreciation schedule
(Source: Created by Researcher)
Task 3
Activity 1
Calculating last three months depreciation
Total balance = $ 120000
Total accumulated depreciation = $ 42000
The motor vehicle was sold on 31 November
Cost of the vehicle = $ 25000

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PREPARE FINANCIAL REPORTS
Sold = $125000
The useful life of the asset = 4 years
Now calculating the depreciation of the asset for three months;
For this, it is assumed that the asset was disposed on 31 November;
120000- 42000 = 78000
On remaining balance
78000-25000 = 53000*10/100= 5300
On sales of asset
25000*10/100 *3/12= 625
Preparation of Journal entries
Motor Vehicle
Date Details Folio Debit Credit Balance
Nov 31
Depreciatio
n Expense 625 625 dr
To Motor
vehicle 625
Table 6: Journal entry of Motor vehicle
(Source: Created by Researcher)
b) Disposable Income
Cash A/c Dr 12500