University Finance Report: Project and Innovation Accounting Analysis

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This report provides a comprehensive analysis of project and innovation finance and accounting. It includes an income statement for the period ending June 30, 2017, detailing sales, cost of goods sold, gross profit, other income, operating income, expenses, and net income. The balance sheet as of June 30, 2017, presents assets (current and non-current), liabilities (current and non-current), and equity. Explanatory notes clarify key accounting treatments such as allowance for doubtful debts, amortization of goodwill and R&D, depreciation, and income tax liability. The report references several sources, including articles discussing depreciation methods, doubtful debts, deferred tax liabilities, and the amortization of intangible assets.
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Running head: PROJECT AND INNOVATION FINANCE AND ACCOUNTING
Project and innovation finance and accounting
Name of the student
Name of the university
Student ID
Author note
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1PROJECT AND INNOVATION FINANCE AND ACCOUNTING
Table of Contents
Income statement for the period ended 30th June 2017..............................................................2
Balance sheet as on 30th June 2017............................................................................................3
Explanatory notes.......................................................................................................................4
Reference....................................................................................................................................6
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2PROJECT AND INNOVATION FINANCE AND ACCOUNTING
Income statement for the period ended 30th June 2017
Particulars Amount
Incomes
Sales $ 37,50,000.00
Sales discount $ (15,000.00)
Net revenue $ 37,35,000.00
Cost of goodssold $ (21,65,100.00)
Add: Freight in $ (11,075.00)
Total cost of goods sold $ (21,76,175.00)
Gross profit $ 15,58,825.00
Other income
Rental revenue from sub-lease $ 12,000.00
Design services $ 1,85,000.00
Gain on sale of delivery vehicle $ 11,000.00
Operating income $ 17,66,825.00
Less: Expenses
Advertising expenses $ 17,000.00
Bad debt expenses $ 25,000.00
Salaries - administrative staff $ 3,54,000.00
Sales commission - marketing staff $ 4,06,000.00
Sales staff vehicle expenses $ 38,000.00
Depreciation of motor vehicle $ 62,000.00
Depreciation of office furniture $ 33,000.00
Depreciation of retail store equipment $ 8,000.00
Depreciation of retail store $ 25,000.00
GST compliance fees $ 22,800.00
Insurance expenses $ 42,000.00
Interest expense $ 4,200.00
Rates expenses $ 15,000.00
Rent expense $ 36,200.00
Research and development costs $ 80,000.00
Freight out $ 22,000.00
Income tax expense $ 1,28,610.00
Amortisation of goodwill $ 7,000.00
Amortisation of R&D $ 10,000.00
Total expenses $ 13,35,810.00
Net income $ 4,31,015.00
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3PROJECT AND INNOVATION FINANCE AND ACCOUNTING
Balance sheet as on 30th June 2017
Particulars Note Amount Amount
Assets
Current assets
Cash at bank 1 $ 1,08,000.00
Accounts receivable 2 $ 2,92,000.00
Less: Allowance for doubtful debt $ (32,000.00)
Net receivables $ 2,60,000.00
Inventory $ 4,15,000.00
Prepaid insurance $ 8,500.00
Prepaid rent $ 6,500.00
Total current assets $ 7,98,000.00
Non-current assets
Goodwill 3 $ 1,08,000.00
Less: Accumulated amortisation $ -
Carrying value of goodwill $ 1,08,000.00
Research and development 4 $ 80,000.00
Less: Accumulated amortisation $ -
Carrying value of research and
development $ 80,000.00
Motor vehicle 5 $ 4,36,000.00
Less: accumulated depreciation $ (1,18,000.00)
Carrying value of motor vehicle $ 3,18,000.00
Retail store equipment 5 $ 93,000.00
Less: accumulated depreciation $ (19,000.00)
Carrying value of retail store equipment $ 74,000.00
Furniture 5 $ 72,000.00
Less: accumulated depreciation $ (5,000.00)
Carrying value of furniture $ 67,000.00
Retail store 5 $ 9,25,000.00
Less: accumulated depreciation $ -
Carrying value of retail store $ 9,25,000.00
Land and building $ 3,00,000.00
Total non-current assets $ 18,72,000.00
Total assets $ 26,70,000.00
Liabilities
Current liabilities
Accounts payable $ 2,37,500.00
Income tax liability 6 $ -
Salaries payable $ 31,000.00
Interest payable $ 1,500.00
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4PROJECT AND INNOVATION FINANCE AND ACCOUNTING
GST owing to ATO $ 28,800.00
Total current liabilities $ 2,98,800.00
Non-current liabilities
Mortgage loan payable $ 2,02,500.00
Provisions for ordinary dividend $ 80,000.00
Provisions for preference dividend $ 40,000.00
Total non-current liabilities $ 3,22,500.00
Total Liabilities $ 6,21,300.00
Equities
Share capital
Preference share at $ 1 each $ 4,00,000.00
Issued capital at $ 1 each $ 4,00,000.00
Ordinary share at $ 2 each $ 7,00,000.00
$ 15,00,000.00
Suspense account $ 3,700.00
General reserve $ 2,75,000.00
Asset revaluation reserve $ 1,40,000.00
Retained income 7 $ 1,30,000.00 $ 5,48,700.00
Total equity $ 20,48,700.00
Total liabilities and equity $ 26,70,000.00
Explanatory notes
1. Cash at bank = $ 135,000
Less: share issue cost = $ 27,000
Closing cash balance = $ 108,000
2. Allowance for doubtful debts will reduce the balance of account receivable and hence,
reduced from the balance of account receivable (Kulikova, Garyncev and Goshunova
2015).
3. Amortisation of goodwill will reduce the balance of accumulated amortisation. As the
accumulated amortisation and amortisation of goodwill amount is same that is $ 7,000
the net deduction amount from goodwill will be nil (Small, Yaseen and Schmidt
2016).
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5PROJECT AND INNOVATION FINANCE AND ACCOUNTING
4. Amortisation of R&D will reduce the balance of accumulated amortisation. As the
accumulated amortisation and amortisation of R&D amount is same that is $ 10,000
the net deduction amount from R&D will be nil (Small, Yaseen and Schmidt 2016).
5. Depreciation of motor vehicle, office furniture, retail store equipment and retail store
will reduce the balance of accumulated depreciation. Therefore, the accumulated
depreciation amount on the said items has been reduced by the amount of depreciation
(Del Giudice, Manganelli and De Paola 2016).
6. Income tax expense reported in the income statement will reduce the balance of
income tax liability reported in the balance sheet. As the income tax expense and
income tax liability amount is same that is $ 128,610 the net amount reported as
income tax liability is nil (Mullinova and Simonyants 2016).
7. As amount of retained income after paying off the dividends is $130,000, the same is
reported in the balance sheet and the net income amount from income statement has
not been considered.
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6PROJECT AND INNOVATION FINANCE AND ACCOUNTING
Reference
Del Giudice, V., Manganelli, B. and De Paola, P., 2016, July. Depreciation methods for
firm’s assets. In International Conference on Computational Science and Its Applications(pp.
214-227). Springer, Cham.
Kulikova, L.I., Garyncev, A.G. and Goshunova, A.V., 2015. Doubtful debts allowance
develoment: Stages and methods of calculation. Mediterranean Journal of Social
Sciences, 6(1 S3), p.448.
Mullinova, S. and Simonyants, N., 2016. Reflection of a deferred tax liability in the credit
union reporting according to IFRS (IAS) 12" Income taxes". Modern European Researches,
(1), pp.83-88.
Small, R., Yaseen, Y. and Schmidt, L., 2016. Amortisation of intangible assets: accounting
technical. Professional Accountant, 2016(28), pp.16-17.
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