Detailed Financial Accounting Report: 71201 Assessment 1 Analysis

This report provides a comprehensive analysis of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). The report includes a statement of comprehensive income, statement of financial position, and statement of changes in equity. Detailed notes to the accounts are also provided, offering insights into key financial metrics such as selling and distribution expenses, administrative expenses, financial expenses, income tax payable, accounts receivable, property, plant & equipment, and intangible assets. The report also includes an income statement and the valuation methods used for inventory and property, plant, and equipment. The financial statements cover the period from January 1, 2019, to December 31, 2019, and the report references relevant accounting standards and principles.

Running head: 71201 FINANCIAL ACCOUNTING
71201 Financial Accounting
Name of the Student
Name of the University
Author Note

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71201 FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1...................................................................................................................2
Bibliography.................................................................................................................................8

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71201 FINANCIAL ACCOUNTING
Answer to Question 1
a) Statement of Comprehensive Income
Statement of Comprehensive Income as on 31/12/19
Particulars Amount
Net Income including non-controlling interests 1699990
Other Comprehensive Income (loss), net of tax:
Gain on asset revaluations 28800
Loss on Financial Assets held for resale -18000
Gain on translation of foreign operations 12960
Total Other Comprehensive income (loss), net of tax 23760
Total Other Comprehensive income (loss), attributable
to entity
1723750
Statement of Financial Position
Assets Amount
Current Assets:
Accounts Receivable, Net 137750
Cash at Bank 46000
Inventory 250000
Term Deposit 60000
Total Current Assets 493750
Buildings, Net 737000

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71201 FINANCIAL ACCOUNTING
Land 1100000
Machinery 480000
Intangible Assets 140000
Total Assets 2950750
Current Liabilities
Wages and Salaries Payable 126000
Mortgage Loan 150000
Total Liabilities 276000
Owner's Equity
Common Stock 750000
Paid in Capital -
Retained Earnings 1648750
Total Owner's Equity 2398750
Total Liabilities and Owner's
Equity
2950750
Statement of
Changes in Equity
Preferre
d Stock
Commo
n Stock
Additional
Paid-in Capital
Retained Earnings
(Accumulated Deficit)
Total
Beginning
Balance
650000 650000

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71201 FINANCIAL ACCOUNTING
Issuance of Stock 100000 100000
Net Income (Net
Loss)
1723750 172375
0
Dividends 75000 -75000
Ending Balance 239875
0
b) Notes to Accounts
1 Selling and Distribution Expenses
Accrued Wages 20000
Depreciation on Buildings 17100
Depreciation on Machinery 54000
91100
2 Administrative Expenses
Accrued Administration Wages 17000
Depreciation on Buildings 11400
Depreciation on Machinery 36000
64400
3 Financial Expenses
Accrued Wages 17000
Depreciation on Buildings 9500
Depreciation on Machinery 54000
4 Income Tax Payable and Tax Expense
Income Earned during the year
265750
0
Tax @28% 744100
Income Tax Payable 744100
5 Accounts Receivable
Opening Balance 165000

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71201 FINANCIAL ACCOUNTING
Less: Bad Debts 20000
Net Accounts Receivable 145000
Less: Allowance for Doubtful Debts 7250
137750
6 Property, Plant & Equipment
Opening Balance
280000
0
Less: Accumulated Depreciation 325000
Written Down Value
247500
0
Less: Depreciation during the year 182000
Written Down Value of Property, Plant & Equipment
229300
0
7 Intangible Assets
Trademarks 110000
Patents 55000
Less: Impairment 25000
Written Down Value 140000
8 Income Statement
Sales
345000
0
Less: Sales Returns 60000
Less: Cost of Goods Sold 520000
Gross Profit
287000
0
Less:
Selling and Distribution Expenses 91100
Administrative Expenses 64400
Financial Expenses 80500
Operating Income
263400
0
Less: Other Administrative Expenditure
Accounting Fees 20000
Advertising fess 47000
Bad debts 20000
Bank Fees 4000
Interest on Mortgage Loan 10500
Net Income 253250

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71201 FINANCIAL ACCOUNTING
0
Other Income 125000
Total Net Income
265750
0
Tax @28% 744100
Profit After Tax
169999
0
c) The financial statements have been prepared by following the guidelines prescribed by
the International Reporting Financial Standards (IFRS).
The financial reports are prepared for the period beginning from 1/1/2019 to the period
ending 31/12/2019. Any changes occurring during this period are covered under the
financial statements.
The financial statements are prepared in compliance with the guidelines prescribed by the
Generally Accepted Accounting Principles (GAAP).
The financial statements are prepared in compliance with the guidelines prescribed by the
New Zealand International Financial Reporting Standards (IFRS).
The accounts receivables have been prepared on the basis of the net value of the
payments receivable by the business. These are recorded after deducting the bad debts
and provision for bad debts from the net accounts receivable by the business.
The accounts receivable and the bad debts of the business are recorded on the basis of the
estimates of the business.
Inventory is valued on the basis of the lower of the cost or Net Realisable Value (NRV)
of the inventory.
The cost of inventory is the amount for which it was acquired initially by the business.
The amount at the date of acquisition is considered to be the cost of the inventory.

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71201 FINANCIAL ACCOUNTING
The inventory is reviewed for any impairment at the end of the accounting period if there
are any signs of impairment. The valuation of the inventory is changed according to the
conditions existing on the date of the review.
Property, Plant and Equipment are recorded on the basis of the written down value which
is the net amount of the assets obtained after deducting the depreciation from the cost of
the assets.
The cost of the Plant, Property and Equipment is the amount for which it was acquired by
the business at the time of acquisition and put to use by the business.
The write-down of the Plant, Property and Equipment is done on the basis of the wear
and tear caused to the equipment due to the usage. A fixed percentage of depreciation is
charged to the equipment and the written down value is carried forward to the next
financial year.

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71201 FINANCIAL ACCOUNTING
Bibliography
Berk, J., & DeMarzo, P. (2016). Corporate Finance, GE. Pearson Australia Pty Limited.
Robinson, T. R. (2020). International financial statement analysis. John Wiley & Sons.